Lapsed Funeral Insurance: Can You Reinstate the Policy?

Funeral insurance lapses when a premium is not paid by the end of the grace period. The Texas Department of Insurance says most policies give 31 days, and that once a policy lapses your beneficiaries will not get the death benefit. A lapsed policy can often be reinstated by paying the overdue premiums with interest, sometimes after health questions. If the insured has already died, check whether the insurer followed its own grace period and notice rules.

What does it mean when funeral insurance lapses?

A lapse means the policy has ended because premiums were not paid, so the coverage stops. The Texas Department of Insurance describes it simply: if you don't pay the premium within the grace period, your policy will lapse, you no longer have coverage and your beneficiaries won't get the death benefit when you die.

A lapse is different from a cancellation you request, and different from a waiting period, which limits what is paid. Our guide to the funeral insurance waiting period covers the second one.

How does the grace period work?

The grace period is a window after the due date when you can still pay and keep your cover. Texas says most policies have a 31-day grace period, and you can pay the overdue premium with no interest charged and still have coverage. If the insured dies during the grace period, the beneficiary receives the death benefit minus the unpaid premium.

The length varies by state and policy. California, for example, requires a grace period of not less than 60 days from the premium due date. Look at your own policy for the exact period.

What notice must the insurer send before a policy ends?

This also depends on the state. In California, an insurer must mail a notice of pending lapse at least 30 days before the policy ends for unpaid premiums. The notice goes to the policy owner and to any person the owner designated to receive it. If you are in another state, ask your insurer or state insurance department what notice is required.

How do you reinstate a lapsed funeral insurance policy?

Reinstatement means restoring a lapsed policy. New York's insurance regulator defines it as paying all the unpaid premiums and policy loans, with interest, and giving satisfactory evidence of insurability. The Texas Department of Insurance says you can typically reinstate within five years, and that the company may require you to answer health questions or take a medical exam.

1. Call the insurer as soon as you notice the lapse. Ask for the exact amount to reinstate, the deadline and what the insurer needs.
2. Ask for the reinstatement application in writing. Complete it honestly. Wrong answers can cause a claim to be denied later.
3. Be ready for health questions. A policy that needed no exam originally may still ask some for reinstatement, so find out first.
4. Pay the overdue premiums with interest. Get a receipt, and make sure the insurer confirms in writing that the policy is back in force.
5. Set up automatic payments so it does not happen again.

Texas also says a new contestable period begins if you reinstate. That means the insurer can review your application, including the reinstatement answers, if you die in the first two years after that. See what to do if a funeral insurance claim is denied.

What if the insurer will not reinstate the policy?

You may need a new policy. Check the trade-offs first. Texas warns that replacing a policy isn't always a good idea, and lists concerns including restarted contestable periods and new medical exams. A new funeral policy can also come with a new waiting period or a higher premium because you are older.

Before you decide:

• Ask whether the old policy has any value left, such as cash value. New York's regulator says permanent policies have a cash value component, and some have an automatic premium loan feature that pays an unpaid premium at the end of the grace period.
• Get quotes from other insurers. See the best age to buy funeral insurance and funeral insurance with no medical exam.
• Look at other ways to set money aside, such as savings or a prepaid plan. See prepaid plan vs funeral insurance.

What if the insured died after the policy lapsed?

First, confirm the facts. Ask the insurer for the premium payment history, the dates of any lapse notices and a copy of the policy. Then check them against the policy's grace period and your state's rules.

• Was the death inside the grace period? If so, Texas says the benefit is paid minus the unpaid premium.
• Did the insurer send the notices your state requires, to the owner and any designated person?
• Do your bank records show a payment that was made on time but not credited?

If the insurer will not pay and you think it broke the rules, ask for its decision in writing. You can then complain to your state insurance department. The NAIC has a directory of state insurance departments for finding the right one. For a large benefit, a lawyer who handles life insurance disputes can explain your options.

Do not assume the family will be paid until the insurer confirms it. Funeral homes usually want payment up front, and the Funeral Consumers Alliance advises against taking out a loan unless it is a last resort. Our guides on paying for a funeral up front and government help with funeral costs can help with the gap.

How can you stop a policy lapsing?

• Pay by automatic bank draft, and check that the bank details are current when you change accounts.
• Keep the insurer's address, phone number and email up to date, so reminders reach you.
• Name a person to get lapse notices if the insurer allows it. California requires insurers to give notice to a person the owner designates. Ask if your insurer offers the same.
• Tell your family where the policy is and who to call, so a missed payment is noticed. Our beneficiary update checklist covers keeping the paperwork current.
• Check once a year that the policy is in force. See our complete funeral insurance guide.

What to do next

1. Find the policy and the date of the last premium paid.
2. Call the insurer and ask whether the policy is lapsed, the grace period and the reinstatement terms.
3. If you want it back, apply to reinstate quickly and ask for written confirmation.
4. If the insured has died, request the premium history and lapse notices before accepting a denial.