SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C.  20549

                                   FORM 10-K

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) of the
                        SECURITIES EXCHANGE ACT OF 1934

                  For the Fiscal year ended December 31, 1996
                         Commission File Number  0-1999

                            KENTUCKY INVESTORS, INC.
               (Exact name of registrant as specified in Charter)

                 KENTUCKY                           61-6030333
              (State or Other Jurisdiction          (IRS Employer
       of Incorporation or Organization)           Identification Number)

                200 Capital Avenue, Frankfort, Kentucky   40601
                    (Address of Principal Executive Offices)

        Registrant's telephone number, including area code 502 223-2361

              Securities registered pursuant to Section 12(b) of the Act:

                               Title of Each Class
                              Common $1 Par Value

                   Name of Each Exchange on Which Registered
                                     NASDAQ

          Securities registered pursuant to Section 12(g) of the Act:

                 Common Capital Stock Par Value $1.00 Per Share
                                (Title of Class)

Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES  X  NO

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this form 10-K
or any amendment to this Form 10-K.         (X)

State the aggregate market value of the voting stock held by nonaffiliates of
the registrant $5,445,664.50 as of December 31, 1996.

Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.

                                     Class
                              Common Capital Stock

                        Outstanding at December 31, 1996
                                    813,401

Documents Incorporated by Reference:

(1)  Portions of the Annual Report to the Stockholders for the year ended
December 31, 1996 (Form 10-K, Items 1, 5a, 6, 7 and 8)
(2)  Portions of the Proxy Statement dated April 18, 1997, for the Annual
Meeting of Stockholders to be held May 8, 1997 (Form 10-K, Items 10, 11, 12 and
13.)



                                  PART I

Item 1.  Business

(a)  General

      (a)  The business of the Company is the holder of the majority interest
in a life insurance company, and total interest in a printing company and an
insurance marketing company which was formed in 1994.  The home office of the
Company, the insurance subsidiary, the printing subsidiary and the marketing
subsidiary are located at 200 Capital Avenue, Frankfort, Kentucky 40601.  The
telephone number is (502) 223-2361.  Kentucky Investors, Inc., now owns 74% of
Investors Heritage Life Insurance Company, Frankfort, Kentucky ("IHL" or the
"Insurance Subsidiary") and 100% of Investors Heritage Printing, Inc. ("IHP")
and Investors Heritage Financial Services Group, Inc. ("FSG").  IHP and FSG are
collectively hereinafter referred to as the "Non-insurance Subsidiaries".  IHL,
IHP and FSG are collectively hereinafter referred to as the "Subsidiaries". IHL
owns 96% of Investors Underwriters, Inc., an investment holding company. While
the Company continues to expand the Non-insurance Subsidiaries, less than 1% of
the Company's total operations were generated by the Non-insurance Subsidiaries
for the year ended December 31, 1996. The Non-insurance Subsidiaries' total
assets and stockholder equity comprised less than 1% in the aggregate of the
Company's reported total assets and stockholder equity as of December 31, 1996.

          Due to the fact that IHL was not a direct writer of Credit Insurance
products during 1995, the Company formed FSG, a wholly-owned marketing company
which marketed and will continue to market a variety of products to financial
institutions for a number of other unaffiliated companies as well as IHL.  As
anticipated more than 10% of FSG's revenues during 1996 were derived from the
sale of IHL's Credit Insurance products.

IHL

               The business segments of the Insurance Subsidiary are identified
and discussed on pages 44 and 45 of the Annual Report to Stockholders for the
year ended December 31, 1996 and are incorporated herein by reference. A
portfolio of the standard forms of participating, non-participating,whole life,
limited pay, endowments, split-funding, interest-sensitive whole life,
guaranteed issue whole life, universal life, term and group life are offered by
IHL.  In addition, IHL has historically written credit life and credit accident
and health insurance (respectively, "Credit Life" and "Credit A&H", and
collectively "Credit Insurance") on a group basis.   During 1995, IHL began
phasing out of the Credit Insurance market as a direct writer and experienced
insignificant production (less than $500,000) from the Credit Insurance
products.

               Ordinary Life.  Ordinary Life sales are under the direct
supervision of the home office using a regionally supervised agency system. The
method of field operation involves independent contractual agents working with
district and regional managers.  These managers contract with and train agents
who work under them.  The regional managers may have several district managers
under their supervision.  As a result of IHL's growth in the preneed area,
agency relationships have been entered into directly with the funeral home
owner. Management anticipates this trend to continue and, depending on the size
of the funeral home and state law, preneed counselors will also become part of
the agency force. IHL also sells business through general agents or brokers who
may represent one or more companies.

      Approximately 37% of total insurance in force is Ordinary life.

      As stated above, the Ordinary Life sales are built around a standard
portfolio of life insurance policies with some of the major contributions to
in-force business being a participating ordinary life insurance policy, a
guaranteed issue whole life policy and non-participating life policies.

      Some of the participating policies provide for payment of guaranteed
annual endowments of fixed amounts beginning at the end of the second policy
year and continuing through the premium paying period. These policies also have
an annual  guaranteed benefit.  As of December 31, 1996, 11% of the total
ordinary insurance in force was comprised of participating policies and of the
11%, approximately 6% was comprised of participating policies with some
guaranteed benefit.

      Another block of participating policies provides for payment of a
dividend which will purchase additional insurance equal to 5% of the previous
year's total death benefit, including any additional insurance purchased in
prior years. The dividend is not guaranteed. As of December 31, 1996, 5% of the
total ordinary insurance in force was comprised of participating policies with
non-guaranteed benefits.

