FBAR Direct prepares and files your FBAR (FinCEN Form 114) on your behalf. You are responsible for reviewing all information for accuracy before submission to FinCEN. This article is for informational purposes only and does not constitute tax, legal, or financial advice.

FBAR Foreign Life Insurance Policy: When Cash Value Makes It Reportable

Many US persons living abroad hold life insurance policies bought in the UK, Germany, Japan, Singapore, or Hong Kong. Some took out these policies decades ago and may not realize the account has built up a large savings component. However, under the Bank Secrecy Act, a foreign life insurance policy with cash surrender value counts as a reportable foreign financial account for FBAR purposes.

The Report of Foreign Bank and Financial Accounts — known as FBAR or FinCEN Form 114 — covers more than bank accounts. It applies to foreign financial accounts with a cash value you can access. Under 31 CFR 1010.350(c), the definition of "financial account" extends to insurance or annuity policies with a cash surrender value. If the combined value of all your foreign financial accounts tops $10,000 at any time during the year, you must file.

In contrast, term life insurance with no cash component does not trigger the FBAR. The key question is whether the policy has a cash surrender value — the amount the insurer would pay if you cancelled today. For example, whole life, universal life, endowment, and investment-linked policies carry this component. This article explains which foreign life insurance policies you must report, how to find the reportable value, and what happens if you miss the filing.

FBAR Foreign Life Insurance Policy: When Is Reporting Required?

A foreign life insurance policy requires FBAR reporting when you hold it with an insurance company outside the United States and it carries a cash surrender value. Under 31 CFR 1010.350(c)(3), insurance policies are reportable as foreign financial accounts if they have a cash value component. The $10,000 threshold under 31 CFR 1010.306 covers all your foreign accounts combined — not per account.

Therefore, you report the cash surrender value, not the death benefit. The death benefit pays out when you die. The cash surrender value is what you would get if you cancelled the policy today. FinCEN calls out the cash surrender value as the reportable metric for life insurance policies.

Which Policy Types Are Reportable?

Your policy type determines whether you must file. Here is a breakdown of the most common types of foreign life insurance and their FBAR status.

Policy Type	Cash Surrender Value?	FBAR Reportable?
Term life insurance	No	No
Whole life insurance	Yes	Yes
Universal life insurance	Yes	Yes
Endowment policy	Yes	Yes
Investment-linked policy (ILP)	Yes	Yes
Variable universal life	Yes	Yes
With-profits policy (UK)	Yes	Yes
Kapitallebensversicherung (Germany)	Yes	Yes
Seimei hoken savings plan (Japan)	Yes	Yes
Group term life through employer	Generally no	Generally no

Additionally, term life insurance provides a death benefit. No cash value builds over time, so the policy does not meet the definition of a foreign financial account under 31 CFR 1010.350(c). Group term life through an employer also lacks a cash component in most cases. Contact the insurance company to confirm if you are unsure.

Common Countries and Policy Names

US expats often hold policies in these countries under these local names:

United Kingdom: With-profits endowment policies, whole-of-life plans from Prudential UK, Aviva, Legal & General
Germany: Kapitallebensversicherung (capital life insurance), structured savings products from Allianz, Generali
Japan: Seimei hoken (life insurance) with an integrated savings component, from Nippon Life, Meiji Yasuda
Singapore: Investment-linked policies (ILPs) from Great Eastern, Manulife Singapore, AIA Singapore
Hong Kong: Savings-linked whole life policies from AIA, Prudential HK, Manulife HK
Canada: Whole life and participating policies from Sun Life, Great-West Life

If your foreign policy lists a "surrender value," "cash value," or "savings component" on the annual statement, assume the insurance policy is reportable on the FBAR.

Calculating the Value of Your FBAR Foreign Life Insurance Policy

To find the FBAR value of foreign life insurance, use the highest cash surrender value during the calendar year. Convert it to USD with the Treasury's December 31 exchange rate. Do not report the death benefit, the premiums paid, or the market value of any funds inside the policy.

