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Google Keeps Paying Deceased Employees' Families for a Decade
- csmeder 14y agoSo soon as you leave google you have to sign up for a real life insurance plan? At that point you may be too old to get one at a good price. This seems like a sneaky way to scare people from leaving google? As I understand it at a normal company you pay into a life insurance plan each month from a young age, so that if you take this plan with you to a new company you get to keep the low rate you have earned. With google you loose all your life insurance if you leave Google! Am I confused or is this a crummy deal?
- tomkarlo 14y agoIt's not in lieu of normal life insurance. It's an additional benefit.
- rexreed 14y agoLife insurance is not exclusive. You can take out a policy on yourself, and your employer can take one out on you, and you can buy one through your employer, all at the same time. In fact, Wal-Mart has been accused of surreptitiously taking out life insurance policies on its own employees without their knowledge. This allows them to claim and get a death benefit on some of their older, senior citizen employees. Clearly in that case, Wal-Mart being a policyholder had no impact on the employees having their own policies at the same time. In this instance, Google is providing an additional benefit to its employees (benefits go to them) which doesn't preclude the employee from getting their own policy -- which they should, since they should never have a life insurance policy that is dependent on employment. In fact, Google gets a good deal in doing so. When they insure their employees, they are doing so with a limited term (a 10 year payout instead of a one-time lump sum), and they are also getting the benefit of a group life insurance policy, which averages out the rates across the insureds rather than on a per-person basis, which would require each employee to endure a physical and a qualification check. Sounds like something other businesses might think of emulating. I liken this more to a disability insurance benefit rather than something that is used to keep employees committed to the company.
- droithomme 14y agoThe policies you mention at WalMart are called "dead peasant insurance". There were even investment funds that engaged in betting on the deaths of nearly random people that had little to no connection to those taking out insurance, but about which the investors had more information about their health and longevity than insurance adjusters. These were good investments because the money you put into it in many cases was tax deductible, but life insurance benefits paid out are completely tax free. So the thing in essence was a legal money laundering operation that converted possible taxable corporate profits into completely untaxed death benefits.
- rexreed 14y agoApparently not that great of an investment, tho: http://www.contingentfeeblog.com/2009/05/articles/corporate-owned-life-insurance/walmarts-dead-peasant-suit-against-insurers-escapes-the-grave-a-third-time/ http://www.contingentfeeblog.com/2009/05/articles/corporate-...
- raghus 14y agoI think you may be confused.
- sp332 14y agoThis seems like a sneaky way to scare people from leaving google? What, by making "working at Google" better than "not working at Google"?
- Foy 14y agoScary! How dare they try to take such a nice approach to employee retention.
- csmeder 14y agoI posted this before some one said "It's not in lieu of normal life insurance. It's an additional benefit." If this was in lieu of normal life insurance (Which every major tech company supplies their employees) this would be a crummy deal. And a sneaky way to skimp on life insurance. If this is confusing I will give you an example. John works at say Firefox. He is given a 500k life insurance plan as part of his benefits. Mike works at google and he is given (100k / 2) * 10 as a death plan (but not life insurance). After 20 years of work John leaves Firefox and Mike leaves Google. Both leave to do contract work. John's life insurance plan is portable so he is able to keep it by paying a small amount each month. Mike has no life insurance plan. He has the option to buy one on his own. This is expensive as he is 20 years older now and has medical conditions that he didn't have 20 years ago. It is so expensive that he can't afford life insurance at this point. John has the exact same condition, but his plan was portable so he doesn't have to pay high amounts each month. Both John and Mike die a year later due to their condition. John's family is given $500k. Mikes family gets nothing. And google got away with paying $0 to provide Mike with a death plan. Firefox spent thousands of dollars over the last 20 years to provide John with a portable life insurance plan. Moral of this story this is why a death plan in lieu of life insurance is crumby. However, it turns out Google is giving away both, so everyone wins :)
- steve8918 14y agoYou are completely confused. All the Silicon Valley companies I've worked at give you automatic 2 x salary as a death benefit for free. This is without taking any sort of physical, etc. If you want additional benefits, you need to pay extra per month, submit to a physical, etc. It seems like instead of the regular 2 x salary, Google is offering 5 x salary for free, which is really great. Saying it's some sort of scare tactic is preposterous. That's like saying paying people extra is a scare tactic, because they won't be able to make the same amount of money elsewhere.
- kkjhcyuwb 14y agoNo. The Death Benefit is in addition to the Life Insurance. Death Benefit = 50% Salary for 10 Years. Life Insurance = 300% Salary at Death. The above is provided for free. Additionally you can increase the Life Insurance percentage by making additional monthly contributions.
