What to Do If You’re Involved in a Life Insurance Beneficiary Dispute or Interpleader Case

If you’ve been told there’s a problem with a life insurance payout—or that the insurance company doesn’t know who to pay—this guide explains what’s happening and how to protect your rights.

At Texas Life Insurance Lawyers, we focus exclusively on disputes involving denied life insurance benefits, wrongful beneficiary designations, and interpleader lawsuits. We represent clients across Texas and in federal courts when insurance companies refuse to pay or file suit to force the claimants to litigate among themselves.

What Is a Life Insurance Interpleader?

A life insurance interpleader is a type of lawsuit filed by an insurance company when there are multiple, conflicting claims to the policy proceeds. Rather than decide who’s right, the insurer deposits the funds with the court and names all claimants as defendants. A judge or jury then decides who should receive the money.

Insurance companies often file interpleaders when:

  • There are conflicting beneficiary designations.

  • The insured tried to change the beneficiary shortly before death.

  • Divorce, remarriage, or estate planning documents conflict with the policy.

  • A prior beneficiary challenges the change based on incapacity or undue influence.

Once the interpleader is filed, strict deadlines apply. Failing to respond can result in a default judgment—and permanent loss of your claim.

Common Questions About Interpleader Disputes

1. Can I dispute a life insurance beneficiary designation after someone dies?
Yes. But you must act quickly—especially if you’ve received notice of an interpleader or pre-interpleader letter. Grounds for challenging a beneficiary include undue influence, lack of capacity, improper designation procedures, or divorce-related claims.

2. What happens if the insured was divorced or remarried?
Texas law, including provisions of the Family Code, may revoke a prior spouse’s beneficiary rights. But ERISA-governed policies (from private employers) may follow federal rules instead. We regularly handle cases involving conflicting claims from current and former spouses.

3. What if I was promised the policy proceeds in a divorce decree or settlement?
If a divorce judgment required one spouse to maintain life insurance, and the policy doesn't reflect that, it may still be enforceable in court—through constructive trust or equitable claims. This is a growing source of litigation in Texas.

4. Can a surviving spouse claim part of the proceeds as community property?
In Texas, if a life insurance policy was acquired during marriage, it may be community property. That means the surviving spouse could be entitled to part of the proceeds—even if not named as beneficiary. These claims are often decided in probate court.

Why Do Insurance Companies File Interpleaders?

Insurance companies prefer to avoid liability when multiple people claim the money. By filing an interpleader lawsuit:

  • The insurer deposits the funds with the court.

  • The company names all potential beneficiaries as defendants.

  • It asks the court to decide who should receive the money.

  • The insurer may request reimbursement of legal fees from the proceeds.

This process protects the insurance company—but you must protect yourself by hiring a lawyer experienced in life insurance interpleader litigation.

Types of Interpleader Disputes We Handle

We’ve represented clients in interpleader actions involving policies ranging from $100,000 to over $5 million, including:

  • Conflicting beneficiary forms: Ambiguous designations or multiple versions.

  • Beneficiary changes made under pressure: Undue influence by caregivers, partners, or relatives.

  • Mental capacity challenges: Claims that the insured lacked the legal capacity to make changes.

  • Divorce and remarriage issues: Ex-spouses disputing rights to proceeds.

  • Employer-provided policies and ERISA plans: Determining whether federal or state law applies.

  • Community property claims in probate: Spouses seeking their fair share under Texas law.

    Why You Need a Life Insurance Interpleader Attorney

    If you’ve received:

    • A letter from the insurer stating there’s a dispute,

    • A pre-interpleader notice warning about litigation,

    • Or a summons and complaint in an interpleader lawsuit,

    you are now in litigation, even if you haven’t filed anything. Time is critical. Don’t rely on the lawyer who handled your divorce or business formation.

    We handle life insurance beneficiary disputes and interpleader litigation every day. This is a focused and technical area of law requiring familiarity with Texas and federal rules, capacity and undue influence law, ERISA statutes, and probate proceedings.

    How to Get Help

    Contact us today for a free consultation. We’ll review your case, determine your legal options, and explain the best path forward. There are strict deadlines once an interpleader is filed, and delay can cost you the benefits you’re entitled to.

    Whether you’re already in a lawsuit or trying to prevent one, we’re here to help you fight for the life insurance benefits you deserve.

    📞 Call us or visit TexasLifeInsuranceLawyers.com
    📬 The initial consultation is always free.

    Texas Life Insurance Lawyers – Trusted counsel in high-stakes life insurance and beneficiary disputes statewide.

J. Michael YoungComment