Life Insurance Interpleader Lawsuits

When there is a dispute between beneficiaries over the proceeds of a life insurance policy, the insurance company will sometimes file what is called an interpleader lawsuit.  In this situation, the insurance company files the life insurance interpleader lawsuit to ask the Court to determine who the proper beneficiary is under the policy.  In essence, the insurance company is saying to the Court: "We don't know who to pay here, would you please tell us?"

An interpleader is an actual lawsuit and the potential beneficiaries are named as defendants.  Interpleader actions are often filed in federal court.  If you are named as a defendant, you will be served with the lawsuit and you have to file an answer.  Notably, you should definitely retain a lawyer to represent you.  Even if you think the case is clear-cut, there are many aspects of the lawsuit that a layperson (or even inexperienced attorney) would not anticipate.  Especially if you find yourself in federal court.  

 An insurance interpleader lawsuit is a way for the insurance company determine the proper beneficiary while at the same time protecting itself from liability (for paying the wrong party).  Although the attorneys for the insurance company probably have no interest whether one beneficiary or the other is awarded the policy proceeds, those attorneys represent the insurance company's interests, not yours.  In other words, even though the insurance company is technically an uninterested party, they are the one suing you. You should not take advice from the insurance company's attorneys except when they inevitably tell you: "you should be represented by your own attorney."  

Insurance companies are prompted to file interpleaders for a variety of reasons.  Sometimes, they are prompted when someone claims to be the true beneficiary under the policy and the claim conflicts with the policy's terms.  Sometimes, the information on the death certificate will prompt the insurance company to file the interpleader.  Whatever the reason, once filed the Court will review the insurance policy and the applicable law and make a determination regarding whether to pay out the policy proceeds and which beneficiary to pay.  

Davis Law Firm regularly handles life insurance interpleader actions.  If you are served with an insurance interpleader action, call us to see if we can help.  We sometimes even take these cases on a contingency fee basis, meaning you don't have to pay us unless we recover some or all of the policy proceeds on your behalf.  However, each interpleader is evaluated on a case by case basis and not every case is right for a contingency agreement.  So if you're named in a life insurance interpleader lawsuit, call us today to see if we can help.