- NDizzle 14y agoThis kind of stuff is great, and great is an understatement. When my Dad passed back in the early '90s from cystic fibrosis, the company he worked for (for about 15 years) continued to pay our family his entire salary for 3 years. That was what enabled me to be where I am today. It allowed my Mother, who was a stay at home Mom with two wild ass kids, to take the time out to get a solid vocational education and get a job that pays a decent wage. Anyways. Good on google.
- melvinram 14y agoI envy not Google employees who get these benefits. I envy Larry Page and Sergey Brin for founding and building a company that is capable of offering these types of benefits.
- jmathai 14y agoYou can envy that this would make the transition to a new, unplanned and unexpected life MUCH easier than it would have been had it included the financial stress.
- patio11 14y agoYou don't have to be all that envious of the capability to offer this particular one. As pointed out by many people here, it is rebranded term life insurance, and dirt cheap for the typical HNer. Kalzumeus bought a $500k policy for me when I got married. The rate (locked in for the next 10 years) was in the tens of dollars per month. I'm pretty sure it is tax-deductible (confidence for Japan: near total, US: fairly strong), too, but if my accountant has a problem with that it is still in the tens of dollars per month. Google can afford to a) self-insure and b) afford modestly higher policies at the upper end without a physical and possible reject (my insurance agent was "only" willing to go up to about a million before they started asking questions), but they're not uniquely capable in this regard.
- slurgfest 14y agoPerhaps I have misunderstood the terms of what Google is offering. You say tens of dollars. You are taking pains to indicate how little it costs, so I suppose that means at least $20. If you started at (say) the age of 30, it doesn't much matter about the rate in the next 10 years - what matters is the next 45 years or so. By the time you are 75, what will the rate be? And what proportion of 5 years salary will it pay out? Insurance agencies are not charities, nor do they pay your salary; they operate on a for-profit basis. The insurance agency is not going to offer you a deal that loses them much money on average. If they never raise the rate and you die promptly at 75, you have only paid in $10,800 (aka $2,160/yr for 5 years, which is a pittance). Since they hold the money they make some interest, but if they pay out much more than you paid in (since they do still have to pay their own bills) they don't break even, and they can't survive if that is the usual case. They are going to have to dramatically raise your rates, or pay much less at the end, or make it less likely that the benefits will be paid out. More likely all 3. So I am skeptical that the relationship of a Google employee to their death benefits is really comparable to your relationship with your insurance agent.
- Eduardo3rd 14y agoWouldn't it be much cheaper to offer a life insurance policy for each employee that would pay out enough to generate this much income at a relevantly low interest rate? Or is that what they are actually doing and just packaging it differently?
- objclxt 14y agoLife insurance/assurance doesn't make much sense for an entire workforce - the insurance company has to make money somewhere. The total you would pay in premiums to cover everybody would almost certainly exceed what you'd end up paying out of your own pocket instead. I don't want to come off as morbid, but I assume it must be reasonably straight-forward for Google to estimate/budget how much this benefit will cost long-term. After all, death rates amongst populations are generally well known.
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- cperciva 14y agoThis is a life insurance policy, except that Google is self-insuring.
- Shebanator 14y agoIt is a life insurance policy, but that isn't the only difference. A key point for me is that google employees are ensured to a very high level without having to send the insurance company the results of a medical exam. Most companies I've worked at can only insure you to 2x or 3x your annual salary without the exam, and they charge you extra to provide even this level of coverage. Google's policy is slightly better than 5x.
- yummyfajitas 14y agoGoogle's policy is slightly better than 5x. If you ignore the time value of money. Google's policy is 5x your salary, but spread out over 10 years. Much better (for you, worse for google) to get the cash up front.
- fsckin 14y agoMorbid as this may be, it's common practice. There was a scandal about it involving Walmart not long ago where they gave absolutely nothing to the family. http://consumerist.com/2007/07/walmart-took-secret-life-insurance-policies-out-on-employees-collected-after-their-death.html http://consumerist.com/2007/07/walmart-took-secret-life-insu...
- harryh 14y agoThat scandal was retarded. They did it for tax reasons. You can certainly argue that the tax code should be changed, but arguing that the families were somehow entitled to something just because it was called life insurance was ridiculous.
- eru 14y agoWhat loophole in the tax code makes that behaviour worthwhile?
