When Are Life Insurance Interpleader Lawsuits Needed?
Every day thousands of people buy life insurance to financially protect their loved ones in the event of their death. Unfortunately, there are an equal number of cases where the death of the policyholder leads to a dispute among the beneficiaries.
If you find yourself in this situation, you may be wondering what is next. An interpleader lawsuit may be forthcoming. You need a top life insurance law firm which has handled thousands of life insurance beneficiary disputes such as ours.
What Is an Interpleader Lawsuit?
An interpleader lawsuit is a type of civil action in which multiple claimants find themselves in court to resolve a dispute over a single piece of property. In the context of life insurance, an interpleader suit may be filed when there is a dispute over who is the rightful beneficiary of a life insurance policy.
The interpleader process begins when the insurer files a complaint with the court. The insurer then deposits the policy proceeds with the court and names all interested parties as defendants in the suit. Once the interpleader suit is filed, the policy proceeds are protected from seizure by creditors and cannot be transferred without a court order.
For example, case law (New York Life Insurance Company v. Lee) has established that interpleader is an appropriate remedy where there is a dispute over the ownership of life insurance policy proceeds. In such a case, the insurer would be protected from having to choose between competing claims, and the policy proceeds would be protected from seizure by creditors.
Who Can File an Interpleader Lawsuit?
In most cases, it is the insurer who files the interpleader lawsuit. Our life insurance attorneys need to be retained ASAP.
As a Policyholder
If you are the policyholder and there is a dispute over who should receive the death benefit, you may find yourself in an interpleader suit. This will protect the policy proceeds from seizure by creditors and ensure that the death benefit is paid to the rightful beneficiary.
As a Rightful Beneficiary
If you are the rightful beneficiary of a life insurance policy, you may find yourself in an interpleader suit if the insurer refuses to pay the death benefit or if there is a dispute over who should receive the death benefit. An interpleader action will protect the policy proceeds from seizure by creditors and ensure that you receive the death benefit.
What are your Options?
If you find yourself in a situation where there is a dispute over the ownership of life insurance policy proceeds, you have two options: you can have your life insurance attorney handle an interpleader lawsuit, or you can have your life insurance lawyer negotiate a settlement with the other interested parties.
If you decide to have your life insurance lawyer handle the interpleader lawsuit, you will need to get one quickly. The interpleader process can be complicated and time-consuming, so you should only consider this option if all remedies are exhausted.
Life Insurance Beneficiary Dispute Settlement
If you decide to retain a life insurance attorney to negotiate a settlement with the other interested parties, you may be able to reach an agreement without having to go to court if the lawsuit hasn't be filed. This option can save you time and money, but keep in mind that the other parties may not be willing to negotiate in good faith.
You should consult with an attorney to discuss your specific situation and decide which option is best.