The Worst Perk at Google

I work at Google

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

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.

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.

[1] https://www.irs.gov/government-entities/federal-state-local-...

> What it costs you

> The tax cost paid by the employee = $200 (additional tax)

> Google paid the insurer $450; without the policy, that cash could be directly paid to the employee = $350 (post-tax)

> Total cost for the insurance: $550

Wait, isn't it like saying "The lunch is free, but if the employer didn't provide lunch they could give me $20 dollars per day instead!"?

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.

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

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.

What a strange way of looking at it.

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.

these benefits need to stop being tied to employers.

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.

How does the author know how much Google is paying for the insurance?

My company shows how much the "cost" of any particular insurance they are covering is, but those aren't the actual prices they are paying.

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?

This is too real