What is a Life Insurance Interpleader?
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.