Funeral Insurance Exclusions: What a Policy Won't Pay For

Funeral insurance exclusions are the situations where the insurer pays less than the full death benefit, or nothing. Washington's insurance commissioner says a life insurance policy can exclude death from war, military service, certain airplane accidents and suicide within two years of the policy date. A funeral policy is a small life insurance policy, so the same rules usually apply. When the suicide clause or the contestable period applies, Texas says the company must return the premiums instead of paying the benefit. Your policy states what happens under each exclusion.

What counts as an exclusion?

Three different rules limit a payout, and families often mix them up.

Only the first is a true exclusion, but all three can leave a family with less than they expected. Our guide to the funeral insurance waiting period covers the second in detail.

Which causes of death do funeral policies usually exclude?

Washington's insurance commissioner tells claimants to read the policy because it can exclude death caused by:

• war, declared or undeclared
• military service or service in civilian forces
• suicide within two years of the policy issue date (this does not apply to group life policies in Washington)
• an airplane accident, under the conditions in the policy

Other policies may add their own wording. Check the section headed "Exclusions" or "Limitations", and ask the insurer to explain any term you don't understand. Terms and state rules vary, so this list is a starting point and not a guarantee of what your policy says.

How does the suicide clause work?

Most life policies, including funeral policies, have a suicide clause for the first years of coverage. Texas says that during the first two years companies usually won't pay the death benefit if the cause of death is suicide, and must return the premiums to the beneficiary. Once a policy has been in force for more than two years, Texas says the company must pay the death benefit regardless of the cause of death.

The period is not the same everywhere. Missouri's law allows a one-year exclusion, and a new one-year exclusion can apply to any later increase in the benefit, but only for the increased amount. Mutual of Omaha's published policy notice gives two years as its general period and says exclusions vary by state. Your policy states the period that applies to you.

If you are thinking about suicide, you can call or text 988 at any time to reach the Suicide & Crisis Lifeline. If you are arranging a funeral after a suicide, our guide to funeral planning after a suicide death has practical and emotional guidance.

What is the contestable period?

For the first two years, the insurer can review what you told it. Washington says it will investigate whether the policyholder left out important information, such as a recent cancer diagnosis, and will likely deny the claim regardless of intent. Texas says the denial can happen even when the wrong information had nothing to do with the cause of death, or was given by mistake. If the company denies payment, Texas says it must return the premiums.

A policy that lapses and is later reinstated starts a new contestable period, according to Texas. This matters for anyone who missed payments. Our guide to lapsed funeral insurance explains reinstatement.

Are waiting periods an exclusion?

Not strictly, but the effect can look the same to a family. NerdWallet says guaranteed issue policies, which ask no health questions, usually carry a waiting period of one to three years. If you die of natural causes in that time, beneficiaries get a refund or a percentage of the premiums paid, not the death benefit. Death from an accident during the waiting period is usually paid in full, but the definition of "accident" is in your policy.

Why else might a funeral insurance claim not pay?

• The policy lapsed. Texas says most policies have a 31-day grace period after the premium due date. If you miss that window, the policy ends and the beneficiary gets nothing.
• The application was wrong or incomplete. This is the contestable-period risk above.
• The cause of death falls under an exclusion. Check the exclusions in the policy against the death certificate.

Our guide to funeral insurance claim denials lists the steps to appeal.

How can you check a policy's exclusions?

1. Find the full policy contract, not just the summary or welcome letter.
2. Read the exclusions, limitations, suicide and incontestability sections.
3. Note the waiting period, if any, and what is refunded.
4. Use the free look period. Washington gives new life insurance policies a 10-day free look, and Texas says policies have a free look of at least 10 to 20 days. You can cancel for a refund in that time.
5. Ask the insurer in writing to explain anything unclear.

What to do next

1. Locate your policy and read the exclusions section.
2. Tell your beneficiary where the policy is, and check their details are current. See the beneficiary update checklist.
3. If you are comparing policies, read our overview of how funeral insurance works.
4. If a claim has been denied, follow our guide to funeral insurance claim denials and ask for the decision in writing.