What is an Interpleader?

Issues around life insurance policies can often become bewildering, a maze of legal jargon thrown at you in a difficult time. One such legal concept that often arises in the context of life insurance disputes is known as “interpleader.” What is an Interpleader

This legal mechanism serves as a vital tool for resolving conflicts and uncertainties regarding the distribution of life insurance proceeds. In this blog post, we’ll delve into the intricacies of interpleader in the context of life insurance, exploring its purpose, process, and implications for policyholders, beneficiaries, and insurance companies alike. Whether you’re a policyholder seeking clarity on your rights or an insurance company navigating a potential dispute, understanding interpleader is essential for navigating the complexities of life insurance law. 

What is an Interpleader?

At its core, interpleader is a legal action that allows a party, typically an insurance company, to initiate a lawsuit to determine the rightful recipient(s) of disputed funds, such as life insurance proceeds. This mechanism arises when there are multiple claimants asserting conflicting interests to the same funds, leading to uncertainty regarding their proper allocation.


We contacted Trief & Olk to help us with a life insurance issue and Shelly Friedland was the attorney assigned to our case. Before Shelly took our case she explained to us that the likelihood of our success without going to court was possible but not likely. Unfortunately we did not get the outcome we had hoped for but it was our decision to not move forward and have our case litigated. Shelly is very knowledgeable and was very straight-forward in her assessment of our case as we moved forward. She was very patient and thorough in answering our questions. She always responded in a timely manner and listened to our concerns. We would certainly recommend Shelly and would use her firm again in the future.”

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Shelly Friedland worked on my case where a life insurance policy had lapsed and was even a few days beyond the grace period. Farmers had rejected my claim twice and was unwilling to take a second look. Shelly was able to get them to pay the entire claim without going to court, and the full amount was deposited in my account within a couple months. Highest recommendation.”

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In the context of life insurance, interpleader may be invoked when there are disputes among beneficiaries regarding the designation of beneficiaries, the validity of beneficiary designations, or the existence of competing claims. For example, if a policyholder passes away without updating their beneficiary designation, multiple individuals may come forward claiming entitlement to the life insurance proceeds, creating a contentious situation that requires legal resolution.

The Purpose of Interpleader in Life Insurance Claims

Interpleader plays a vital role in life insurance claims, combining several key functions to streamline the legal process. It enhances efficiency and judicial economy by merging all competing claims into one lawsuit, allowing the insurance company to address all disputes in a single legal action instead of multiple ones. This consolidation saves time, resources, and legal costs. Additionally, interpleader offers protection to insurance companies by providing a way to avoid liability while ensuring they meet their obligations under the policy. By transferring the disputed funds to the court and stepping away, the company reduces the risk of conflicting claims and wrongful distribution. Furthermore, interpleader ensures a fair and impartial resolution by allowing the court to decide on the claims based on the law, contractual agreements, and equity principles, ensuring a transparent and fair distribution of the life insurance proceeds to all parties involved.

Common Causes of Interpleader Suits

An interpleader action may be filed for a variety of reasons. While the details may vary, one thing stays the same: in each scenario, more than one party makes claim to the life insurance policy.

Disputes Over Beneficiary Designations

When a policyholder fails to update their beneficiary designation after major life events such as marriage, divorce, or the birth of a child, conflicting claims may arise among family members, former spouses, or other parties who believe they are entitled to the proceeds. In such cases, an interpleader lawsuit may be initiated to determine the validity of the beneficiary designation and allocate the funds accordingly.

Ted Treif (Partner)

Life insurance attorney since 1976

Barbara Olk (Retired)

Life insurance attorney since 1976

Shelly L. Friedland (Partner)

Life insurance attorney since 1997

Eyal Dror (Associate)

Life Insurance Attorney since 2007

Multiple Claimants with Equal Entitlement

When there are multiple claimants who assert equal entitlement to the life insurance proceeds, interpleader may become neccesary. This often occurs in blended families or situations where the deceased had multiple marriages or relationships. Without clear documentation or instructions regarding the distribution of the proceeds, disputes may arise among the claimants, necessitating legal intervention through an interpleader lawsuit to resolve the matter and distribute the funds equitably.

