Disputes Over Insurance Proceeds Between Life Insurance Beneficiaries

Certain situations arise where more than one person claims to be the beneficiary of a life insurance policy. In other words, multiple people claim life insurance they are entitled to receive the life insurance payments when the insured passes away. For example, an individual might initially designate a spouse as a primary beneficiary and his children as secondary beneficiaries, get divorced and remarry, and designate the new spouse as the beneficiary of the same policy. This would create a situation where different individuals might claim the right to receive the same funds. In these cases, the life insurance company admits that it owes payment; the question just becomes who is entitled to receive the funds.

In such cases, where more than one party claims the right to recover the same life insurance proceeds, the life insurance company frequently brings an action known as an interpleader action. In these cases, the life insurance company deposits the insurance proceeds into an account controlled by the court to be paid when the case is resolved, and the life insurance beneficiaries then work out the dispute between them, by litigation or settlement.

Interpleader actions can arise in various circumstances, including the following:

• The insured’s surviving spouse and ex-spouse both claim they are entitled to the life insurance proceeds, which can occur if the insured never changed the listed beneficiary on the policy even after divorcing and then re-marrying;
• The insured had children from two different marriages that both ended in divorce, was obligated to maintain the same life insurance policy as child support in both divorce decrees, creating a conflict between the children from the first marriage and the children from the second marriage;
• The insured had no beneficiary designated;
• The insured’s beneficiary designation assigned 100% of the proceeds to more than one individual;
• The insured’s attempt to change the beneficiary was unsuccessful; for example, the insured completed the paperwork to change the beneficiary but died before the insurer received the updated designation; or
• The insured changed the beneficiary but the life insurance company does not have a record of the change.

Trief & Olk has represented clients in disputes between competing beneficiaries who claim to be entitled to the same life insurance policy proceeds. Our experienced life insurance lawyers will work hard to get you the life insurance proceeds you deserve. Disputes between beneficiaries can often settle out of court, but we have the litigation experience to take your case to trial if needed.