That is a very interesting question. We researched it for you, and find that a foreign life insurance policy is reportable as a “foreign
financial account” only if the insurance policy is owned by a U.S. person, and
the policy has a cash surrender value. If there is no cash surrender value, then there is no reporting requirement. However, if there is a cash surrender value attached to the policy, then the dollar amount to report as a foreign financial asset would be just that (potential) cash surrender amount, and not the face value of the life insurance policy upon eventual payout.
Thank you for asking this, and we appreciate the opportunity to be of service.
