I like that this is taken care of for me and that I don't have to spend my personal time trying to research a bunch of life insurance options and figure out what works and what doesn't. I also love that there is some amount of collective bargaining being applied here instead of me making the purchase as an individual. I'll gladly pay a $300/yr premium for that, and the ease of mind that my loves ones will have some advocate inside Google rather than having to go toe-to-toe with the insurance companies themselves to get pay out.
I mean has anyone dealt with other forms of insurance? E.g. Car insurance or home owner insurance or health insurance. Getting these companies to actually pay you when the policy rightly kicks in is like pulling teeth. I wish Google did that for me too.
One time I filed a claim on my car getting broken into. They 'paid' me with a prepaid debit card that had a $300/day limit. Out fucking rageous
> some amount of collective bargaining being applied here instead of me making the purchase as an individual.
The whole point of the article is that Google's pricing is terrible compared to the open market. If they actually did any bargaining they did it this way: https://www.youtube.com/watch?v=QPqAcOnEBUI.
Having competitive rates and having HR helping out the family when an employee dies can be completely orthogonal.
No, because this entirely ignores the dimension of quality. I mean maybe they are right, but it's not considered in the analysis.
The author recommends I buy Geico life insurance for $156/yr.
I have Geico car insurance and have filed claims when people broken into my car. You would not believe the lengths this scum bag company goes to in order to not pay you the money you are entitled to. I don't want my family subject to that if I die.
> I like that this is taken care of for me and that I don't have to spend my personal time trying to research a bunch of life insurance options and figure out what works and what doesn't.
Does Google help the family with detailed claim resolution in the event of an employee's death? I don't have evidence either way, but that seems more personal than I'd expect.
To be honest, I don't know the detailed structure for this as I'm relatively young and have the luxury of it being out of mind at the moment.
What I know is that you will for sure have allies that you wouldn't have on an individual basis.
For example, my wife would be able to call up my colleagues (from my team that I work with every day) and ask for connections to HR or whatever. They would definitely help her because 1) they care about me as a person and 2) they are invested from a game theory perspective, because they also want to know that they'll be paid out if the same thing happens to them.
Most likely, there is some existing structure to actually help, as Google is at the scale where this kicks in non-zero times.
However, I just looked it up on the internal search and as you'd expect, it differs based on your country and its laws. So I can't speak for all Googlers
I get what you're saying, but at 29 what would I have done with life insurance? I had no spouse or children. It seemed like all they were asking is a way to opt out.
True but at the same time, Google has all sorts of weird perks that we can't opt out of and essentially pay a tax for.
For example, some parts of campus have swimming pools and endless treadmill pools. I don't swim so I get zero benefit from this. Meanwhile these things definitely cost some amount of money to service and maintain. We can't opt out of that.
We can't out of Google throwing massive holiday parties that I don't think are a lot of fun.
In the end, it's just kind of a package deal. Given that Google comps relatively well, the point is to just be happy with the money you are making and not stress too much about optimizing <$1000 at a time
I’ve heard from friends in finance that it’s very intentional that firms provide complementary car service (or now, Uber credits) if you’re staying in the office past a certain hour. Sure, they could just pass that to you as cash compensation; they have decades of data to predict how often you would stay late. But it’s one less tradeoff for the employee to need to worry about, which translates into that much more focus.
This is an extreme example - it’s Google saying “we don’t want you to even need to think about the tradeoff of ‘do I spend my comp on a more sunny living space with a quicker commute, or save it so my family can be taken care of if the worst should happen.’” They want that latter part to not be a consideration.
Elite firms invest in their employees’ focus. They’ll always do things like this. Call it paternalistic or morbid, but it’s logical and intentional and not at all about whether it’s efficient vs. additional cash comp.
This is a complete misunderstanding of probability, payoff, and return on investment.
The value of a life insurance policy isn’t in its amortized yearly returns. This policy is not an investment. The policy allows you to pay a negligible amount of money to avoid a devastating situation — family pain and debt that might arise from your death.
Anybody who uses this article as justification to end their life insurance policy is so badly mistaken that it hurts.
