IRS Form 712, the Life Insurance Statement, is a document the insurance company fills out so the IRS can determine the taxable value of a life insurance policy on a specific date. You need it any time life insurance is reported on a federal estate tax return (Form 706) or a gift tax return (Form 709). For estates of decedents dying in 2026, the basic exclusion amount is $15,000,000, so Form 712 matters most when policy proceeds push an estate above that threshold or when someone transfers a policy during their lifetime.1Internal Revenue Service. What’s New – Estate and Gift Tax
Who Fills It Out and How to Request It
The executor or the person gifting a policy does not complete Form 712. The insurance company that issued the policy does, because only the insurer has the actuarial data and contract terms needed to value the policy on a specific date.2Internal Revenue Service. About Form 712, Life Insurance Statement
Contact the insurer’s policy services or tax compliance department. Have the full name of the decedent or donor, the policy number, and the date of death or the date the gift was completed. The insurer calculates the value as of that date. Turnaround varies by carrier and by policy complexity, so request the form early in the estate administration. Waiting is one of the more common reasons Form 706 gets filed late.
The Form 706 instructions require a completed Form 712 for every life insurance policy listed on Schedule D. If the insurer will not provide the form, the executor should attach alternative documentation such as an assignment, a rider, or a copy of the insurance proceeds check to verify the amount included in the estate.3Internal Revenue Service. Instructions for Form 706
Which Part of Form 712 Applies
Form 712 has three parts. Which one the insurer completes depends on the relationship between the decedent or donor, the policy, and the insured person.
Part I: Proceeds on the Decedent’s Life
Part I applies when the proceeds of a policy on the decedent’s life belong in the gross estate. That happens in two situations: the decedent held any “incidents of ownership” in the policy at death, or the proceeds are payable to the estate.4Office of the Law Revision Counsel. 26 USC 2042 – Proceeds of Life Insurance
Incidents of ownership is a broad concept. It covers the power to change the beneficiary, surrender or cancel the policy, assign it, pledge it for a loan, or borrow against its cash surrender value. Outright ownership is not required; holding any one of these powers is enough for the IRS to include the proceeds in the estate.5eCFR. 26 CFR 20.2042-1 – Proceeds of Life Insurance
Part I reports the gross face amount, accumulated dividends payable at death, and any outstanding policy loans. The net amount — face plus dividends, minus loans — is the figure that goes into the gross estate, regardless of who actually received the death benefit.
Part II: Gifts and Policies on Someone Else’s Life
Part II covers two situations: a policy transferred as a gift during the donor’s lifetime, and a policy the decedent owned on someone else’s life at the time of death. In both cases the policy has not matured, so the value is not the face amount but the fair market value of the contract itself.
For a policy that has been in force and still requires premium payments, fair market value equals the Interpolated Terminal Reserve plus the unearned portion of the last premium paid. The Interpolated Terminal Reserve (ITR) is the policy’s reserve adjusted to the exact valuation date, under the Treasury regulations governing life insurance valuation.6eCFR. 26 CFR 25.2512-6 – Valuation of Certain Life Insurance and Annuity Contracts If the policy was transferred immediately after purchase, the value is simply the gross premium paid.
Part III: Actuarial and Special Valuation
Part III handles complex arrangements: policies bundled with annuities, reversionary interests, or other contractual features that do not fit the standard ITR or net-proceeds methods. The insurer supplies actuarial calculations using mortality tables and a discount rate equal to 120% of the federal midterm rate for the month of the valuation date.7Office of the Law Revision Counsel. 26 USC 7520 – Valuation Tables
Where the Number Goes on Form 706
Where the Form 712 figure lands on the estate tax return depends on whether the decedent was the insured or merely the owner of a policy on another person’s life. Getting this wrong means reporting the wrong value using the wrong method.
Schedule D: Insurance on the Decedent’s Life
Schedule D covers every life insurance policy on the decedent’s life, whether or not the proceeds are included in the gross estate. The executor lists each policy and attaches a Form 712 for it.8Internal Revenue Service. Schedule D (Form 706) – Insurance on the Decedent’s Life
The value entered is the net proceeds figure from Part I: face amount plus dividends, minus outstanding loans. That figure is included even when the proceeds went to a named beneficiary, as long as the decedent held any incident of ownership at death or the proceeds are payable to the estate.
