diff --git a/src/nvim/edit.c b/src/nvim/edit.c
index 18d5ea533d..ca5b6f02ce 100644
--- a/src/nvim/edit.c
+++ b/src/nvim/edit.c
@@ -502,7 +502,7 @@ static int insert_check(VimState *state)
     Insstart_orig = Insstart;
   }
 
-  if (stop_insert_mode) {
+  if (stop_insert_mode && !pum_visible()) {
     // ":stopinsert" used or 'insertmode' reset
     s->count = 0;
     return 0;  // exit insert mode
diff --git a/src/nvim/option.c b/src/nvim/option.c
index 89889aa997..e2a5d38bee 100644
--- a/src/nvim/option.c
+++ b/src/nvim/option.c
@@ -3658,14 +3658,16 @@ set_bool_option (
   /* when 'insertmode' is set from an autocommand need to do work here */
   else if ((int *)varp == &p_im) {
     if (p_im) {
-      if ((State & INSERT) == 0)
-        need_start_insertmode = TRUE;
-      stop_insert_mode = FALSE;
-    } else {
-      need_start_insertmode = FALSE;
-      stop_insert_mode = TRUE;
-      if (restart_edit != 0 && mode_displayed)
-        clear_cmdline = TRUE;           /* remove "(insert)" */
+      if ((State & INSERT) == 0) {
+        need_start_insertmode = true;
+      }
+      stop_insert_mode = false;
+    } else if (old_value) {  // only reset if it was set previously
+      need_start_insertmode = false;
+      stop_insert_mode = true;
+      if (restart_edit != 0 && mode_displayed) {
+        clear_cmdline = true;  // remove "(insert)"
+      }
       restart_edit = 0;
     }
   }
diff --git a/src/nvim/testdir/test_popup.vim b/src/nvim/testdir/test_popup.vim
index 78fc81e3d2..63be8bf609 100644
--- a/src/nvim/testdir/test_popup.vim
+++ b/src/nvim/testdir/test_popup.vim
@@ -28,3 +28,38 @@ func Test_noinsert_complete()
   set completeopt-=noinsert
   iunmap <F5>
 endfunc
+
+let g:months = ['January', 'February', 'March', 'April', 'May', 'June', 'July', 'August', 'September', 'October', 'November', 'December']
+let g:setting = ''
+
+func ListMonths()
+  if g:setting != ''
+    exe ":set" g:setting
+  endif
+  call complete(col('.'), g:months)
+  return ''
+endfunc
+
+func! Test_popup_completion_insertmode()
+  inoremap <F5> <C-R>=ListMonths()<CR>
+  new
+  call feedkeys("a\<F5>\<down>\<enter>\<esc>", 'tx')
+  call assert_equal('February', getline(1))
+  %d
+  let g:setting = 'noinsertmode'
+  call feedkeys("a\<F5>\<down>\<enter>\<esc>", 'tx')
+  call assert_equal('February', getline(1))
+  call assert_false(pumvisible())
+  %d
+  let g:setting = ''
+  call feedkeys("a\<F5>". repeat("\<c-n>",12)."\<enter>\<esc>", 'tx')
+  call assert_equal('', getline(1))
+  %d
+  call feedkeys("a\<F5>\<c-p>\<enter>\<esc>", 'tx')
+  call assert_equal('', getline(1))
+  %d
+  call feedkeys("a\<F5>\<c-p>\<c-p>\<enter>\<esc>", 'tx')
+  call assert_equal('December', getline(1))
+  bwipe!
+  iunmap <F5>
+endfunc
diff --git a/src/nvim/version.c b/src/nvim/version.c
index dc5e313579..bc446fcedb 100644
--- a/src/nvim/version.c
+++ b/src/nvim/version.c
@@ -480,7 +480,7 @@ static int included_patches[] = {
   // 1964,
   // 1963 NA
   // 1962,
-  // 1961,
+  1961,
   1960,
   // 1959 NA
   // 1958 NA