They say its a dividend check for a policy. Why did they send me this money. Is this a scam or should I just put it into savings somewhere...maybe an I bond or something?
I just cannot figure out why State farm is sending their customers money, first a free pizza and now a check.
2007-08-29 02:18:21 · 8 answers · asked by happydawg 6 in Business & Finance ➔ Insurance
Not a scam. If you don't want to bother to ask your agent to explain "dividend", then just deposit the check and don't worry about it.
2007-08-29 04:58:46 · answer #1 · answered by Anonymous 7 · 1⤊ 2⤋
Many insurance companies are 'Mutual' insurance companies. That means they are owned by the policyholders and not by investors. State Farm has many mutual insurnace companies under their banner.
Every mutual insurance company expects to make a certain amount of profit every year, which gets re-invested in the company. If their profit is higher than expected, they will share the profits with their policyholders. Hence your check in the mail.
I have gotten a few such checks over the years. They are rare, but nice to receive.
And as far as taxation goes, that is tax-free. The IRS considers this to be a refund of premiums and not taxable dividends.
2007-08-29 12:34:17 · answer #2 · answered by j-man 4 · 2⤊ 1⤋
When you have a policy with an insurance company, occasionally the premium you pay will go down and they will refund you by check. Do whatever you want with the money.
2007-08-29 09:26:31 · answer #3 · answered by blue eyes 5 · 0⤊ 2⤋
Be weary. Call your agent. Last year we received a check from Farmer's Insurance. I assumed I overpayed and cashed it. Come to find out, and underwriter had decided to reduce our home owners coverage for $135,000 (appraisal value) to $108,000! Needless to say I was surprised to find out I was only covered for $108K for the entire year-not even enought to pay of my loan if my house burned down! Call your agent immediately - good luck.
2007-08-29 09:28:04 · answer #4 · answered by Baby #1 born August 2009 6 · 1⤊ 2⤋
Just deposit the check. Based on your description, it sounds legit. Like they said, it's a dividend check.
2007-08-29 09:25:35 · answer #5 · answered by Anonymous · 1⤊ 2⤋
Clearly, they are celebrating on a grand scale for not having to pay the victims of their poor policies and illegal practices in the Katrina zone.
2007-08-29 09:25:16 · answer #6 · answered by Mr. Vincent Van Jessup 6 · 2⤊ 2⤋
Call your agent and ask.They should know the answer.
2007-08-29 09:26:36 · answer #7 · answered by ponygirl 6 · 0⤊ 1⤋
No,its just that they had better profits than expected,wasn't that cool??!!
2007-08-29 09:25:29 · answer #8 · answered by Anonymous · 1⤊ 1⤋