As a result, under 31 CFR 1010.350(a), you report the peak value at any point during the year — not the year-end figure alone. The life insurance cash surrender value typically grows as you pay premiums and interest accrues each year. Check your annual statement for the highest cash surrender value shown during the calendar year.

Step-by-Step: Calculating and Reporting the Value

Get your annual statement from the foreign insurer.
Find the cash surrender value — the amount payable on surrender. It may appear as "surrender value," "policy value," or "cash value."
Find the highest cash surrender value during the year, not the December 31 figure alone.
Convert that amount to USD using the US Treasury December 31 exchange rate for the reporting year.
Add this amount to the peak values of all other foreign financial accounts. Check whether you exceed the $10,000 threshold.
If the total exceeds $10,000, report each account on FinCEN Form 114 via the BSA E-Filing system.

For details on how to find the peak value across your foreign accounts, see our guide on how to calculate maximum account value for your FBAR.

What About Investment-Linked Policies?

Investment-linked policies (ILPs) hold fund units whose value goes up and down. The reportable value is the total account value — all fund units at their peak during the year. Some ILPs also carry a guaranteed base surrender value. Use whichever figure is higher.

Furthermore, some ILPs invest in funds that qualify as passive foreign investment companies (PFICs) under IRC Section 1297. PFIC reporting is separate from the FBAR. The IRS requires Form 8621 for each PFIC fund held within the policy under IRC Section 1291. Talk to a tax professional who knows PFIC rules if your ILP invests in non-US mutual funds.

FBAR Penalties for Unreported Foreign Life Insurance Policies

If you fail to report a foreign life insurance policy with cash surrender value on your FBAR, you face steep penalties under 31 USC 5321. The penalty amount depends on whether the failure to file was willful or non-willful.

For non-willful violations, the IRS can charge up to $16,117 per violation (the 2026 amount under 31 USC 5321(a)(5)(B)). The Supreme Court ruled in United States v. Bittner (2023) that non-willful penalties apply per report — not per account. One missed year counts as one violation, regardless of how many insurance policies and accounts you left off the form.

For willful violations, the penalty is the greater of $100,000 or 50% of the balance of the unreported account under 31 USC 5321(a)(5)(C). The IRS can assess willful penalties for each year of non-compliance. Criminal prosecution under 31 USC 5322 can add fines up to $250,000 and up to five years in prison.

Nevertheless, taxpayers who missed reporting a foreign life insurance policy often did not know the policy had a cash surrender value. This supports a non-willful position. But the IRS has pushed back in cases where the filer got annual statements showing a surrender value. For penalty details and remedies, see our article on FBAR penalties and what happens if you do not file.

Let FBAR Direct prepare your FBAR filing — you review and approve before we submit to FinCEN. Upload your insurance statements and we handle conversion, value calculation, and submission.

How Does FBAR Interact with Form 8938 for Foreign Life Insurance?

You may need to report foreign life insurance policies with cash surrender value on both the FBAR and Form 8938 (FATCA). These are two separate reporting requirements. Filing one does not satisfy the other.

On one hand, the FBAR goes to FinCEN under the Bank Secrecy Act (31 USC 5314). The $10,000 aggregate threshold applies to foreign financial accounts. Form 8938 goes to the IRS under 26 USC 6038D. It has higher thresholds that change based on filing status and residence.

	FBAR (FinCEN Form 114)	Form 8938 (FATCA)
Threshold (domestic, single)	$10,000 aggregate	$50,000 on last day or $75,000 at any time
Threshold (expat, single)	$10,000 aggregate	$200,000 on last day or $300,000 at any time
Covers life insurance?	Yes — cash surrender value	Yes — specified foreign financial assets
Agency	FinCEN	IRS
Penalty for failure	Up to $16,117 non-willful (31 USC 5321)	$10,000 per failure (26 USC 6038D(d))

Foreign life insurance policies are "specified foreign financial assets" under 26 USC 6038D. If the cash value of foreign life insurance, combined with other foreign financial assets, pushes you above the Form 8938 threshold, you must also file that form. For a full breakdown, see our guide on FBAR vs Form 8938 differences.

