Beneficiaries can sue for life insurance proceeds if they believe that the insurance company is wrongfully denying their claim. If the beneficiaries believe that the insurance company has breached the policy contract or state/federal laws, acted in bad faith, or otherwise acted improperly, they can file a lawsuit to recover the life insurance proceeds.

Before filing a lawsuit, beneficiaries may be required to exhaust all other options for resolving the dispute with the insurance company. This may include appealing the decision administratively or providing additional evidence to support their claim. The beneficiaries should consult with an experienced attorney who specializes in life insurance litigation. The attorney can review the policy contract, assess the evidence, and advise the beneficiaries on their legal options.

Who Is Entitled to the Proceeds of a Life Insurance Policy?

The proceeds of a life insurance policy are typically paid out to the named beneficiaries in the policy. The policyholder designates the beneficiaries when they purchase the policy, and they can change the beneficiaries at any time.

If the named beneficiaries are deceased or unable to receive the proceeds, the policy will typically pay out to the contingent beneficiaries, if any are named. If there are no named beneficiaries, the proceeds will be distributed according to the policy provision for when no beneficiary is named – the payment can go to the insured’s estate or the next of kin. 

Sometimes there are situations when a person other than the listed beneficiary is entitled to the proceeds. For example, suppose there is a divorce decree obligating the policyholder to carry a life insurance policy for the children, but the children are not listed as beneficiaries at the time of the insured’s death. In that case, they may still be entitled to the proceeds and need to contest the beneficiary designation in order to assert their claim. 

If there is any dispute over the distribution of the life insurance proceeds, the insurance company may file an interpleader. It is prudent for policyholders to keep their beneficiaries up-to-date and to ensure that their wishes are clearly stated in the policy.

Can You Sue Someone for Life Insurance Proceeds?

The answer to this question depends on the circumstances of the case. Generally, a person cannot sue for life insurance proceeds unless they are the named beneficiary of the policy or they have a valid legal basis for the payout. For example, if there are multiple beneficiaries and they cannot agree on how to divide the proceeds, they may file a lawsuit. 

In some cases, a person may try to sue for life insurance proceeds if they believe that the policyholder was coerced into naming a particular beneficiary. This could be the case if the policyholder was under duress or was not of sound mind when they made the designation. In these situations, the court may consider the evidence presented and may decide to invalidate the beneficiary designation. 

Read more in our article about contesting a life insurance beneficiary.

Another scenario where a person may sue for life insurance proceeds is if they believe the insurance company made a payment to the wrong party. A common scenario involves a former spouse and a beneficiary change. If the couple lives in one of the states that revokes a former spouse as a beneficiary on a life insurance policy, the insured’s family may claim that the life insurance proceeds should not be paid to the former spouse. However, the former spouse may still collect a group life insurance claim under ERISA because ERISA requires payment according to the designation on the policy. 

Many courts have held that even if the former spouse receives a payment, the insured’s family can still sue her for the life insurance benefit in what is called a post-distribution lawsuit.

Can You Sue a Parent for Death Benefits if One Parent Dies?

Losing a parent is a devastating experience, and it can be even more challenging if you rely on their income to support yourself. In some cases, a parent may have a life insurance policy that provides death benefits to their beneficiaries. However, what happens if one parent dies, and the surviving parent refuses to share the death benefits with the children? Can you sue a parent for death benefits if one parent dies?

The answer to this question depends on several factors, including the terms of the life insurance policy, state law, and the relationship between the surviving parent and the children. 

First, if the life insurance policy lists the surviving parent as the sole beneficiary, then the death benefits will typically be paid to them. In this case, the children would not have a legal claim to the proceeds. However, if the policy lists the children as beneficiaries, then they would be entitled to a portion of the death benefits.

Second, the laws of each state vary regarding inheritance and the rights of surviving spouses and children. In some states, a surviving spouse may have the right to claim all or a significant portion of the deceased spouse’s assets, including life insurance proceeds. 

Finally, if the surviving parent has a good relationship with the children, life insurance proceeds may be shared without the need to file a lawsuit. To sue a surviving parent, the child needs to have a valid legal basis for a lawsuit. 

When Can You File a Life Insurance Lawsuit?

A life insurance lawsuit can be filed when beneficiaries believe they are entitled to receive the death benefits from a life insurance policy, but the insurance company or other involved party has refused to pay the claim.

There are several reasons why a life insurance suit may be necessary. These include:

1. The insurance company has denied the claim: In these cases, the beneficiaries may need to file a life insurance lawsuit to dispute the denial and receive the death benefits.
2. The insurance company is delaying payment: Sometimes, an insurance company may take an unreasonable amount of time to process and pay out a claim. In these cases, the beneficiaries may need to file a life insurance suit to compel the company to make payment promptly.
3. Disputes among beneficiaries: When there are multiple beneficiaries listed on a policy, disputes can arise over how the death benefits should be distributed. In these cases, an interpleader may be necessary to resolve the dispute and determine the appropriate distribution of the death benefits.

A beneficiary designation is in question: if the validity of the beneficiary designation is in question, a life insurance lawsuit may be necessary to determine the rightful beneficiary.