- mbrubeck 14y agoThis doesn't do a very good job of explaining the tax consequences, but: "Wal-Mart, which said it canceled its policies in early 2000 because it was losing money on the arrangement, says the program was intended to reduce its income taxes to help pay rising employee health care costs." -- http://news.tbo.com/news/metro/MGB5SEJVN3F.html http://news.tbo.com/news/metro/MGB5SEJVN3F.html
- mtr 14y agoOver the long term wouldn't a company lose money on life insurance policies such as this? If you are buying insurance then you are betting that you are better at actuary analysis than the insurance company. Insurance companies are for-profit entities. Insurance is useful for protecting against large losses that would impact your solvency, so I don't understand why Wal-Mart would have had these policies in the first place.
- selvan 14y agoWow..loved last line of the post.."Google has an interest in being seen by its staff not just as a place of work, but as a way of life. Even in death."
- coopdog 14y agoAs admirable as this is (they're basically giving employees a free, low hassle premium life insurance plan), I can't help but feel that this is a will calculated way to widen the gap between goog and startups. I imagine employee spouses have a huge reason now to talk their partners out of leaving their cushy job. 'If not for yourself then think of us...'
- emmapersky 14y agoI think there are many significantly more important reasons that differentiate Google and start ups that can not be compensated by paying into a private life insurance plan (that all start up's I've previously worked at had an option for).
- JoeCortopassi 14y agoIsn't that kind of the point of benefits? Make your company more attractive than the next, for potential new hires
- ajdecon 14y agoThat argument is true for just about any company's benefits. Even without this, startups generally offer much less in the way of life insurance, health insurance, time off, and various miscellaneous benefits. All of these provide a much higher quality of life to the family than their absence, and most of them even operate while the employee is alive. :-) If a spouse is already supportive enough of the startup choice to forgo all that? I doubt the extra google life insurance will change their mind. (Incidentally, I also think that the most responsible thing you can do if you have a family and you're founding or joining a startup, is to buy your own high-value life insurance policy immediately.)
- slurgfest 14y agoWhen startups offer higher salaries or better working conditions or other benefits than other startups, they are engaging in "a calculated way to widen the gap" as well. Is the problem that Google is too big to do grossly unfair things like trying to retain employees by treating them well?
- rhplus 14y agoThis is just a life insurance policy being rebranded and puffed up by Google PR & Google HR. Life insurance is a standard benefit among many top employers. What makes Google a bit different is that they're paying out 10 x salary, which is probably at the higher end of the spectrum of policies like this. I think my previous employer paid something like 4 x salary for death through illness and 10x for accidental death. Perhaps Google is happier to pay higher premiums or they've negotiated down thanks to a younger and healthier corpus of employees?
- philsnow 14y agoWhere do you get the 10x salary number ? The linked article says 50% of salary for 10 years -> 5x yearly salary total. I wouldn't say that on average my co-workers are "younger" (than whom?). Healthier, maybe.
- Evbn 14y agoIf it's salary and doesn't include equity or benefits, its value is reduced another 30%-50% as a multiple of compensation.
- cgs1019 14y agoLife insurance is provided as a separate benefit.
- patio11 14y agoHe's pointing out (correctly) that this is an entirely cosmetic abstraction layer on top of life insurance. It's like saying "And in addition to your salary, we're also giving you a roll of quarters every month in case you need to pay tolls, do laundry at one of those barbaric laundromats not in the Googleplex, or play arcade games." "So what you're saying is you're giving me $10 a month extra in salary?" "No no, what we're saying is we're giving a roll of quarters..." Pro-tip for HNers here, by the way: Notice how you responded much, much more viscerally to this emotional, novel perk than you would have if Google had described it as an industry-standard perk with a knob slightly adjusted? Please remember this the next time you're e.g. writing a pricing plan or feature grid.
- kkjhcyuwb 14y agoThis is in addition to regular life insurance that Googlers get, not instead of.
- melvinmt 14y agoWow, Google's a great place to die.
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- vexxt 14y agoLarry Page probably got health issues (he lost his voice) that lead to this
- ChuckMcM 14y agoWow, this is the same guy who decided that engineering managers cannot share with their reports the calibration number which is the basis for all their variable compensation calculations. I wonder if you keep the same number after you die or if they set it to 0 since you're not really contributing as much any more.
- j_baker 14y agoSomewhat random (but non-trolling!) question: Why is it considered good for Google to give its employees lavish benefits while it's considered extravagant for Wall Street companies to give lavish benefits? I personally feel this is a valid way of viewing things (I may be biased), but I can't quite put my finger on why.
- wutbrodo 14y agoBecause Google has never been bailed out by taxpayers. The idea that Wall Street was able to socialize its losses and claim all its gains for itself, and then go right back to paying out extremely high amounts, is what rankled people a lot more than "those benefits are lavish, per se".
- MordinSolus 14y agoWhy, then, do we not blame the government instead of Wall Street?
