This 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.
This 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?
It is fantastic PR, though. It sounded fantastic to me until I remembered that I have a private policy that is about 7x salary plus a separate policy that repays my mortgage, and the combined cost is low enough that I don't notice when it goes out each month.
If I wasn't paying for my own separate insurance, I probably would've been easier to wow with this.
"This might sound ridiculous, but we've announced death benefits at Google."
From that point on, you're led to believe that Google is such a great company that it's willing to hurt itself to be good to its employees. Much better than "We automatically contribute $10 a month into a life insurance policy for everyone."
To me, it's a great example of showing the benefits instead of just the features, mixed with an elegant form of Crazy Mike's Discount TV Warehouse, with prices so low, we must be crazy.
Speaking 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).
Yeah, 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.
The rules governing Corporate Owned Life Insurance require notification except in the case of highly compensated employees (over $95k/year), according to Wikipedia.
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.
I am amazed at how well Google always treated, and still treats its employees. I am even more amazed at companies like Zynga, Amazon and other popular valley companies (both big and small) dont take a leaf or two from Google's playbook, and start treating employees with more respect and give good perks, and spend resources to provide their employees an awesome working environment. The more a company gives, the more it gets from its employees. It is a simple rule. Marissa is prudent and wise enough to know this. Food is free for employees at Yahoo! now. Other execs can learn a thing or two from her.
I 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.
You 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.
You 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.
Wouldn'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?
So 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!
Life 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.
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.
Morbid 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.
That 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.
How is a company buying life insurance policies on employees that pays out to the company (and not their families) in any way comparable to this? Yes, that's common practice. This is not.
Somewhat 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.
Because 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".
Much of the objection has been that those benefits have been tied to high degrees of risk taking, which has demonstrably harmed the system. People who royally screw up and do extremely questionable things getting millions and millions of dollars. The same isn't true of Google's benefits in any way.
Though I've answered it in earnest, your question really does strike me as trolling - it implies pretty heavily that the only reason anyone could ever complain about Wall Street's incentive structure is for irrational emotional reasons, like they are jealous communist types.
Order of magnitude compensation difference (non exec salaries at google, acquihire signing bonuses aside, top out at what, 150-200k?), the fact that they sell services instead of maybe-kind-of-only being a middleman, blah blah blah.
Perception of how the money is made. Generalizing a bit, but most people feel that Google earned the money honestly while Wall Street got their money dishonestly.
It's pretty simple really. People don't like the fact that Wall Street is paying out very high bonuses so soon after many of the companies were bailed out with taxpayer money.
You're comparing a $20 month life insurance plan incredulously to bonuses sometimes in the hundreds of thousands PR millions of dollars sometimes inspire of bad or selfish decisions?
Wow, 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.
This 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.
As 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...'
That 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.)
I 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).
When 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?
That'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. :)
As 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?
Wow..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."
I 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.
[+] [-] NDizzle|13 years ago|reply
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.
[+] [-] rhplus|13 years ago|reply
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?
[+] [-] cgs1019|13 years ago|reply
[+] [-] shasta|13 years ago|reply
[+] [-] grandalf|13 years ago|reply
[+] [-] vidarh|13 years ago|reply
If I wasn't paying for my own separate insurance, I probably would've been easier to wow with this.
[+] [-] philsnow|13 years ago|reply
I wouldn't say that on average my co-workers are "younger" (than whom?). Healthier, maybe.
[+] [-] pikewood|13 years ago|reply
"This might sound ridiculous, but we've announced death benefits at Google."
From that point on, you're led to believe that Google is such a great company that it's willing to hurt itself to be good to its employees. Much better than "We automatically contribute $10 a month into a life insurance policy for everyone."
To me, it's a great example of showing the benefits instead of just the features, mixed with an elegant form of Crazy Mike's Discount TV Warehouse, with prices so low, we must be crazy.
[+] [-] cletus|13 years ago|reply
[+] [-] jholman|13 years ago|reply
[+] [-] brudgers|13 years ago|reply
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
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.
[+] [-] simplekoala|13 years ago|reply
[+] [-] melvinram|13 years ago|reply
[+] [-] patio11|13 years ago|reply
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.
[+] [-] jmathai|13 years ago|reply
[+] [-] Eduardo3rd|13 years ago|reply
[+] [-] csmeder|13 years ago|reply
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?
[+] [-] rexreed|13 years ago|reply
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.
[+] [-] sp332|13 years ago|reply
What, by making "working at Google" better than "not working at Google"?
[+] [-] steve8918|13 years ago|reply
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.
[+] [-] tomkarlo|13 years ago|reply
[+] [-] fsckin|13 years ago|reply
http://consumerist.com/2007/07/walmart-took-secret-life-insu...
[+] [-] harryh|13 years ago|reply
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[+] [-] slurgfest|13 years ago|reply
Though I've answered it in earnest, your question really does strike me as trolling - it implies pretty heavily that the only reason anyone could ever complain about Wall Street's incentive structure is for irrational emotional reasons, like they are jealous communist types.
[+] [-] phillmv|13 years ago|reply
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[+] [-] ajdecon|13 years ago|reply
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.)
[+] [-] emmapersky|13 years ago|reply
[+] [-] slurgfest|13 years ago|reply
Is the problem that Google is too big to do grossly unfair things like trying to retain employees by treating them well?
[+] [-] yason|13 years ago|reply
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[+] [-] Eduard|13 years ago|reply
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[+] [-] rprasad|13 years ago|reply
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.
[+] [-] vexxt|13 years ago|reply