Glossary

Interpleader

A lawsuit in which an insurer facing competing claims deposits the death benefit with a court and asks the judge to decide who should receive it.

Also called: interpleader action, interpleader lawsuit

Interpleader is a legal procedure that lets a party holding money claimed by two or more people turn it over to a court and let the claimants resolve their dispute there. Life insurers use it when they can't safely decide who is entitled to a death benefit, such as when an ex-spouse and a current spouse both claim the proceeds, a beneficiary designation is ambiguous, or a beneficiary is suspected of causing the insured's death.

The insurer files the case in state or federal court, names every potential claimant, and deposits the death benefit, sometimes with interest, with the court. In federal court this can be done under the federal interpleader statute or Rule 22 of the Federal Rules of Civil Procedure. The insurer is then usually released from further liability and may ask for its legal fees to be paid from the fund. Say, hypothetically, a $400,000 benefit is interpleaded and the court awards the insurer $15,000 in fees: the eventual winner receives $385,000 plus any interest.

Interpleader cases can take months or years. Keeping beneficiary designations current after a divorce, marriage or death is the simplest prevention. See life insurance beneficiary disputes and interpleader, divorce and your ex as beneficiary: revocation-on-divorce laws and the slayer rule: when a beneficiary can't collect.

Last reviewed October 4, 2026

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Related terms

Beneficiary The person, trust, charity or estate named to receive a life insurance death benefit or an annuity's remaining value when the insured or owner dies. Claimant The person or entity that files for a policy's benefits, usually a named beneficiary, executor or assignee after the insured's death. Revocation-on-divorce statute A state law that automatically cancels an ex-spouse's designation as beneficiary when a marriage ends, unless the owner names them again. ERISA The 1974 federal law governing most private employer benefit plans, including group life insurance, which sets claim procedures and overrides many state laws. Beneficiary designation The signed instruction on file with an insurer naming who receives a policy's proceeds, in what shares and in what order.

Related guides

Bad faith claim handling by life insurers What bad faith means for a life insurance claim, how state law and ERISA change your remedies, and what to document if an insurer stalls or denies unfairly. Life insurance beneficiary disputes and interpleader When two people claim one death benefit, insurers file interpleader. How Rule 22 and 28 U.S.C. 1335 work, and what claimants should do. Employer life insurance, ERISA and beneficiary disputes How ERISA governs workplace life insurance beneficiary fights: the plan-documents rule, Egelhoff, Kennedy, claim deadlines and how to protect your form. Divorce and your ex as beneficiary: revocation-on-divorce laws Whether divorce removes your ex as life insurance beneficiary depends on state law, the type of policy and your decree. Compares Texas, Florida and the UPC. How long life insurance takes to pay out Clean claims are usually paid within weeks of complete paperwork. Here are the state deadlines, what causes months-long delays and how to keep a claim moving. Interest on late life insurance claims Many states make insurers add interest to late death benefits, some from the date of death, some with penalty rates. How the rules work and how to check yours.