Edit — the “buy it yourself” argument is stupid. It doesn’t solve the problem outlined in the article.
Also a bit of survivorship bias. No employee who literally makes use of the perk is around to say how useful it is. Thus we debate how valuable it is if you never actually need it.
The problem outlined in the article is that Google is paying to much... So buying it yourself is the entire point of the article. I don't know how it doesn't solve the problem.
I am guessing the math in the article is wrong and/or the insurance pays for is better than both of the barrel insurance the article suggests you get.
In general insurance has a slightly negative expected value (that plus the time value of money) is how insurers make money. You are paying to reduce variance.
I could just as easily alter the variables for various mortalities to make $150/month seem expensive by that logic. Paying $150 vs $300 per month for life insurance doesn’t suddenly make it “worth it”
What? Of course there is a dollar amount where people switch from "worth it" to "not worth it". Here is a thought exercise. Would you buy the same insurance plan for $0. Of course, it is free. Would you buy the same insurance plan for $500,000. No of course not, that's the payout. Everyone has a different dollar amount in between based on the risk aversion, their own valuation of "peace of mind", and their perceived likelihood of using it.
Yes of course there is a dollar amount where it stops becoming worth it, but the primary rule is simply whether the amount is sufficiently negligible. It is not whether the amortized return on investment beats the specific dollar amount.
As a thought experiment, would you pay $500,000 a month if the payoff was $5B?
It is only available if you are in good health; if you are in bad health than it is impossible to get life insurance at an attractive price. This is fair, because of course folks in bad health are likelier to die sooner. But that makes the value of group life insurance very high to those individuals — it is a wonderful perk for them.
The first $50,000 of group term life insurance is not taxable, so the tax penalty here should be reduced by about 10% [1].
Second, either Google is getting shafted on their premiums (they may be) and over paying by more than 44% ($200/$450 from the article), or on average this is a net benefit to employees over the possibility of opting out. Consider employees with health problems that could never get term insurance on their own. The real story might just be that Google should find a better priced term life provider.
It's worse than that, it's like saying the sandwich cost $20 but actually it only cost them $5 to make the sandwich and you can buy a sandwich down the road for $15.
The perk also includes: 10 years of salary to your spouse, and monies also for your children. Googlers typically aren't going to microptimize expenses this small.
I think this is the real perk -- I remember in ~2008 that sadly, a googler's family had to take advantage of this when they passed. It stood out as the company really taking care of the team. I have no clue if they still do this today but it was certainly a wow moment.
back when google was great, my manager had to call a coworker's parents, who lived in Iran, and explain that their son had been badly injured in a parachute accident and was in the hospital, but that Google would be paying all his bills and we'd do the best to get him back on teh ground so he could eventually return to the office. (said employee left right after to be a VP at a bank. I thought that was a jerk move).
Life insurance is actually surprisingly common a perk; I remember even Stripe had it! I guess it's nice to know that your employees' family will be well provided for regardless of their original financial situation.
Maybe this is a healthy dose of paternalism? I feel like there would be more people who regret not buying life insurance in this case than people who regretted the minimal $250 outlay
Let's be real, it isn't a perk, it is a marketable asset for insurance companies to make more money.
A lot of dental insurance falls under a similar category. It is often more expensive to pay for the insurance than it is to pay out of pocket. But then you wonder about what happens if something really bad occurs? Well, a lot of the dental insurance policies (especially for smaller companies) have yearly maximum limits. You're still paying out of pocket.
A lot of small business dental plans cost the company nothing extra to offer to employees because the cost is passed onto the employee directly. It is an optional 'perk' that is offered by the insurance company, but it is almost worthless in value. A lot of employees don't do the math and just tack on the extra monthly fee. But, if you do the math on them, it often doesn't work out to opt into that perk, even in an emergency case.
Correct, larger plans get it factored into the overall costs and hidden from you. When my company grew in size and we switched plans, suddenly I got dental as well for free (I had previously denied it cause I did the math). It may not even be something your employer pays for as it might be a perk added in by the insurance company. Depending on what the coverage actually is, it still may or may not be worth it. Hard to say... it is all so nebulous and poorly defined.
