Do I have to report a foreign life insurance policy in Canada?
It depends on what the policy actually is, not on what it is called. A contract treated as tax-exempt life insurance in the country that issued it can, here, be a reportable foreign asset or an investment whose growth is taxable annually. The determination rests on the policy's terms: how the value accumulates, what the holder can take out, and how much genuine risk the insurer carries. It does not rest on the insurer's brochure or on the word insurance in the title. Get the full policy wording rather than the annual statement, and have the classification settled in writing, because it drives both the reporting and the tax.
Is the growth inside my overseas policy taxable in Canada?
It may be, and this is the difference that costs the most. Many countries let value accumulate inside a policy without annual tax, on the basis that it is insurance. If the same contract is not treated as exempt insurance here, the growth can be taxable as it arises, which means tax falling due each year on an increase you have not received and may not be able to reach. That mismatch can run for years before anybody notices, because the annual statement from abroad reports nothing taxable. The policy has to be tested against the rules of the country you live in, not the one that sold it.
I am moving to Canada, what should I do about my policy?
Test it before you arrive, while you still have every option. Once you are resident, the classification question is answered by the contract as it stands, and the cures are limited and costly: replacing cover later means fresh underwriting at your current age and health, and surrendering a policy can have consequences in the country that issued it. The work before a move is short. Read the terms, determine how they will be treated here, and decide whether to keep, restructure or replace. Doing it in that order is the difference between a choice and a problem you inherit on the day you land.
Does an investment-linked policy count as life insurance here?
Not automatically. A wrapper that holds a portfolio and pays out its value on death sits at the edge of what insurance means, and several jurisdictions sell exactly that product as a tax-efficient policy. The question is decided on the terms: how the benefit is determined, how much genuine mortality risk the insurer carries, and what the holder can do with the value while alive. A contract that is essentially a managed portfolio with a death wrapper is likely to be treated as what it is. Read the policy schedule and the fund provisions together before assuming the label holds.
Will my policy proceeds be taxed in my estate when I die?
That depends on which country is asking. Whether policy proceeds are included in a taxable estate differs by jurisdiction, and so does the weight given to who owns the policy, who pays the premiums and who is named as beneficiary. A policy can sit outside the estate in one country and inside it in another, which matters particularly where the person insured, the policy and the beneficiary are in three different places. The ownership arrangements are usually the lever, and they are far easier to change while everyone is well. Answer the question for each country involved, not only for the one that issued the policy.
Can I just cancel my old policy and buy a new one?
You can, and it is often the wrong first move. Replacement is priced on your age and health now rather than when the original policy was written, so a contract taken out years ago may not be reproducible on terms you would accept. Surrender can also have consequences in the issuing country. The sensible order is to establish how the existing policy will be treated where you now live, then see whether the difficulty is the contract itself or the way it is held and reported. Cancelling before that analysis removes the option you may turn out to need.
What happens if I have not filed for several years?
Missed years are handled as one package, not one at a time, because the route chosen for the first year determines the relief available for the rest. Each country has a disclosure or relief programme with its own conditions, and entering the right one — before the authority contacts you — is usually what keeps penalties down. Filing quietly outside a programme forfeits that protection. See catching up on missed returns.
How do families with assets in two countries handle inheritance?
With paperwork built for both systems rather than one. In practice that means wills that work where each asset actually sits, an executor with authority a foreign bank or land registry will accept, clearance certificates before the estate distributes so the executor is not left personally exposed, and an estate tax exposure calculation done while the person is alive and can still act on it. Doing it afterwards costs more and forecloses most of the options. See cross-border wills and trusts.
