My father loaned money to me out of his home equity account (Verbal Agreement). I made payments every month for +/- a year per our verbal agreement. Upon his death (he died in February) he stated that he preferred/wished for it to be paid from his wife's portion of the life insurance.
The equity line is in his name and against their (Deceased & Wife) home.

The wife is now saying I owe even though I have told her the arrangement. I am also the Executor and Durable Power of Attorney for Finance.

Please advise.

"Upon his death (he died in February) he stated that he preferred/wished for it to be paid from his wife's portion of the life insurance."

I don't think that's enforceable. If the wife is a named beneficiary of a life insurance policy that trumps whatever your father may have expressed as a wish, whether he expressed it verbally or in writing. What he should have done is made you the beneficiary of the life insurance prior to his death.

At this point it appears that you owe the estate a certain amount of money. If you are inheriting other property from your father you could pay your loan back to the estate by deducting the value of the outstanding loan from what you would otherwise inherit. Be very careful with the accounting of this - as the executor you have a fiduciary responsibility to do what's best to preserve the value of the estate and distribute proceeds to heirs in accordance with his will. But as noted above - if there are named beneficiaries on accounts or insurance policies it does not matter what the will says.

Also, you should be aware that as of your father's date of death your Power of Attorney is no longer in effect.

Sorry no, he can not verbally give his wife's insurance money to pay anything, he would have had to do that in writing with the insurance company. The insurance will pay the wife and that money is hers to do what she wants.

You owe the money and will need to pay it.

Verbal agreements to you take a backseat to any written, legally binding documents. Insurances generally are very specific as to the beneficiary(s), so unless the estate is the beneficiary, it's out of your influence.