Interpleader

What Does Interpleader Mean?

An interpleader is a type of lawsuit in which two or more parties claim entitlement to life insurance benefits. These lawsuits are typically filed by life insurance companies. Most disputes that lead to an interpleader come from outdated or unclear beneficiary designations, so reviewing life insurance beneficiary rules after major life changes is one way policyholders can prevent the situation.

Insuranceopedia Explains Interpleader

Life insurance providers typically file interpleader lawsuits to resolve complex situations involving life insurance payouts. When an interpleader case arises, the life insurance company simplifies its involvement by depositing the money with the court and withdrawing from the dispute. The court then takes over and delivers a verdict on the insurance claim. Once the court identifies the rightful recipient, that person can then move ahead with collecting the life insurance proceeds as a beneficiary through the normal claims process.

An interpleader is a win-win situation for all parties involved. The insurer avoids resolving the case, while the claimant receives a resolution.