Sometimes a life insurance company does not deny a claim outright. Instead, it files a lawsuit.
When this happens, beneficiaries are often shocked. They were expecting a check, not a summons.
In most of these cases, the lawsuit is not an accusation of wrongdoing. It is something called an interpleader action.
An interpleader is filed when more than one person claims the same life insurance benefit and the insurance company does not want to risk paying the wrong person. When you are facing a beneficiary dispute, we are here for you. Look at our beneficiary dispute fact sheet for more information.
What a Life Insurance Interpleader Really Is
An interpleader action is a legal procedure that allows the insurance company to step out of the middle of a dispute.
Instead of deciding who should get the money, the insurer deposits the policy proceeds with the court and asks a judge to decide who the rightful beneficiary is.
Once the money is deposited, the insurance company usually exits the case.
From that point on, the fight is between the competing claimants, who are often:
A current spouse and an ex spouse
Children from a prior marriage and a new spouse
A named beneficiary and someone claiming fraud or undue influence
Two people both claiming to be the proper beneficiary
Being named in an interpleader does not mean you did anything wrong. It means the insurance company does not want to take responsibility for choosing.
Why This Feels So Shocking to Families
Most people do not know interpleader lawsuits exist.
They submit a claim and expect a payment. Instead, they get served with legal papers.
The insurance company’s lawyers are already involved. The court is already involved. And suddenly, you are in litigation at one of the worst moments of your life.
We see this constantly. When someone calls us and says, “The insurance company is suing me,” we usually know exactly what happened before reading the complaint.
A Very Common Scenario: Divorce and Remarriage
Here is one of the most common fact patterns.
John divorced his first wife, Adriana, after thirteen years of marriage. They had two children.
As part of the divorce, the court ordered John to keep a $400,000 life insurance policy naming Adriana as beneficiary to protect the children if he died.
A year later, John remarried. His new wife, Sally, convinced him to change the beneficiary to her.
He did it without going back to court.
A few years later, John was killed in a car accident.
Both Adriana and Sally filed claims.
The insurance company refused to choose and filed an interpleader lawsuit instead.
Now both women were defendants in a court case, even though neither had done anything wrong.
How Courts Decide Who Gets the Money
The judge decides who receives the benefit based on:
The policy documents
The beneficiary designation forms
Divorce decrees or court orders
State law
And sometimes federal law, especially in ERISA cases
Important issues often include:
Whether the beneficiary change form was valid
Whether the change violated a court order
Whether any fraud, forgery, or undue influence occurred
Whether the original designation was meant to be irrevocable
Whether ERISA preempts state law
Small technical details often decide these cases.
That is why legal representation is critical.
What You Should Do If You Are Served With an Interpleader Lawsuit
Do not ignore it.
Courts have strict deadlines. If you miss them, you can lose your rights by default.
You should immediately gather:
The life insurance policy
All beneficiary designation forms
The death certificate
Any divorce decrees or court orders
Letters or emails from the insurer
Any documents showing what the insured wanted
Then you should speak to a lawyer who handles life insurance interpleader cases.
The insurance company already has lawyers. The other claimant will likely get one too. You should not be the only person in the case without representation.
Can the Insurance Company Still Be Liable?
Sometimes, yes.
In many interpleader cases, the insurer properly protects itself by depositing the money and stepping aside.
But if the confusion was caused by the insurance company, for example:
They accepted an invalid beneficiary change
They ignored a court order
They failed to follow their own procedures
They created the problem through their own negligence
Then they may still be liable for bad faith or breach of contract, even if the court ultimately awards the money to someone else.
Part of our job is to investigate whether the interpleader was truly necessary or whether the insurer caused the mess.
Why You Need a Lawyer in These Cases
Interpleader cases are not simple.
They involve contract law, family law, probate issues, and sometimes federal ERISA law all at once.
We regularly see beneficiaries lose cases they should have won because they did not know how to present the evidence or challenge the other side’s claims.
Do Not Face an Interpleader Lawsuit Alone
Our firm focuses exclusively on life insurance disputes, including interpleader lawsuits, beneficiary fights, ERISA claims, and denied or delayed claims.
We represent beneficiaries across the country who suddenly find themselves in court because the insurance company refuses to decide who to pay.
If you have been served with an interpleader lawsuit, contact us. We can explain what is happening, what your chances are, and how to fight for the benefit your loved one intended you to receive.