Generally speaking, the proceeds are only taxable if they are more than you paid in premiums. Besides the treaty issue, an owner of a foreign life insurance policy may have trouble proving how much they paid in, if the insurance company does not keep track like they do in the US. If you were audited, you would need some way to establish what you paid in premiums that was more than a guess.
Then, that taxable income might be further modified by a tax treaty.
