FBAR Foreign Life Insurance Policy 

FBAR Foreign Life Insurance Policy Reporting: The FBAR Foreign Life Insurance Policy Reporting to the IRS rules are complex. Even though most owners of a foreign life insurance policy overseas do not consider their own insurance policy as a foreign account, the IRS does. (of course they do, right?)

Technically, the policy will have an identifier, which is then reported as an account number on the FBAR (FinCEN Form 114). The Internal Revenue Service has taken an aggressive approach to foreign accounts compliance and unreported offshore income. Therefore, if you are out of compliance, you may consider the IRS FBAR Life Insurance Policy Reporting

The FBAR Life Insurance Policy Reporting rules have many components to it — and  the reporting revolves around surrender value. Not all life insurance policies are reported.

Rather, only certain life insurance policies are reportable once they have what is referred to as a surrender value. If the foreign insurance policy does not have a surrender or “cash” value, it may not be reportable.

FBAR Foreign Life Insurance Policy: How to Report to IRS

FBAR Foreign Life Insurance Policy: How to Report to IRS

Surrender Value for FBAR Life Insurance Policy Reporting 

The Surrender Value is the current “cash” value of the life insurance policy. For example, let’s say Daniel purchased a life insurance policy.

He paid $50,00 and then premiums each year, with the payout (in 30-years) to be $2,000,000.

Is the surrender value $2.000.000?


That is the payout when the triggering event occurs. Instead, the surrender value is the value that the owner of the policy can “surrender” or turn in the policy to the insurance company, and receive a value in exchange for surrendering the policy and the rights associated with it.

CVAT (Cash-Value Accumulation Test)

Sometimes, the policy will provide a surrender value for you. Other times, the insurance company will not provide that information. If you are unsure what the surrender may be, you can refer to the IRS Cash Value Accumulation Test for guidance.

Beneficiaries & FBAR Insurance Policies

A common question involves whether beneficiaries of foreign life insurance policies must report the policy on their FBAR. The answer is generally, no. That is because the beneficiary does not have any ownership interest in the policy AND can be removed at any time by the owners.


A ULIP is a Unit-Linked Insurance Policy. This is a common investment tool in foreign countries. In this scenario, the policy has an investment component, which is linked to the policy and premiums.

Visit our main site to learn more about ULIPs.

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