This is completely standard in every big corporation Ive worked for, both in Europe and North America. I think it’s just a corporate flex: “when you’re with us, you’re covered”
What about the more than twenty-something workers? Does Google pay more for them?
I agree it might not be good for twenty-somethings. And I'm sorry, your expected value is low here. The tax situation makes this awkward, an ask I'd rather not make. But: I hope you're ok paying the taxes on this free benefit, if it includes older folk too. They do have- I'm sorry to report- an expected positive value.
In healthcare, a group-pool means the healthy & young pay a little more than their fair share. But it means we all can have benefits. And if catastrophe does happen, well, everyone's glad this is here.
I might cheekily throw in that we can possibly unwind some of the college-educated 0.3x multiplier, because Googlers have enough money to get themselves into some stupid & dangerous hobbies & travel. I wonder if that's actually real... Probably not.
Having this be a universal policy has a big clear benefit--when someone at the company dies, their family's immediate needs and expenses are taken care of. It avoids the awkward "passing the hat" to the company or fellow employees for support. There's no need to make special exceptions, determine how much to help out in a crisis, etc--it's taken care of automatically, to a pre-determined extent. No one can complain that an employee died and big rich Google did nothing for their family. It saves a lot of potential handwringing, bad PR, and employee dissatisfaction, etc.
I think it's pretty unlikely that Google is getting a bad deal on its group life insurance relative to the expected value of benefits. Yeah, younger people are cross-subsidizing premiums for older coworkers - it's arguably a dumb standard, but it is a standard, and ultimately the impact isn't that significant.
The bigger issue with employer-sponsored life insurance is that it leaves you vulnerable to losing your coverage right when you actually need it. Lots of fatal medical conditions make it impossible to work in your last months or years of life. And that's if you want to spend your last months or years of life at work, which many people understandably don't.
In the best case, you can take your insurance with you when you lose or quit your job. You just have to remember to fill out the forms to port your policy out and pay the premiums within ~30 days, which sounds trivial but probably isn't exactly top-of-mind if you're dying. The insurer will be unsympathetic if it takes you 31 days instead of 30, of course. In worse cases, you might not be able to port out your policy at all if you have an immediately-life-threatening medical condition, or your premiums may be unaffordable, or there may be limits on how much you can convert.
So yeah, I generally recommend that people ignore their employer-sponsored life insurance and buy their own if they need it. All of this also goes for long-term disability insurance.
In the US, around 80% of men and 88% of women live to be 65. I wasn't easily able to find stats on how this breaks down across college graduates (or separate it from those who die before they enter the workforce), but for simplicity's sake, let's take 88% average for both genders to account for this.
That means the odds of me dying throughout my entire working life are 12%.
Let's plug THOSE numbers into the equations, assuming working from 18-65, so 47 years.
> Likelihood of death in 47 years = [12%]
> Multiplied by the total payout (median $166k/yr salary) = $500 000
> The insurance's expected value is $60 000
Total payments into the premium are 47 * 550 = $25 850
Now obviously there are some big caveats to this - I would imagine a significant proportion of Googlers retire early, etc., but the maths presented is... at best oversimplified. This is also not some impartial review, this is a company with something to sell. I would be very cautious accepting their 'review' at face value.
The calculation seems incorrect to me because $200 tax is paid in both options. A Googler can either have $350 a year (in cash), or have the insurance. Thus the cost to the employee is $350 a year, not $550. Provided the self-bought insurance cost is $270 a year, this goes to a difference of $80 a year, or $6.7 a month.
This article is utterly irresponsible. Yes, the expected value of insurance is less than the cost: that is how insurance works. The purchaser is buying down risk. That's how car insurance works; it's how life insurance works; it's how home insurance works; it's even how health insurance works.
Moreover, an overlooked perk is that if one has a dangerous medical condition, then individual life insurance is impossible to get at an attractive price (the ones which require no medical exam still ask medical questions, and if you have a life-threatening condition then you will be denied coverage, which is fair, because the risk is too high), but group life insurance is still available. This is wonderful for those who need it.
