Most people who receive a life insurance claim denial are devastated—and understandably so. They’re dealing with the loss of a loved one and are relying on that payout to support themselves or their families. While some beneficiaries accept the insurance company’s decision without question, others receive something even more shocking: a lawsuit. Specifically, they find themselves being sued by the life insurance company in what’s called an interpleader action.
What is an interpleader lawsuit and why are you being sued?
An interpleader action is not a typical lawsuit where someone is claiming you did something wrong. Instead, it’s a legal mechanism life insurance companies use when they don’t know who to pay. If multiple people claim to be the rightful beneficiary—or if the policy documents are unclear—the insurer doesn’t want to make the wrong choice and be sued later. So instead, they file a lawsuit asking a court to decide who should receive the money. If you need legal help for life insurance disputes in Montana call today.
Common scenarios that lead to interpleader actions
Divorce and remarriage: Many policyholders forget to update their beneficiary forms after a divorce or remarriage. As a result, both the former and current spouse may file a claim. With conflicting claims and varying state laws about who should receive the money, the insurer seeks a legal ruling.
Predeceased beneficiaries: If the person listed as beneficiary dies before the policyholder, and the policyholder never updated the form, the insurer may receive competing claims from family members or others who believe they are entitled to the benefit.
Undue influence or coercion: Sometimes, someone close to the policyholder (such as a caregiver) is accused of pressuring them into changing the beneficiary. In these cases, the original beneficiary may challenge the change, and the insurer again defers to the courts.
Conflicting documents: When multiple documents exist (such as a beneficiary form and a divorce decree or will), and they contradict each other, the insurer may not want to risk deciding which one to honor.
What to do if you’ve been named in an interpleader lawsuit
Don’t panic. Being named in an interpleader action doesn’t mean you’re accused of wrongdoing. It simply means the insurance company is asking the court to determine the proper recipient of the death benefit.
Your next step should be to contact an attorney who specializes in life insurance disputes. A lawyer with experience in interpleader litigation can:
Review the life insurance policy and related documents
Build a legal case to support your claim to the benefit
Represent you in court or settlement negotiations
Real-world example: When interpleader becomes necessary
In one case, a man named Steve had a $500,000 life insurance policy through his employer. At the time he got divorced, a court order required Steve to keep his ex-wife as the beneficiary until their children reached age 18. Years later, just two months before his son turned 18, Steve changed the beneficiary to his new wife, Rachel. He died in a car accident one month later.
Both women filed claims. The insurance company didn’t want to decide who was entitled to the money, so it filed an interpleader action. The court considered the timing of the change and the clear language of the divorce decree. Ultimately, it split the benefit between the two women, with Rachel receiving the bulk of the proceeds.
Get legal help before it’s too late
If you’ve been named in an interpleader lawsuit or are facing any kind of life insurance dispute, legal representation is critical. These cases can quickly become complex and emotionally taxing. Our firm handles interpleader cases nationwide and has successfully resolved disputes involving spouses, former partners, children, and caregivers.
We offer free consultations and don’t charge a fee unless we secure a recovery on your behalf. Don’t risk losing the benefit your loved one intended for you. Call us today—we’re here to help.