Schedule F: Policies on Another Person’s Life
When the decedent owned a policy on someone else’s life, the policy is an estate asset that has not paid out. Its value goes on Schedule F (Other Miscellaneous Property) using the Part II ITR-based figure.9Internal Revenue Service. About Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return
If a husband owned a $1 million policy on his wife’s life and he died first, the estate does not report $1 million. It reports the ITR plus unearned premium, which might be $45,000 for a policy that had been in force for several years. Form 712 must be attached to support the value.
Reporting a Gifted Policy on Form 709
Transferring ownership of a life insurance policy during your lifetime is a taxable gift. The gift’s value is the fair market value of the policy on the transfer date, which for most policies in force is the ITR plus the proportionate part of the last premium covering the period after the gift date. The insurer supplies these figures in Part II.6eCFR. 26 CFR 25.2512-6 – Valuation of Certain Life Insurance and Annuity Contracts
The value is reported on Schedule A of Form 709. For 2026, the annual gift tax exclusion is $19,000 per recipient, which can offset some or all of the ITR-based gift value.10Internal Revenue Service. Frequently Asked Questions on Gift Taxes
Using the Part II figure matters because it establishes fair market value under Treasury regulations. Without the form attached, the IRS could argue the value should be the higher cash surrender value or challenge the reported amount entirely. The completed Form 712 must accompany the filed Form 709.11Internal Revenue Service. IRS Form 712 – Life Insurance Statement
The Three-Year Lookback for Transferred Policies
Many estate plans built around life insurance come undone here. If you transfer a policy and die within three years of the transfer, the full death benefit is pulled back into your gross estate as if you never transferred it. The statute specifically carves life insurance transfers out of the general exception that lets most small gifts escape this lookback.12Office of the Law Revision Counsel. 26 USC 2035 – Adjustments for Certain Gifts Made Within 3 Years of Decedent’s Death
The rule applies whenever the policy would have been included in the gross estate under the incidents-of-ownership rules had the decedent kept it. Transferring a $2 million policy to an irrevocable trust and dying two years later means the full $2 million is included, and the executor needs a Part I Form 712 rather than the Part II form that would have applied to a completed gift. For transfers that survive the three-year window, the policy is excluded from the estate entirely, which is the whole point of transferring it.
Deadlines That Drive When to Request the Form
Form 712 itself has no filing deadline, but the returns it supports do. Missing those deadlines triggers penalties and interest on top of the tax owed.
Form 706 is due nine months after the date of death. A decedent who died on March 15, 2026 has a return due December 15, 2026.13eCFR. 26 CFR 20.6075-1 – Returns; Time for Filing Estate Tax Return Executors can get an automatic six-month extension by filing Form 4768 before the original due date, but the extension only covers the filing. Estimated tax is still due at the nine-month mark.14eCFR. 26 CFR 20.6081-1 – Extension of Time for Filing the Return
Form 709 for gift tax is due by April 15 of the year after the gift. A policy transferred in 2025 puts Form 709 on an April 15, 2026 deadline. An automatic six-month extension is available through Form 8892, and any extension granted for your income tax return automatically extends the gift tax return deadline as well.15Internal Revenue Service. Instructions for Form 709 (2025)
Because insurance companies can take weeks to produce Form 712, request it as soon as possible after a death or policy transfer. Waiting until the return is nearly due and then discovering the insurer needs more time is a common and avoidable problem.
Undervaluation Penalties
Undervaluing a policy on an estate or gift tax return has real financial consequences beyond the additional tax. The IRS imposes a 20% accuracy-related penalty when the reported value is 65% or less of the correct value and the resulting underpayment exceeds $5,000.16Office of the Law Revision Counsel. 26 USC 6662 – Imposition of Accuracy-Related Penalty on Underpayments
If the reported value is 40% or less of the correct amount, the penalty doubles to 40% of the underpayment as a gross valuation misstatement. A completed Form 712 is the primary defense. When the insurer calculates and certifies the value using IRS-approved methods, the executor or donor has documented evidence that the figure came from professional actuarial data rather than guesswork, leaving an examiner little room to argue the valuation was unreasonable.