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Comment by aabhay | Hacker News Reader

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.

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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.

Should also mention that the site that posted this _sells_ insurance packages.

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.

Why doesn’t “buy it yourself” solve the problem?

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.

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