Final answer:
Decreasing term insurance is best suited for Jean Reamer to ensure her boat loan is paid off in the event of her demise, as it is designed to cover debts that diminish over time, like a loan, and offers lower premiums.
Step-by-step explanation:
For Jean Reamer, who borrowed $14,000 to purchase a new boat, the most cost-effective type of life insurance to ensure her loan is paid off in the event of her death would be Decreasing term insurance. This type of insurance is designed to help cover debts that decline over time, such as a loan or mortgage. As Jean pays off her boat loan, the potential payout of the insurance decreases accordingly, which generally results in lower premiums compared to other types of life insurance, making it a cost-effective choice for protecting a debt.
Comparing to other life insurance types: Level term insurance would provide a fixed benefit that doesn't decrease over time, which might be more than what's needed for a diminishing loan. A Family policy could cover more than just the loan, likely leading to higher costs than necessary, and Annual renewable term insurance would potentially increase in cost each year, which may also be less cost-effective in the long term.
Life insurance is important to safeguard financial responsibilities against unforeseen events. Choosing the right type of insurance depends on one's individual needs, financial obligations, and the desired coverage period.