However, this transaction will be subject to the rules for Gift Tax. Even though it might not be intended as an actual gift (such as, the reason it is happening this way is that the person in Mexico is the real intended beneficiary but it was not possible to list them on the policy), the gift tax applies.
https://www.irs.gov/forms-pubs/about-form-709
Gift tax is not actually owed unless the person's lifetime total of gifts given is more than $13 million, but if your wife gives gifts of more than $17,000 per person per year, she is required to file form 709 to report the gift, so the IRS can track it against her lifetime exemption limit. Turbotax does not support form 709 and it can't be e-filed, she will have to fill it out by hand and mail it in (or see a professional). It's separate from your regular tax return, not attached. The deadline for a gift made in 2023 is the same as the tax return deadline, April 15, 2024.
