PayPal have a list of companies that accept PayPal (see
https://www.paypal-marketing.co.uk/bigbrands/) but there appear to be no travel insurance providers on there.
Monarch Airlines accepts payment through payment and they even provide a link on their website to purchase travel insurance, however, when you click it, you are directed to a third party company and they will only take payment by credit or debit card.
I think you're going to struggle to find anybody willing to accept this form of payment.