Uncle John's Bathroom Reader The World's Gone Crazy (8 page)
Read Uncle John's Bathroom Reader The World's Gone Crazy Online
Authors: Bathroom Readers' Institute
• Novelist
John Cheever
(1912–82) owned only one suit. He put it on each morning, then took an elevator down to the basement of his New York apartment building, where he rented an office. Once there, he took off the suit, hung it up, and wrote all day sitting in his underwear. At the end of the day, he’d put the suit back on and take the elevator home.
It is illegal to die in the U.K.’s Houses of Parliament, or to enter wearing a suit of armor
.
Even if you don’t think you have life insurance, a policy may have been taken out in your name. So is that good news? Probably not. Here’s a look at one of the craziest tax-avoidance schemes in U.S. history. It’s still legal and still in widespread use
.
P
APER TRAIL
Not many people realized it at the time, but by the early 1990s it had become a common practice in many American corporations for the company to contact the estate of any employee who died and request a copy of the death certificate.
It made no difference if the death was work related or not. The deceased didn’t even have to be a
current
employee—so what if they’d quit two years earlier, after only a few weeks on the job? The company wanted a copy of the death certificate just the same. Few companies bothered to explain why they needed the death certificates, and considering what they were up to, it’s no wonder they kept it a secret. Not many bereaved families had the presence of mind to ask; those few families who learned what was going on usually found out by accident.
In the case of a banker named Dan Johnson, who died of brain cancer in 2008, that accident came when a letter addressed to Amegy Bank, his former employer, was damaged while being sorted at the post office. Johnson’s name was listed on the letter, and the post office mistakenly forwarded it to his widow.
The letter contained a check for nearly $1.6 million. But it was payable to Amegy Bank, not to Johnson’s heirs. The check was just one installment in a $4.7 million life insurance policy that Johnson’s former employer had taken out on him—the company was cashing in on his death.
JANITOR INSURANCE
For decades it has been common for companies large and small to take out “key-person” life insurance policies on company presidents and other valuable employees who are difficult to replace. Dan Johnson was hardly indispensable: The bank proved that when it demoted and then fired him after he got sick. By then, it was too late for him to buy his own insurance. But it wasn’t too late for Amegy Bank: By pooling him with 40 other executives, the bank was able to take out a multimillion-dollar policy on him
after
he’d been diagnosed with terminal cancer.
No Longer Lonely is an online dating site specifically for people with a history of mental illness
.
In years past, it would not have even been possible for Amegy to take out a policy on Johnson because the bank had no “insurable interest” in him: It didn’t stand to lose much if he died. But thanks to years of intensive lobbying by insurance companies, all that began to change in the late 1980s. In many states, regulations were loosened to allow companies to take out policies on any employee, no matter how lowly or unimportant, often without their knowledge or consent. Such policies became known inside the insurance industry as “janitor insurance” or “dead peasant insurance.”
DEATH AND (NO) TAXES
Dead peasant policies had a lot to offer: The payment balance grew, tax-free, until the insured party died, and the after-death payout to the company was also tax-free, just as if it had gone to a widow or an orphan. If the company borrowed money to buy the policy, or borrowed against the policy’s cash value, the loan payments were tax deductible. Under certain circumstances, a corporation could reduce its taxes by more than a dollar for every dollar it spent on dead peasant insurance.
With no requirements for disclosure, either to the employee or to corporate shareholders, it’s difficult to know how many policies were taken out by the time the practice peaked in the mid-1990s. According to one insurance industry estimate, as many as six million American workers may have had policies taken out in their name.
Keeping track of employees after they quit or were fired was not a problem; all a company had to do was conduct quarterly “death runs” of insured employees’ Social Security numbers to see if anyone had died, then collect death certificates from the next of kin and forward them to the insurance companies to cash out the policies.
ARE YOU DEAD YET?
Dead peasant policies created some appalling and cynical conflicts of interest: What’s the incentive to provide a safe work environment if you collect a $400,000 payout every time one of your hourly employees falls off a creaky ladder or drops dead from a heart attack loading a big-screen TV into a customer’s car? Why should a company improve its prescription drug coverage if doing so would make its insured employees live longer?
According to the Texas Restaurant Association, 800,000 orders of chicken-fried steak are served in Texas every day
.
Dead peasant policies may actually have cost some workers their lives. In the early 1990s, Texas’ Diamond Shamrock convenience-store chain upgraded security at its stores with bulletproof glass and other improvements, while a competing chain took money that could have been used for such upgrades and insured its store clerks for $250,000 each instead. Between 1991 and 1995, Diamond Shamrock had one on-the-job fatality; the competitor had nine.
