Life insurance is meant to benefit the loved ones who would suffer financially in your absence, but it can be difficult to figure out who to list as the beneficiary on your policy. This person will also have the responsibility of dealing with the insurance company after your death to collect the money. Choosing a beneficiary is an important process, and one that will be guided in part by your insurance company’s policies and even state laws. If you’re asking yourself, "Who can I list as the beneficiary?," here are some things to consider.

1. Spouse

Your spouse is the most obvious beneficiary for a life insurance policy, as he or she will feel the greatest financial impact should you die first. Your spouse will probably organize your funeral and perhaps be left without a second income to support your household. In some states, you may be obligated to choose your spouse as the beneficiary on a personal life insurance policy unless he agrees to sign a waiver that lets you list someone else as a beneficiary. If you want to list someone other than your spouse as the beneficiary, investigate your state laws and make sure to file all necessary paperwork. This will eliminate confusion or delays in insurance funds payout after your death.

2. Children

You may also list one or all of your children as the beneficiary of your life insurance policy. If you choose your kids as the beneficiary, be sure to establish clear language in the policy. Do you want all of your children as equal beneficiaries if the policy allows it? Does this include adopted or step-children as well as your own natural children? If your children are minors, you need to ask the insurance company if it will agree to pay out the funds to someone who is not yet 18 years old. In some cases, you may have to give the money to a legal guardian who would then in turn be allowed to give the money to your children.

3. Other Parties

If you are unmarried and don’t have kids, you can also designate someone else close to you as the beneficiary of your life insurance funds. Keep in mind, however, that you may need to prove that the person will in fact suffer some financial burden after your death, such as being responsible for your funeral. If you can’t prove that the beneficiary would actually suffer a financial burden, you may not be permitted to add him or her as the beneficiary on your policy. Parents, siblings, or close friends are some of the people who might be used as a beneficiary.

4. Primary vs. Contingent

Your primary beneficiary is the person or persons who will get the insurance money after your death. Contingent beneficiaries will only receive funds if the primary beneficiary precedes you in death, or is unable to accept the funds for some reason. It’s a good idea to have a primary and contingent beneficiary on your account – if, for instance, you and your spouse both perish at the same time, your insurance money won’t have a clear beneficiary if you haven’t selected a contingency plan. For example, you might list your spouse as the primary beneficiary and your children as the contingent beneficiaries.

Precision and careful consideration are among the most important aspects of choosing a personal life insurance beneficiary. While you are generally granted some leeway when choosing the person who will benefit from your policy, it’s crucial that you find out what your state laws will permit. Laws will always trump your insurance provider’s internal policy.