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Willy is not "crazy" as in "insane" but he is one of the most washed-out, non-affirmative characters around. He is unable to take control of anything and seems to be a victim of life itself. Between the precarity of his job and his family obligations, Willy is held in stalemate.
At first Willy thinks looking smart or positive thinking is the key to success. He truly believes that a little "luck and pluck" Horatio Alger style will bring him clients and contracts. As his short quips in the dialogue portray, Willy is looking for a magic formula, a foolproof recipe, a quick fix to resolve his problems - but to no avail.
Ironically, his suicide at the end of the story (in hopes of procuring insurance money for his family) is the only time Willy Loman ever manages to assert himself. Athough he has been a failure as a parent, husband and businessman, he manages to "provide" for his family.
Was Willy really that desperate or had his life simply become a humiliation? Even his death is an anitclimax (it isn't even portrayed, but just alluded to); life goes on for his wife and sons, and finally they are better off (at least financially) without him.
"Crazy" is a word that doesn't have a specific meaning. He certainly is surrounded by illusions, but some of this is Miller's techniques of wandering back and forth in time. He talks with a brother who isn't there, but this is Miller's way of letting us enter into mind, something like the use that Shakespeare makes of the soliloquy. He has deluded himself into believing that economic success is the measure of a man's meaning, and that this success somehow depends on being "well liked" --- something we suspect that Willie never was. None of this makes him crazy by any definition that I can imagine.
And I don't think that his family received any insurance money after his death. Insurance policies don't pay on suicides, and it would not be all that difficult for an insurance company to demonstrate that Willie's death was no accident.
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