The ideal time to buy life insurance is at 30 (it's not much cheaper before that, and quickly gets more expensive after). I went with a 30 year, $2mill plan for $120 a month. My thought is that who knows if/what my family looks like in the next 30 years, $2mill is a decent chunk of money for any dependents, and by the time the insurance runs out, my investments will hopefully be worth more than the insurance.
I did policy genius (not affiliated), and it was really easy. Plus it's not tied to my employer.
This is simply terrible analysis. The likelihood of death analysis is beside the point. By enrolling every employee in a group life policy, Google is able to get a very favorable rate from an insurer. Googlers in general are going to be younger, healthier, with greater access to health care than the general population, let alone people who are seeking out life insurance who don’t have access to one through their job (or union).
There is no way an individual would be able to get the same rate Google is paying.
I wouldn't, because speaking out is useless. Our current freedom of speech hasn't brought free healthcare, jobs, living wages, or affordable homes any closer. The genius of the American plutocracy is convincing the working class that free speech enables all of these, in spite of the last fifty years showing that it does nothing of the sort.
Reminds me of how, for Cuba-loving leftists, the first thing they cite is how under the Castro regime the literacy rate hit 99%. Hey, that's great. But if there's no freedom of speech, what are people going to read besides state propaganda?
China doesn't have good Mexican food. But they really are a remarkable country. Building high speed rail over their entire country in a few years, shiny new hospitals in days during a pandemic. Sometimes I wish they would occupy California and shut down our racist concentration camps (sorry, for-profit prisons), then ship the homeless to dorms in the Central Valley. Of course, they would also build out our high speed rail in a couple of weeks, just as they are modernizing Africa (rather than dropping "aid" like Americans).
Sadly, most countries don't have good Mexican food. Pet theory is easy for undocumented/labour Mexicans to sneak into US who absorbs 98% of the diasphora. Rest of world has dearth of Mexicans who opens restaurants because that's not a skill set they look for in economic migrants. Lucky to have some good Mexican joints in major Canadian city, but most places don't. That extra border hop filters out a lot.
> Building high speed rail over their entire country in a few years
Ah, the high speed rail network to podunk provincial towns where nobody can actually afford the fares. Built by taking on insane levels of debt which will hobble China Railway for decades to come.
> shiny new hospitals in days during a pandemic
And yet keep imposing lockdowns while the rest of the world has limped back to normal. All the while pushing inferior vaccines and ineffective cures.
Do you understand how bad the healthcare system in China is?
Even highly paid software engineers have to resort to smuggling medicines from India because of the absurd costs at home. I know because I personally helped my colleagues procure anti-cancer drugs.
> then ship the homeless to dorms
I think the preferred term is reeducation camps.
> just as they are modernizing Africa
By building white elephant projects and leaving them with unsustainable levels of debt. Do you see a pattern?
I've always heard it attributed to WWII era wage controls. You couldn't compete on salary so you had to come up with other benefits to tie to your job.
Insurance shouldn't be only valued by expected value, but also how do they affect the other part of distributions. Getting less expected value for knowledge that the chances of your family going completely broke, 0, are now much lower is worth it.
What I don’t understand is people making 160k per year worrying about $300 extra tax in a year. It’s just a rounding error, why would you obsess over it?
I like that this is taken care of for me and that I don't have to spend my personal time trying to research a bunch of life insurance options and figure out what works and what doesn't. I also love that there is some amount of collective bargaining being applied here instead of me making the purchase as an individual. I'll gladly pay a $300/yr premium for that, and the ease of mind that my loves ones will have some advocate inside Google rather than having to go toe-to-toe with the insurance companies themselves to get pay out.
I mean has anyone dealt with other forms of insurance? E.g. Car insurance or home owner insurance or health insurance. Getting these companies to actually pay you when the policy rightly kicks in is like pulling teeth. I wish Google did that for me too.
One time I filed a claim on my car getting broken into. They 'paid' me with a prepaid debit card that had a $300/day limit. Out fucking rageous
Insurance is pretty much a scam