The company holding Heath Ledger's life-insurance policy will pay the $10 million death benefit and avoid a costly lawsuit, according to court records.

ReliaStar Life Insurance Co. had initially refused to fork over the money, claiming it had to investigate Ledger's death last year as a possible suicide.

The actor's estate filed a lawsuit in Los Angeles Superior Court, but both sides agreed to the $10 million settlement in court papers, which just needs a judge's approval at a routine hearing next month.

The lawsuit asked for damages beyond the $10 million death benefit, so ReliaStar dodged that potential penalty by paying up now.

Documents showed that the court will need to appoint a guardian to represent Ledger's 3-year-old daughter, Matilda Rose who is the policy's beneficiary.

"A confidential settlement has been reached," a lawyer for Matilda's trust, told The Australian Associated Press.

"The parties are pleased we have been able to settle it amicably."

The New York Medical Examiner's Office ruled that Ledger died of an accidental overdose, after he consumed a lethal cocktail of prescription painkillers and sleeping pills.

The deadly pills included OxyContin, Vicodin and Xanax.

Ledger, 28, could win an Oscar next month for his final movie, "The Dark Knight."