Life Insurance Interpleader Lawyer
Individuals buy life insurance for a variety of reasons. The major one is because they want to protect their loved ones financially. Many people pay into their life insurance policy for several years. When doing so they have the peace of mind knowing that their loved ones will be taken care of in the event of the death of the insured. Sometimes this is a false sense of security. There can be disputes that arise over the payout of the life insurance claim.
What is an Interpleader?
When an insured passes away the beneficiaries of the insurance policy make a claim with the applicable insurance company. Once the insurance company has done their review of the claim they then make the payment to the beneficiaries. There are times when the insurance company may receive more than one claim on the insurance policy. The insurance company does not know to whom the claim is to be paid. What they will do is place the value of the policy in the hands of the courts. Then the courts will decide who is to receive the money. The insurance company no longer has any involvement in the payout of the claim. This is the most effective way for the insurance company to deal with this problem. Otherwise they would be spending a great deal of money on trying to settle the claim themselves.
The Life Insurance Interpleader Process
As soon as the insurance company becomes aware of a dispute over the claim, they will start interpleader actions in the court. Legal actions cost money. The insurance company will ask the courts to compensate them for their legal costs out of the proceeds of the life insurance policy in question. Those involved in the dispute now have to make their claims of being the true recipient of the life insurance proceeds to the courts.
Why Would There Be More Than One Claim?
Those who buy life insurance believe the process of leaving the money to their loved ones is a simple process. It is just a matter of naming them as the beneficiary on the policy. This is the proper procedure. The problem arises when someone contests who the beneficiary is.
The amount of money paid out on life insurance claims is substantial. The insurance companies have to be absolutely sure that they are paying the right beneficiary. If there is any doubt on the insurance company's part they would prefer to let the courts determine who is the right payee.
Common Interpleader Cases
Court Orders for Life Insurance
Sometimes individuals are compelled to buy life insurance. This often happens in divorce cases. The courts order a spouse to buy life insurance to protect their children. This is common when the spouse is responsible for paying support. The life insurance protects the children financially if the paying spouse dies. In some cases the insured may have had to cover children from different marriages. This means that the life insurance policy was meant for all the children. The children each put claims in against the life insurance policy. Now the insurance company has received more than one claim. They now have to go into the interpleader process.
The cause of death can sometimes be an issue. The insured may have been murdered. There could be suspicion that the beneficiary had a part in this. In this case the insurance company will opt for an interpleader.
Forgetting to Change the Beneficiary
Married couples will often take out an insurance policy to protect their spouse financially. These policies can be in place for many years. There are times where the couple end up divorcing and then getting remarried. On occasion an insured may forget to change their beneficiary who was their first spouse. Then the insured dies. There is now a problem between the first spouse and the second. Although in some states there are laws in place for this. Where upon divorce there is an automatic revocation.
Not Naming a Beneficiary
Some real battles can surface in the family of the deceased when the insured did not name a beneficiary. The insurance company will have to refer this to the life insurance interpleader.
Individuals who are involved in a life insurance interpleader case should seek out legal advice as this is matter that will be before the courts.
Life Insurance Lawyer and Interpleader
A life insurance attorney can step in and get the interpleader resolved quickly.
Whenever someone passes away and there are multiple, conflicting claims on a life insurance policy, the insurance company will usually file a life insurance interpleader. This is a lawsuit filed in the appropriate court that essentially asks the court to determine who is the rightful beneficiary of the policy. The company will deposit the full amount of the policy into a court-controlled bank account and withdraw from the suit until the claims are resolved. The claimants will then have to allow the court to determine who will receive the proceeds of the policy. In many cases, this is done through arbitration, but it can go to a formal court hearing.
How Is a Life Insurance Interpleader Resolved?
Any time there are two or more individuals filing a claim for the proceeds of an insurance policy, the company will most likely file an interpleader. It is often the best way to resolve the dispute and ensures that there is no bias in the determination between the claimants. If you’ve filed for the proceeds of a life insurance policy and been told that another individual or individuals have filed for the proceeds, expect them to file an interpleader.
When the insurance provider files this, it will also request that the court deducts its legal fees from the life insurance proceeds, which will leave less money for the successful claimant at the end of the law suit or arbitration. Having an attorney on your side as soon as you learn there is a conflicting claim or even before the interpleader is filed can save you time, money and distress and give you stronger footing for contesting the other claim. In some situations, the mere fact that you’ve retained an insurance attorney is enough to prompt a rival claimant to drop the claim. If they don’t, your attorney will represent you before the insurance company and will negotiate for you if the case goes to arbitration.
Under What Circumstances Will an Insurer File a Life Insurance Interpleader?
Television programs sometimes dramatize disputes between family members over who will be the beneficiary of a life insurance policy when someone passes away. In the real world, there are many reasons why an insurance provider might file an interpleader, including:
- In the event of suspected foul play in the death of the insured, particularly if a beneficiary is a suspect in the investigation
- If the policy holder was killed by the named beneficiary, who then killed themselves
- When it appears that a recent change in the life insurance policy may have been the result of fraud, duress or undue influence
- When both a current and ex-spouse claim to be beneficiaries
- The individual was divorced but didn’t change the beneficiary but lives in a state where life insurance policies are automatically revoked when the divorce is formalized
- An ex-wife or ex-husband is entitled to the proceeds of a life insurance policy as part of the final divorce settlement
- When children from more than one marriage have a claim to the funds due to an obligation to maintain life insurance for child support benefits
- The policy doesn’t indicate who the beneficiary was
- The insured individual talked about changing the beneficiary and had begun the paperwork, but had not yet submitted it to the insurance company
- The insured individual didn’t follow the appropriate guidelines set forth by the insurance company for changing the beneficiary
What to Do When a Life Insurance Claim is Disputed
If you fear there will be a dispute over who the beneficiary is of a life insurance policy or you suspect some kind of fraud that could lead to a life insurance interpleader, be sure you have copies of the relevant policy naming you as the beneficiary, then contact us for a free consultation. We will be happy to review your case and assist you in any way we can. We work on a contingency basis, which means you won’t pay a dime unless we win your case and you get the life insurance proceeds, when we will collect a small percentage to cover the legal fees.