What Do Real-World Scenarios Look Like?

The following real-world scenarios show how US taxpayers with different types of foreign life insurance determine their FBAR obligations. Specifically, each scenario walks through how to identify the cash surrender value, convert it to USD, and decide whether to file.

Scenario 1: American Expat with a UK Endowment Policy

Sarah is a US citizen who lived in London for fifteen years. She returned to the United States in 2020 but still holds a with-profits endowment policy from Prudential UK. She bought it in 2005 as a mortgage savings plan. The policy matures in 2030.

Her 2025 statement shows a guaranteed surrender value of £48,000 and a bonus of £7,200. The total surrender value is £55,200. At the December 31, 2025 Treasury rate of 1 GBP = 1.26 USD, the amount converts to $69,552. Sarah also holds a Barclays savings account with a peak of £5,000 ($6,300).

Her aggregate maximum value is $75,852. Sarah must file the FBAR under 31 CFR 1010.350. She reports the Prudential UK policy at $69,552 and the Barclays account at $6,300. She uses the cash surrender value — not the projected maturity value of £72,000. For more on UK accounts, see our article on FBAR UK bank accounts.

Scenario 2: US Citizen with a German Kapitallebensversicherung

Michael is a US citizen who worked in Germany from 2010 to 2019. He bought a Kapitallebensversicherung (capital life insurance policy) from Allianz. This product combines life insurance and long-term savings. He returned to the US in 2020 but kept the policy active.

His 2025 Allianz statement shows a Rückkaufswert (surrender value) of EUR 62,000. At a Treasury rate of 1 EUR = 1.08 USD, the amount converts to $66,960. Michael has no other foreign accounts. His aggregate maximum is $66,960 — well above the $10,000 threshold. He must file the FBAR and list the Allianz policy as a foreign financial account.

He should also check whether the insurance company invests the policy in non-US funds. If so, those funds may trigger PFIC reporting. For guidance on German accounts, see our article on FBAR Germany bank accounts and Bausparen.

Scenario 3: Singapore ILP Held by a Green Card Holder

Priya is a US green card holder. She bought an investment-linked policy (ILP) from AIA Singapore before moving to the United States in 2018. She kept the policy active because it has a strong death benefit and has grown in value.

Her 2025 AIA statement shows a total account value of SGD 95,000 and a guaranteed surrender value of SGD 82,000. She uses the higher figure — SGD 95,000 — because it shows the most she could get on surrender. At a Treasury rate of 1 SGD = 0.74 USD, the amount converts to $70,300.

Priya must file the FBAR. The total account value — not the guaranteed minimum — is correct because it is higher. She should also check Form 8938. Her ILP value exceeds the $50,000 domestic threshold under 26 USC 6038D. For FBAR rules for green card holders, see our guide on FBAR for green card holders.

How Do You Report a Foreign Life Insurance Policy on the FBAR?

To report a foreign life insurance policy on the FBAR, enter the insurance company's details, the policy number, and the maximum cash surrender value in USD on FinCEN Form 114. File the FBAR online through the BSA E-Filing system. Here is what to enter for each field:

Financial institution name: Enter the name of the foreign insurer (e.g., "Prudential UK Limited," "Allianz Lebensversicherungs-AG," "AIA Singapore Private Limited").
Account number: Use the policy number as shown on your annual statement.
Account type: Select "Other" and enter a description such as "Whole life insurance — cash surrender value."
Country: The country where the insurer is based (not where you live).
Maximum value: The highest cash surrender value during the year, converted to USD at the December 31 Treasury rate.
Financial interest or signature authority: Select "financial interest" — you own the policy.

You do not need to list the fund holdings inside the policy one by one on the FBAR. The FBAR covers the account — the insurance policy — as a whole. Fund-level reporting may apply separately under PFIC rules.

What If You Did Not Know About the Reporting Requirement?

