Rejected means claims were not processed due to technical errors in submission, i.e. incomplete documents, delayed reporting etc.
Repudiated means that claims were received and processed and determined that insurance company does not have the liability. i.e. not covered in policy etc.
You may find this site helpful.
You are correct that life insurance proceeds, accounts held jointly, or accounts with a named beneficiary pass outside of probate. Those kinds of things are not an asset of the estate.
Certainly final expenses are a reasonable expense of the estate and are typically paid prior to any creditors of heirs. So the ...