- lmm 14y agoWhen guy A gives guy B money to lift him out of bankruptcy and guy B spends it on crack and hookers, most of us blame guy B.
- MordinSolus 14y agoIf that were guy A's money, that would make sense. But it is not guy A's money. If guy A takes money from guys C - ZZZZZZ in order to give that to guy B, without setting many restrictions or even punishing guy B, and guy B spends in on crack and hookers... we blame guy B? Sure, guy B was a scumbag, but guy A was the one who took and misappropriated the capital in the first place. Not to mention the actions of guy B that led up to his needing money were actively encouraged by guy A.
- wutbrodo 14y agoNot to strain this metaphor to the breaking point, but guy A is, in theory, a representative of guys C-ZZZZZZ, and they have recourse when they're angry at his actions. More importantly, guy A IS being held accountable; there's a lot of anger at the government as well over the bank bailouts (and the attendant lack of conditional guarantees). even in the situation you're describing, of COURSE one would blame guy B (along with guy A). Coincidentally enough...that's exactly what's happening.
- clarky07 14y agoThis sounds great when you write it like this, but it's a $10 a month life insurance policy. If they have another regular life insurance policy that's fine, then it's $20 a month. Not exactly mind blowing when we are talking 6 figure salaries. Awesome, everyone just got a .1% raise. yay.
- cletus 14y agoSpeaking as a Google employee who does NOT speak for the company, I remember reading the notice about this. This is separate to life insurance (which we also get).
- jholman 14y agoYeah, I was going to say. This is on top of Google's free, portable, standard life insurance, from a big conservative company. Which even when it's free, is better than any of the life insurance policies people have already mentioned in these comments. And which, if you want to, you can pay extra to upgrade.
- brudgers 14y agoDisclaimer: I am not an actuary. The rules governing Corporate Owned Life Insurance require notification except in the case of highly compensated employees (over $95k/year), according to Wikipedia. http://en.wikipedia.org/wiki/Dead_peasant_insurance http://en.wikipedia.org/wiki/Dead_peasant_insurance Looking at it cynically or from the standpoint of cold hard cash - take your pick - it looks this sounds like "dead peasant insurance 2.0" - i.e. an actuarial scheme for the age of blogs and the PR nightmares they can create. When considering life insurance as a financial instrument, Google is in a position to structure the policies in ways which benefit their own bottom line (consult your tax attorney and re-insurance provider for details). I would conjecture that the level of Wall Street analyst outrage over this benefit is probably proportional to the drag the policy creates on Google's gross revenues. The worst case payout would probably be somewhere around six times annual salary - married, quadruplet infants, and little return on investment over the lifetime of the annuity payments. Actuarially, it may be significantly less across the pool of Google's employees. The neutral case is an employee with a role that it makes sense to insure anyway, and the death benefit creates only a marginal increase in policy price (one which may well be offset through retention and goodwill). The best case is zero - no spouse or domestic partner, no kids. Like many things in Silicon Valley, I suspect that the entire investment is funded by the homeruns. Young employees, such as new college grads, are the least expensive to insure and would generally provide the highest rates of internal death benefit retention and the highest probability of cash value retention due to resignation. By coincidence, this also happens to be a demographic Google recruits heavily. None of this is to say that this is bad for Google employees - it may in fact be a win-win. Only that it is unlikely to be munificence on the part of Google as the article implies. I suspect that following the money will lead to the bottom line.
- yason 14y agoThat's just proof that half a day's of work isn't productive anyway. The guy lives, gets half of his salary for trying to do work and the other half of actually doing it. The guy dies, the productive half of his salary disappears but the unproductive half continues. :)
- keithpeter 14y agoAs the original article states, this benefit will mean more to older employees. Do HNers think this will lead to the median employee age at Google increasing over time?
- rprasad 14y agoI can see the headlines now: "Is Google's Generous Post-Death Policy the New Unfunded Pension Liablity?" EDIT: Google's policy is not life insurance. The post-death salary payments appear to come out of Google's pockets, not the pockets of an insurer or reinsurer. /EDIT This may help Google compete right now, but in the long run, it will be the same drain on the company's resources that pensions were for Detroit. When Detroit was giving out pensions like candy, it was the top-grossing industry in the world; they were making margins close to what Apple makes today. It helped them recruit the best and brightest talent. But then a funny thing happened: the market corrected itself. Cars stopped earning bank. Margins fell, and even the biggest carmakers started going out of business. We're in the glory days of the web industry, the only difference being that most websites don't even make money before getting sold. But investors will catch on, eventually, like they always do. And when that happens, policies like this will start to go away, just like they did for Detroit.
- Evbn 14y agoShort term life insurance is far less than risky than lifetime pension.