Disputed Legal Validity of Beneficiary Designation

In some cases, the legal validity of the beneficiary designation itself may be called into question, leading to disputes over the rightful beneficiary. This could occur if there are allegations of fraud, undue influence, or lack of capacity at the time the designation was made. If one or more parties contest the validity of the beneficiary designation, an interpleader lawsuit may be filed to adjudicate the matter and determine the rightful beneficiary in accordance with the law and relevant evidence.

Conflicting Claims Among Potential Beneficiaries

If there are competing claims between biological children and stepchildren, or between siblings and other relatives, the insurer may be uncertain about the proper allocation of the proceeds. In such cases, an interpleader lawsuit provides a legal mechanism for all parties to present their claims and evidence, allowing the court to make a determination based on the merits of each claim.

Uncertainty Regarding Legal Requirements

Complex family dynamics, conflicting state laws, or ambiguous provisions in the insurance policy regarding beneficiary designations may lead an insurance company to file an interpleader suit.. By seeking guidance from the court, insurers can ensure compliance with legal requirements and mitigate the risk of facing future litigation or liability.

Settlements & Verdicts

$3 Million Policy

William Penn Life Insurance

$1.2 Million Policy


$1.5 Million Policy

Metropolitan Life Insurance Company

$1 Million Policy

Protective Life Insurance

$675,000 Settlement

Confidential Settlement

$4.3 Million Policy

State Farm, Primerica, Farmers, BrightHouse

The Interpleader Process

Initiation of the Interpleader Action

The interpleader process typically begins when an insurer, faced with conflicting claims to the life insurance proceeds, files a petition for interpleader in the appropriate court. Along with the petition, the insurer deposits the disputed funds into court custody, relieving itself of any further liability regarding the distribution of the proceeds.

Naming of Defendants

In the petition for interpleader, the insurer names all potential claimants to the life insurance proceeds as defendants in the lawsuit. This ensures that all parties with a potential interest in the funds are given notice of the legal proceedings and an opportunity to assert their claims.

Service of Process and Notice to Defendants

Once the interpleader action is initiated, the court issues summonses to all named defendants, notifying them of the lawsuit and providing instructions for responding to the claims. The defendants must be served with the summonses in accordance with the rules of civil procedure governing service of process.

Answer and Response by Defendants

Upon receiving the summonses, the defendants have a specified period of time to file their answers to the interpleader complaint. In their answers, the defendants may assert their respective claims to the life insurance proceeds and provide any supporting evidence or documentation to substantiate their claims

Discovery and Proceedings

Following the filing of answers, the interpleader action proceeds through the discovery phase, during which the parties engage in the exchange of relevant documents, information, and evidence. This may include requests for production of documents, interrogatories, and depositions aimed at uncovering facts relevant to the disputed claims.

Guardian Ad Litem Appointment

In cases where there are minor or incapacitated beneficiaries involved, the court may appoint a guardian ad litem to represent their interests in the interpleader action. The guardian ad litem acts as a legal advocate for the best interests of the minor or incapacitated beneficiaries and ensures that their rights are protected throughout the proceedings.

Adjudication and Judgment

After considering the evidence and arguments presented by the parties, the court issues a judgment determining the rightful recipients of the life insurance proceeds. The court’s decision is binding on all parties involved, and the disputed funds are distributed accordingly in accordance with the court’s order.

Disbursement of Funds

Once the court issues its judgment, the interpleaded funds held in court custody are disbursed to the designated beneficiaries as directed by the court’s order. The insurer is relieved of any further liability regarding the distribution of the proceeds, and the interpleader action is concluded.

Life Insurance Denial Statistics


The annual average number of life insurance claims denied.

$50 Million

The yearly average dollar amount of claims denied by life insurance companies.


The number of claims appealed annually by consumers.

Your Life Insurance Advocate

 At Trief & Olk, our dedication to those facing life insurance issues goes far beyond providing valuable information on legal concepts.

With our deep understanding of life insurance law and our commitment to providing personalized, attentive legal representation, we stand ready to assist beneficiaries whose life insurance policies are denied. 

If you’re facing a dispute over life insurance proceeds , don’t hesitate to contact Trief & Olk for a consultation. Let us put our experience and dedication to work for you, helping you achieve a favorable resolution to your life insurance claim. Your peace of mind is our top priority, and we’re here to fight for the justice and compensation you deserve. 

Contact us today to schedule your consultation and take the first step toward resolving your life insurance dispute with confidence.