What Happens When You Sue for Life Insurance Proceeds?

When you sue for life insurance proceeds, you are essentially taking legal action to compel an insurance company or other involved party to pay the death benefits to the beneficiary or beneficiaries named in the policy. 

Here are the general steps that may occur when you sue for life insurance proceeds:

1. Consult with an attorney: It is important to understand your options. Consult with an attorney who specializes in life insurance law to assess the strength of your case and determine your legal options.
2. File a lawsuit: If you and your attorney determine that a life insurance suit is necessary, you will need to file a lawsuit against the insurance company or other involved party in the appropriate court. Your attorney will prepare the necessary legal documents and pleadings. The insurance company may be required to transfer the death benefit to the court until the resolution of the case. 
3. Discovery process: After filing the lawsuit, the discovery process will begin. This is the process where both sides exchange information and evidence to support their case. This may include depositions, interrogatories, and document requests.
4. Negotiations: During the discovery process, there may be negotiations and settlement discussions between the parties involved. If a settlement is reached, the lawsuit can be dismissed.
5. Trial: If the parties cannot reach a settlement, the case will go to trial. Both sides will present evidence and arguments, and a judge or jury will decide the case’s outcome.
6. Judgment: If the judge or jury rules in your favor, the insurance company or other involved party will be ordered to pay the death benefits to the beneficiary or beneficiaries named in the policy.

The legal process of suing for life insurance proceeds can be lengthy and complicated. Consult with an experienced attorney who can help guide you through the process and protect your legal rights.

What Happens if You Win the Lawsuit?

If you win a life insurance lawsuit, the insurance company or other involved party will be required to pay the death benefits to the beneficiary or beneficiaries named in the policy. The specific amount of the death benefits will depend on the terms of the policy.

The insurance company or other involved party will generally have a certain amount of time, usually within 30 days, to comply with the court’s order to pay the death benefits. If they fail to comply, the court may order additional penalties or sanctions against them.

Once the death benefits have been paid, the lawsuit will be resolved, and the case will be closed. The beneficiaries will be responsible for any taxes, fees, etc.

What if You Lose?

If you lose a life insurance suit, you will not receive the death benefits from the insurance company or other involved party. The court’s decision is final, and you will not be able to appeal the ruling unless there are legal grounds to do so.

If you lose the case, you may be responsible for paying the legal fees and costs associated with the lawsuit. Additionally, you may also be responsible for the legal fees and costs incurred by the insurance company or other involved parties.

The Costs of Suing for Life Insurance Proceeds

Suing for life insurance proceeds can involve various costs, including:

1. Legal Fees: You will need to hire an attorney to represent you in the lawsuit. The attorney’s fees will vary depending on their experience and the complexity of the case.
2. Court Fees: You will need to pay court fees to file the lawsuit, serve legal documents, and other court-related expenses.
3. Expert Witness Fees: If your case requires expert testimony, you may need to pay for their fees and expenses.
4. Discovery Costs: The discovery process can be costly, and you may need to pay for document production and depositions.
5. Appeals: If the case is not resolved at the trial level and appeals are necessary, you may need to pay additional legal fees and expenses.

How to Sue for Life Insurance Proceeds

If you believe you are entitled to life insurance proceeds and have been denied payment, you may need to sue the insurance company or other involved party to collect the benefits. 

Here are the general steps to sue for life insurance proceeds:

1. Gather Documents: Collect all documents related to the life insurance policy, including the policy itself, any correspondence with the insurance company, and any documents related to the claim.
2. Consult with an Experienced Attorney: Consult with an attorney who specializes in life insurance law to assess your case and determine your legal options.
3. Demand Letter: Your attorney may send a demand letter to the insurance company or other involved party requesting payment of the life insurance proceeds.
4. Administrative Appeal: If your case requires an appeal before a lawsuit, your attorney will file an administrative appeal in preparation for litigation. 
5. File a Lawsuit: If the demand letter does not result in payment of the life insurance proceeds, you will need to file a lawsuit against the insurance company or other involved party in the appropriate court. Your attorney will prepare the necessary legal documents and pleadings.
6. Discovery Process: After filing the lawsuit, the discovery process will begin. This is the process where both sides exchange information and evidence to support their case. This may include depositions, interrogatories, and document requests.
7. Negotiations: During the discovery process, there may be negotiations and settlement discussions between the parties involved. If a settlement is reached, the lawsuit can be dismissed.
8. Trial: If the parties cannot reach a settlement, the case will go to trial. Both sides will present evidence and arguments, and a judge or jury will decide the case’s outcome.
9. Judgment: If the judge or jury rules in your favor, the insurance company or other involved party will be ordered to pay the death benefits to the beneficiary or beneficiaries named in the policy.

How Our Lawyers Can Help to Sue for Life Insurance Proceeds

Winning a life insurance lawsuit can be a lengthy and complicated process. It’s always recommended to consult with an experienced attorney who can help guide you through the process and protect your legal rights. Our life insurance lawyers know what it takes to win your case. Call (888) 510-2212 now for a free consultation.