Life Insurance Disputes / Federal Interpleader Cases
Life insurance disputes typically arise when a life insurance company receives a claim, but is unsure if the claimant or someone else may be entitled to the life insurance benefits. To avoid having to pay twice if they mistakenly pay the wrong person, the insurance company has an option to deposit the money in the federal court's registry, like a bank account, and bring a case against any parties who may have a claim, called an Interpleader. The parties can either work out a settlement of the money in the Court's registry or let a judge or jury decide who is entitled to the money.
How do Interpleader claims typically arise?
Divorce Life Insurance Claims - A recent change in Alabama law makes an ex-spouse deemed to predecease their ex-spouse for purposes of life insurance, unless certain specific requirements are met. This means that, for example, a husband who had a life insurance policy listing his wife as beneficiary and his kids as contingent beneficiary would have his policy go to his kids if he gets divorced, unless a provision is made in the marital settlement agreement or other specific requirements are met.
The statute may be subject to challenges both on its face and as applied. There are legal grounds to challenge the statute.
Many life insurance companies have been filing Interpleader actions against an ex-spouse to nullify any claim they might have. When there is no other beneficiary, the life insurance company still tries to skip the ex-spouse and give the proceeds to the Estate of the person who died.
Last Minute Beneficiary Changes - While policy owners generally have a right to change a beneficiary at any time, that rule is not absolute. Typically, any changes must be free of undue influence and duress, and the owner must have capacity at the time of the change. These Interpleader actions may arise between children of the policy owner and a new spouse or girlfriend who the owner changed to as the beneficiary. They may also include a change to a beneficiary who is a friend or caregiver.
Special care should go into last minute beneficiary changes. As people age or become ill, undue influence may arise to get a policy owner to change the beneficiary. They may also lose their abilities and not have the mental capacity to fully understand what changes they are making.
If you were the beneficiary and were taken off within a few months of a person passing away, or even years prior if the person did not have capacity, you may be entitled to the policy benefits.
What Can I Do If I Was Taken Off A Policy?
If the insured died and you made a life insurance claim only to find out that you are not the listed beneficiary, contact our office as soon as possible. Also, let the insurance company know you are disputing their decision. This could help force an Interpleader action to preserve the money.
Life insurance is driven by both contracts and Alabama Statutes. Failure to comply with certain contract provisions or Statutes could nullify any attempted changes to the policy or beneficiary. You may have a limited time to answer the lawsuit or your benefits may be denied forever. We would be more than happy to discuss your options with you. If you were denied benefits or sued in an Interpleader lawsuit, contact our office immediately. (256) 519-9970