Funeral Insurance Claim Denied: What to Do and How to Appeal

If a funeral insurance claim is denied, ask the insurer to explain the reason in writing, and ask for copies of the policy, the application and the premium history. Common reasons are a death in the first two years, when the insurer can review the application, and a policy that lapsed for unpaid premiums. A denial is not always final. You can ask the insurer to reconsider, and you can complain to your state insurance department.

Why do insurers deny funeral insurance claims?

The reason should be in the denial letter. These are the ones that come up most often:

• A death in the first two years, and a problem with the application. The Texas Department of Insurance says life insurance policies have a two-year contestable period. If you gave wrong information on the application, the company may deny payment "even if the wrong information was unrelated to the cause of death". Washington's insurance regulator says that in this window the company investigates whether important information was left out and will likely deny the claim if it was.
• Suicide in the first two years. Texas says companies usually won't pay the death benefit for suicide in the first two years, but must return the premiums to the beneficiary. Washington lists it as a reason for denial too, but says that does not apply to group policies.
• A lapsed policy. If premiums stopped and the grace period ended, the policy may no longer be in force. See below.
• An exclusion. Washington's regulator lists war, military or civilian service, and certain airplane accidents as reasons for denial, depending on the policy. Our guide to funeral insurance exclusions goes through them.
• A limit that is not a denial. Some policies pay only a refund of premiums for a death in a waiting period. See how the funeral insurance waiting period works.

If the reason touches a suicide, take care of yourself as well as the paperwork. You can call or text 988 at any time to reach the Suicide and Crisis Lifeline.

What should you do first?

1. Read the letter and note the date. Write down the reason given, the policy wording it quotes and any deadline to respond. If the reason is vague, write back and ask the insurer to name the exact policy provision it relied on.
2. Ask for your documents. Request a copy of the policy, the signed application and the premium payment history. Also ask for the medical records or other evidence the insurer used. Keep a copy of everything and note each phone call.
3. Check the dates. When was the policy issued, and when did the death happen? Is that inside two years? Was the last premium paid within the grace period?
4. Compare the facts with the reason. If the insurer says the application was wrong, set the application beside the medical records. If it says the policy lapsed, set the premium history beside your bank statements.
5. Ask for reconsideration in writing. Answer the insurer's reason point by point and attach your evidence. Follow any appeal steps in the denial letter.
6. Complain to your state insurance department if it will not budge. The NAIC has a directory of state insurance departments where you pick the state and file a complaint. Washington's consumer advocacy line is 800-562-6900.
7. Consider a lawyer for a large benefit or a fraud allegation. An attorney who handles life insurance disputes can tell you what your state's law and the policy allow, including any time limit to sue.

What if the insurer says the policy lapsed?

Start with the dates. Texas says most policies have a 31-day grace period after a missed premium, during which you can pay with no interest and still have coverage. If the person dies in that window, the beneficiary gets the death benefit minus the unpaid premium.

State laws differ. California requires a grace period of at least 60 days from the premium due date. It also says an insurer must mail notice of a pending lapse at least 30 days before ending the policy for unpaid premiums, to the owner and to any person the owner designated. If your claim involves a lapse, ask the insurer to show the notices it sent and when. Our guide to lapsed funeral insurance explains the grace period and reinstatement in more detail.

What if the insurer says the application was wrong?

First check whether the policy was in its contestable period. Texas says that after two years the company must pay regardless of the cause of death, so the issue date and the date of death matter. If the death fell inside the two years, compare each disputed answer with the medical records and check whether the insurer has quoted the question and answer accurately.

If the agent filled in the form, tell the insurer and your regulator. Whether that changes the outcome depends on your state's law and the policy wording.

Which documents help your case?

How do you pay the funeral home while the claim is disputed?

The funeral bill does not wait for the insurer. The Funeral Consumers Alliance says most funeral homes expect payment in full up front, and that no charity will bail you out if you go into debt for a funeral. It advises against taking out a loan except as a last resort.

An assignment of benefits, where the insurer pays the funeral home directly, depends on the insurer agreeing and may not be available once a claim has been denied. Read assignment of benefits for funerals first. For other ways to cover the cost, see paying for a funeral up front and government help with funeral costs. The Funeral Consumers Alliance also lists veterans' benefits, the Social Security death payment for some surviving spouses, victim compensation programs, social services for people with no resources, and community fundraising.

What happens if the denial is reversed?

The insurer pays the benefit. How fast depends on state law. Texas says companies must pay within two months after getting proof of death, and Washington says the insurer must pay no less than 8% interest from the date of death, with another 3% on claims not settled within 90 days of proof of death. Our guide to funeral insurance payout time covers the usual timeline, and how to claim life insurance covers the general process.

What to do next

1. Get the denial in writing and note any deadline.
2. Collect the policy, application, premium history and certified death certificate.
3. Write to the insurer asking it to reconsider, with your evidence attached.
4. If it refuses, file a complaint with your state insurance department, and talk to a lawyer if the amount is large.
5. Line up a way to pay the funeral home, so the dispute does not add pressure.