When Multiple People Claim Life Insurance Benefits, Who Gets Paid? Understanding Interpleader Actions in Denied ERISA Claims
As attorneys who focus exclusively on the wrongful denial of life insurance claims, we often encounter shocking examples of insurers denying valid benefits. But sometimes, the problem isn’t that the insurance company doesn’t want to pay—it’s that they don’t know who to pay. In cases where the beneficiary designation is unclear or conflicting, life insurers may freeze the payout and file what’s known as an interpleader action. These disputes frequently arise in ERISA-governed policies, where strict legal procedures must be followed before any benefits can be released.
Why beneficiary disputes happen more often than you think
Unclear, outdated, or incomplete beneficiary designations are surprisingly common in life insurance. While naming a beneficiary might seem like a simple task, the wording people use—or fail to update—can cause legal confusion after death.
Some examples of scenarios that often lead to interpleader:
The policyholder names “my wife” as the beneficiary but later divorces and remarries
The beneficiary is listed as “my children” but more children are born later
A form is submitted with a name like “Mark Jones” when several relatives share that name
No beneficiary is named at all, leaving the policy subject to plan defaults or state law
In these situations, the insurance company risks being sued if they pay the wrong person. Rather than choose a side, they shift the burden to the courts through an interpleader.
What is an interpleader, and how does it work?
An interpleader is a type of lawsuit that allows an insurance company to deposit the policy funds with the court and ask a judge to determine who is rightfully entitled to the money. The insurer names all potential claimants as defendants and withdraws from the dispute once the court accepts the case.
Unlike typical lawsuits, the insurer doesn’t seek damages—it’s simply asking for a neutral resolution. This process is particularly common in ERISA life insurance plans, where employers or insurers want to avoid being held liable for paying the wrong party.
Each named claimant must then prove they are the true intended beneficiary, often through legal arguments, documentation, or testimony. These cases can get highly emotional, especially when family members or former spouses are pitted against one another.
Case study: Four men named Mark Jones and a family left in limbo
A particularly unusual interpleader case involved a man named Mark Jones. For the sake of privacy, we’ll refer to him as Mark Sr. Over decades, Mark Sr. maintained a life insurance policy without incident. But like many families that cherish tradition, the Jones family had several generations sharing the same name:
Mark Jones (age 87) – the policyholder
Mark Jones, Jr. (his 70-year-old son)
Mark Jones III (his 50-year-old grandson)
“Little Mark” Jones IV (his 28-year-old great-grandson)
Two years before his death, Mark Sr. submitted a Change of Beneficiary form naming “Mark Jones” as the sole beneficiary. Unfortunately, he sent the form directly to the insurer, and no one there knew which “Mark Jones” he meant. When Mark Sr. passed away, the insurer received competing claims from Mark Jr. and Little Mark—and eventually discovered Mark III, who also had a potential interest in the policy.
The court steps in
With no clear answer, the insurer filed an interpleader lawsuit and named all three surviving “Mark Joneses” as defendants. This forced the family to participate in legal proceedings to establish who was truly entitled to the payout.
Little Mark quickly retained a life insurance attorney. He presented strong evidence that he was the intended beneficiary, including:
A handwritten letter from Mark Sr. stating, “Little Mark, after I die, you should be ok financially once the life insurance kicks in.”
Testimony that Little Mark had lived with Mark Sr. and served as his caregiver for the last three years
Statements from family members affirming that Mark Sr. frequently referred to Little Mark as his intended beneficiary
At mediation, the attorney persuaded Mark III to acknowledge that Little Mark was most likely the intended recipient. With this concession and compelling evidence, the mediator reached a settlement: Little Mark received the full payout, and the case was dismissed.
Lessons from this case: Make your beneficiary designation crystal clear
Mark Sr.’s vague designation caused his family unnecessary stress, legal fees, and court involvement. The insurer couldn’t simply “guess” which Mark he meant, and the resulting confusion required a full legal resolution.
To avoid these issues:
Always use full legal names, birthdates, or even Social Security numbers when naming beneficiaries
Update beneficiary designations after major life events (divorce, birth of children, death of prior beneficiaries)
Keep documentation of changes and notify the insurer directly, preferably with confirmation of receipt
If the policy is ERISA-governed, understand that disputes may involve federal court and complex legal rules
If you're facing an interpleader or denied ERISA claim, legal help is essential
Whether you’re one of several people named in an interpleader lawsuit, or your ERISA life insurance claim has been wrongfully denied, don’t try to navigate it alone. These cases often require detailed legal arguments, the presentation of evidence, and a deep understanding of both insurance law and federal ERISA procedures.
Our law firm specializes in these matters. We’ve helped countless clients resolve life insurance disputes—both through litigation and negotiation—and recover the benefits their loved ones intended for them. If you’ve been served in an interpleader case, or you’re unsure of your rights as a beneficiary, call us today for a free consultation.
FAQ: Interpleader and ERISA Life Insurance Claims
What is an interpleader action?
It’s a legal process where an insurer asks a court to decide who should receive life insurance benefits when there are conflicting or unclear beneficiary claims.
Can an ERISA policy be resolved in state court?
Usually not. ERISA policies are governed by federal law, and disputes—including interpleader lawsuits—are often handled in federal court.
What happens if the insured didn’t name a beneficiary?
If no beneficiary is named, the policy may default to the estate or follow plan-specific rules. However, disputes often arise, especially when multiple people believe they’re entitled to benefits.
Can I win an interpleader case without a lawyer?
It’s possible, but not advisable. The other parties may be represented, and the court will expect clear, well-supported legal arguments. A life insurance attorney greatly improves your chances of success.