Foreign Life Insurance

Katelynn Minott, CPA & CEO July 11th, 2026

Foreign life insurance is a life insurance policy issued by an insurer outside the United States. For U.S. expats, it can create U.S. tax and reporting issues when the policy has cash value, investment features, foreign fund holdings, premium payments to a foreign insurer, or benefits paid to U.S. beneficiaries.

Why it matters for U.S. expats

A foreign life insurance policy may be treated very differently by the U.S. than by the country where it was purchased. Cash-value policies can trigger FBAR and Form 8938 reporting, policy income or surrender gains may need to be reported on the U.S. tax return, and premiums paid to a foreign insurer can create Form 720 excise tax issues. Investment-linked policies also need careful review because the underlying assets may create PFIC, foreign trust, or other international reporting problems.

Common questions

1. Do U.S. expats need to report foreign life insurance?

Yes, if the policy creates U.S. income tax, FBAR, FATCA, excise tax, or other reporting requirements. Cash-value policies need special attention.

2. Does foreign life insurance need to be reported on FBAR?

Yes, if the policy is foreign-issued, has cash value, and the taxpayer meets the FBAR reporting threshold.

3. Does foreign life insurance need to be reported on Form 8938?

Yes, if the policy is a specified foreign financial asset and the taxpayer meets the Form 8938 threshold.

4. Is a term life insurance policy reportable?

A pure term life policy with no cash value is less likely to create FBAR or Form 8938 reporting. Premium payments, death benefits, and policy terms should still be reviewed for U.S. tax treatment.

5. Is foreign life insurance taxable in the U.S.?

The policy itself is not taxed just because it exists. Tax can arise from policy income, withdrawals, surrender gains, loans, investment features, excise tax on premiums, or benefits that do not qualify for normal U.S. life insurance treatment.

6. Are foreign life insurance death benefits taxable?

Life insurance death benefits can be excluded from U.S. income when the policy qualifies under U.S. rules. Foreign policies should be reviewed because local insurance treatment does not guarantee the same U.S. result.

7. Can a foreign life insurance policy create PFIC reporting?

Yes, if the policy includes foreign funds or investment-linked features that are treated as PFICs under U.S. rules. Form 8621 may be required.

8. Can premiums on foreign life insurance trigger U.S. excise tax?

Yes. Premiums paid to a foreign insurer for life insurance, sickness or accident insurance, or annuity contracts can be subject to U.S. foreign insurance excise tax unless an exemption or treaty position applies.

9. What form is used for foreign insurance excise tax?

Form 720 is used to report and pay foreign insurance excise tax when it applies.

10. Can foreign life insurance be treated as a foreign trust?

It can, depending on the structure. Some policies, wrappers, pensions, or trust-held insurance arrangements may need to be reviewed for Forms 3520 and 3520-A.

11. What records should U.S. expats keep for foreign life insurance?

Keep the policy contract, annual statements, cash surrender value, premium payment records, insurer details, beneficiary information, investment schedules, withdrawals, loans, surrender records, foreign tax documents, and exchange-rate calculations.

When to get help

Professional guidance is important when:

You own a foreign life insurance policy with cash value.
You paid premiums to a foreign insurer.
You surrendered, borrowed against, or withdrew money from a foreign policy.
The policy is investment-linked or holds foreign funds.
A U.S. person is the policyholder, insured person, or beneficiary.
You are unsure whether FBAR, Form 8938, Form 720, Form 8621, or Form 3520 applies.
You inherited or received benefits from a foreign life insurance policy.

Bright!Tax can review the policy structure, identify FBAR, FATCA, excise tax, PFIC, and income tax reporting issues, and prepare the required U.S. forms. Get started with Bright!Tax.

U.S. tax reporting requirements for expats with foreign investments

Official sources

Reviewed by

Katelynn Minott, CPA & CEO

Last reviewed

July 2026