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Comment by patio11 | Hacker News Reader

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.

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Hmm, they did spin it well. I feel a bit silly for not recognizing it. And you're right, this can be a nice "benefit" that would be really cheap to add for employees, especially at the age that most "hackers" are at.

As a point of reference, my employer provides 2x my salary in life insurance for free, and I can double it to 4x for $6.80 a month.

It's a nice benefit, but it's on the same extravagance level as providing free coffee.

fyi, there is a term mortality protection gap known about in insurance at the moment, in which limited duration mortality-based benefits cost significantly less than the utility customers derive from them. There is a report somewhere, but I don't know if it is confidential. http://www.swissre.com/reinsurance/insurers/life_health/Swis... is related.

The report says that people require life insurance, because the financial burden on their family after death is too high for them to afford.

It also says that purchasing life insurance is a cheaper alternative than building the required savings to cover the family's financial burden after losing the main breadwinner.

The report was written by Swiss Re.

Yes, sorry, it's not the right report.

Perhaps 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.

Are people really going to keep working at Google until they're 75? I expect most of them would like to retire at some point.

Are you really going to keep paying into the insurance policy until you're 75? The sooner you stop paying in (or die), the more you'd have to have paid in order to count on getting 5 years' salary paid out.

The incentive structure of your deal with the insurance agent is that he is trying to get more money out of you than you will get paid out.

The incentive structure of your deal with Google is that you have a benefit for staying.

Retirement is really another issue.

The incentive structure of your deal with Google is that you stay while you are young, but get out before you are likely to die.

If Google reduced your pay as you got older, then that would be strictly comparable to the insurance agent who raises your rates as you get older.

Otherwise, it's not comparable

A benefit that never decreases, premiums that never increase, no questions asked for less than a million bucks, and a configurable end date picked in advance? The industry has a word for this. It is called term life insurance. It is a very inexpensive commodity trivially available from hundreds of providers, which is why they spend hundreds of millions so you remember the talking duck.

I don't understand how that answers the valid points that the person above (slurgfest) raised. It seems impossible to me that any company could offer a policy such as yours (patio11) for 45 years. (Yes, I know that you said that yours is 10 years, but please bear with me for the sake of my example.)

I think that slurgfest was trying to point out the flaws in the following kind of reasoning:

- A man buys a term insurance policy at age 30

- The policy that costs $20/month

- After 45 years, the total cost would be $20 x 12 x 45 = $10,800

- If the man dies at age <= 75, the policy pays out $500,000

- The average life expectancy in the US is 75 years (Wikipedia)

No company could offer a policy like that, right? There's a 1 in 2 chance that the insurance company will pay $500K but will only have received fees of $10K.

If the scenario I've described is possible, could you--or anyone--please explain why the insurance company wouldn't go bankrupt?

It's a 10 or 20 year term and the rate goes up when you're in your 50s. It's dirt-cheap now for those of us in our 20s and 30s without occupational death risks because the odds that we'll die are pretty low. But term life insurance when you're 60 is considerably pricier. And that's who the benefit is aimed at - industry veterans who are looking for the job they'll retire from a decade or so down the line.

Yes, I know that you said that yours is 10 years, but please bear with me for the sake of my example.

Do you understand that the "term" in "term life insurance" is a very, VERY important detail? If you carry the term out to where there is an actuarial likelihood (or certainty!) of death, then yes, term life insurance does get radically more expensive. If you cover a) someone's working career or b) someone's expected career with a particular company, term life insurance remains quite inexpensive.

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