THE PARTY’S OVER?
The IRS began to disallow some dead peasant tax deductions in the late 1990s, and Congress and state legislatures began closing the loopholes. And in many states, the next of kin retained some legal claim to life insurance policies where the purchaser of the policy had no insurable interest in the deceased. That wasn’t much of a problem when the policies were a well-kept secret, but as the publicity generated by one horror story after another brought the policies out into the open, more families of the deceased began to sue. So did many “peasants” who weren’t dead yet: Because life insurance policies have a cash value even while the insured is alive, many employees who’d had policies taken out against them without their consent filed suit to claim some of the cash for themselves.
FREEING THE SERFS
For many companies who held them, dead peasant policies became a nightmare. The publicity was devastating, and when all the closed loopholes and lawsuits were tallied up, many policies were now money losers. Wal-Mart alone lost $150 million on the 350,000 dead peasant policies it purchased between 1993 and 1995.
Dead peasant policies are still alive and well in the states that allow them. But federal law now requires companies to obtain the written consent of the insured; in all, it’s estimated that today companies hold policies on as many as five million workers. At least these dead peasants have been informed that they’re dead peasants, and have given their consent.
But does it really make them feel any better?
You’d be insane not to want to know where all these nutty words for “crazy” came from—and how to properly use them, so people don’t think you’re batty
.
C
RAZY / CRACKED / CRACKPOT
The verb “to craze” originally meant “to violently shatter,” and most likely came from an Old Norse word. It was first applied to people in 1555 to describe one who was “in ill health.” The use of “crazed” and “crazy” to describe the mentally impaired came about 40 years later. The term “cracked,” from the same root, was first applied to mental derangement around 1611. “Crackpot” is more recent, first appearing in the late 1800s. Often used to describe people with unusual ideas, it was short for “cracked pot”—“pot” having been a common slang term for “head” since the 16th century.
INSANE
The Latin word
sanus
means “healthy,” but in English, the term “sane” wasn’t attributed to a “healthy mind” until about 1600. About the same time, its opposite, “insane,” also came into use. The term is no longer used by the medical establishment, who instead refer to a patient’s specific mental illness (such as obsessive-compulsive disorder or schizophrenia). So, technically, no one can be clinically diagnosed as “insane.”
BATTY
There are a few theories as to where this term came from. A popular one says that it was named for Fitzherbert Batty, a prominent English barrister known for being eccentric, who was certified insane in 1839. London’s newspapers widely publicized the diagnosis, and ever since, “batty” has been used to describe anyone who is harmlessly crazy. Another possible origin is that “batty” is short for “bats in the belfry” (or bell tower), an Americanism dating to at least 1899, when it appeared in William J. Kountz’s
Billy Baxter’s Letters
: “The leader tore out about $9.00 worth of hair, and acted generally as though he had bats in his belfry.”
Sticky fingers? Ben & Jerry’s sells a combination lock for its ice cream containers
.
NUTS
“Nut” in its original sense—peanuts and cashews, for instance—is a very old word, most likely coming from the Indo-European root knu, which meant “lump.” The English word “nut” first appeared around A.D. 875, but wasn’t used to refer to a person’s head until the mid-1800s. Around the same time, anyone who acted a little off kilter was said to be “off his nut” or just “nuts.” However, referring to a crazy person as a “nut” wasn’t common until around 1903. (The British form, “nutter,” didn’t appear until the late 1950s.)
GIDDY
These days, we associate being giddy with being silly or in love. But at one time, being giddy could have gotten you locked up. It first appeared in Old English as the word
gydig
, meaning “insane” or “possessed.” The root of “giddy” is, in fact, the same Germanic root that gave us the English word “god”—and originally, to be giddy was to be possessed by a god or other supernatural being.
BERSERK
Thought to be a combination of the Icelandic
ber
(“bear”) and
serkr
(“shirt”), Berserkers were Norse warriors who wore bearskins into battle and were known for their terrifying, uncontrollable bloodlust. They were thought to have suffered actual fits of madness, referred to as
bärsärkar-gång
(“going berserk”), described here in Howard Frabing’s
On Going Berserk: A Neurochemical Inquiry
:
Men who were thus seized performed things which otherwise seemed impossible for human power…which at last gave over into a great rage, under which they howled as wild animals, bit the edge of their shields, and cut down everything they met without discriminating between friend or foe.
Today, we use “berserk” to describe out-of-control behavior.
Crazy for word origins? Go to
page 226
for “bonkers,” “wacky,” “madcap,” and more
.
What do Fiji, Chile, and Egypt have in common? You can be jailed there for not voting
.