US persons who hold foreign life insurance policies may not have learned about FBAR reporting rules. The insurance company that sold you a policy abroad had no duty to explain US reporting requirements. A UK insurer who sent statements in pounds had no reason to flag US tax duties. This lack of awareness is common. It supports a non-willful position.

Fortunately, the IRS offers programs for late filers. The most popular is the Streamlined Filing Compliance Procedures. It lets non-willful late filers submit six years of missed FBARs and three years of amended tax returns. Under the offshore streamlined program, the penalty is 5% of the highest aggregate balance. Under the domestic streamlined program, there is no FBAR penalty.

In addition, if the insurance policy did not produce US-taxable income, the Delinquent FBAR Submission Procedures may let you file past-due FBARs with no penalty. You must attach a statement that explains why the FBAR was not filed on time. See the IRS guidance at Delinquent FBAR Submission Procedures.

For willful non-filers, the IRS Voluntary Disclosure Practice offers a path to reduced criminal exposure. Any filer who considers voluntary disclosure should talk to a qualified tax attorney first.

Frequently Asked Questions

Below are the most common questions about reporting a foreign life insurance policy on the FBAR, including which policy types qualify, how to find the cash surrender value, and what penalties apply if you miss the filing.

Do I need to report a foreign life insurance policy if I only hold term life coverage?

No. Term life insurance has no cash surrender value. Under 31 CFR 1010.350(c), only insurance policies that carry a cash value count as foreign financial accounts for FBAR purposes. A pure term policy pays only a death benefit. If you cancel it, you get nothing back. That type of policy is not reportable on FinCEN Form 114.

What value do I report for a foreign life insurance policy on the FBAR?

Report the highest cash surrender value during the year. Convert it to USD at the Treasury's December 31 exchange rate. Do not use the death benefit, total premiums paid, or projected maturity value. The cash surrender value is the amount the insurance company would pay you today if you cancelled. Check your annual statement for this figure.

Can a foreign life insurance policy trigger both the FBAR and Form 8938?

Yes. Foreign life insurance policies that carry cash surrender value must go on both the FBAR and Form 8938. The FBAR threshold is $10,000 in aggregate foreign accounts under 31 CFR 1010.306. The Form 8938 threshold starts at $50,000 for domestic filers under 26 USC 6038D. A policy worth $80,000 would require both filings for a domestic single filer.

What if the foreign insurer does not show a cash surrender value on the statement?

Contact the insurance company directly. Ask for the surrender value as of year-end and the highest value during the year. Many insurers provide this on request even if the annual statement does not list it. If the insurer will not give the figure, document your attempts and use the best available estimate of the account value.

Do I report a foreign life insurance policy I inherited from a foreign relative?

Yes, if the policy has a cash surrender value and you became the owner with the right to surrender it. Once you hold a financial interest in the insurance policy, you are subject to FBAR rules under 31 USC 5314. Your duty to file starts in the year you gained ownership rights.

What if my foreign life insurance policy invests in mutual funds?

If the policy invests in non-US mutual funds, those funds may qualify as PFICs under IRC Section 1297. PFIC reporting on Form 8621 is separate from FBAR reporting. You must handle both on their own. The PFIC rules impose US income tax on gains inside the policy — even if you got no payout. Talk to a tax professional with international tax expertise if your policy invests in foreign funds.

Let FBAR Direct Handle Your Life Insurance Policy Filing

Foreign life insurance policies add complexity to FBAR filing. Policy numbers differ from bank account numbers. Surrender values may appear in a local currency not shown on a standard statement. ILP account values need a fund-by-fund review. Getting the value of the policy wrong can lead to penalties or IRS inquiries.

Let FBAR Direct prepare your filing — you review and approve before we submit to FinCEN. Upload your insurance policy statements and we handle currency conversion, value calculation, account classification, and filing. See how it works.

Tax regulations change frequently. Always verify current requirements at IRS.gov or FinCEN.gov. For advice specific to your situation, consult a qualified tax professional. This article is current as of March 12, 2026.