      Non-participating life insurance policies represented 89% of the total
ordinary insurance in force.

      Four different guaranteed issue whole life policies were sold through
1993.  Each has a policy limit of $10,000 face amount, with graded death
benefits during the first two policy years.  Two of the policies are non-
participating with non-guaranteed increases in the death benefit and two of the
policies are participating.

      IHL also issues two non-participating interest-sensitive single premium
whole life policies based on simplified underwriting.  These policies provide
for payment of the full face amount at the death of the insured and for
increasing death benefits on a non-guaranteed basis.

      During 1994, IHL introduced new products designed for the pre-arranged
funeral market. These products are single premium and modal premium non-
participating whole life policies.  Single premium policies are sold on a
guaranteed issue basis and modal premium policies are fully underwritten.  Both
single and modal premium policies provide for non- guaranteed increasing death
benefits and have a maximum face amount of $25,000.  IHL also introduced a new
mortgage protection product which is being marketed by FSG.

      It is  anticipated that during 1997 IHL will introduce group products
designed for the pre-arranged funeral market.   These products  are in the
process of being approved in various states and will be implemented after
approvals are received.

      Credit Insurance.  Credit Insurance is generally sold through banks,
finance companies and automobile dealerships and is offered in connection with
the extension of credit by financial institutions.  The amount of the insurance
is designed to cover the amount of the loan with the financial institution
being the beneficiary of the insurance policy to the extent of the unpaid
balance of the loan. Credit Insurance production is dependent on consumer debt.
In times of low unemployment, reasonable interest rates and a steadily
improving economy, consumer debt increases; therefore, Credit Insurance sales
increase.  When the economy slows, consumer debt slows and therefore Credit
Insurance sales decrease.

      During the fourth quarter of 1994, IHL began exiting this market as a
direct writer and premium production from Credit Insurance during 1995 was less
than $500,000, as anticipated.  IHL continued to provide the administration of
the Credit Insurance operations. FSG entered into a marketing agreement with
Franklin to market Franklin's Credit Insurance products during 1995.

      During the fourth quarter of 1995, IHL and FSG were advised that Franklin
Life Insurance Company ("Franklin") was exiting the Commonwealth of Kentucky as
a direct writer of Credit Insurance products. FSG immediately began negotiating
with a number of unaffiliated insurance companies to market Credit Insurance
products for them.  Simultaneously, FSG initiated discussions with unaffiliated
companies regarding a transaction where the Credit Insurance business would be
written by IHL and all of the risk insured would be immediately reinsured to
the unaffiliated company. A reinsurance transaction was viewed favorably
because IHL would be able to generate an alternative source of income through
fees from administration and claims processing of Credit Insurance.  In
addition, FSG would be able to generate revenues in the form of commissions
from the sale of IHL's Credit Insurance products.

      In December, 1995, IHL entered into a reinsurance agreement with The
Connecticut General Life Insurance Company, Bloomfield, Connecticut
("Connecticut General") under the terms of which IHL cedes to Connecticut
General 100% of the risk on all Credit Insurance policies sold by IHL. In
addition to receiving a retention fee, IHL  also receives a fee for
administration and claims processing services.It has not been necessary for IHL
to add any employees to assist in the administration of this business.  No
additional amounts were expended in order to put IHL's administrative and
claims processing capabilities to use.  Employees will be added only when
warranted.

      It was and continues to be management's belief that the number of Credit
Insurance providers in the Commonwealth of Kentucky is contracting as a result
of two Kentucky domestic insurers exiting the Credit Insurance market.
Management believed there would be opportunities to  administer Credit
Insurance business in Kentucky for  non-domestic insurers that are expected to
replace exiting insurers. This belief has come to fruition in an alternate way
through the reinsurance agreement with Connecticut General. IHL has continued
to seek contracts to operate as an administrator for other companies which sell
Credit Insurance and has recently entered into a reinsurance agreement with
another unaffiliated company, Life Investors, whereby the Company's Credit
Insurance products sold by Life Investors' agents will be reinsured to Life
Investors.  IHL and FSG will be paid a retention fee and a marketing fee for
services provided.

      FSG will continue to call on banks, finance companies and selected
automobile dealerships to market the Credit Insurance products for IHL.  As
anticipated that more than 10% of FSG's revenues for 1996 were derived from the
sale of IHL's Credit Insurance products. IHL anticipates 1997 Credit Insurance
gross written premiums to exceed $10 million; however, as described above, that
business was and will continue to be ceded to Connecticut General.
Approximately 9% of the total life insurance in force is Credit Insurance, all
of which was written directly by IHL.

      In addition to selling Credit Insurance, some IHL bank agents obtain an
ordinary life license enabling them to sell mortgage insurance that might be
required in excess of the statutory credit life limitation enacted by each
state where our Credit Insurance products are sold.  The mortgage insurance
sales operations will continue to be conducted through FSG.

      Group Life.  Group life accounts for the remaining 54% of in-force
business.      Since 1990, IHL has participated in the Federal Employee Group
Life Insurance (FEGLI) Program, which is administered by Metropolitan Life
Insurance Company.  As a result of the termination of the Commonwealth of
Kentucky group life contract, on November 30, 1992, IHL's participation in the
FEGLI Program has substantially decreased since 1993 and 1994. The reduction of
in-force business since 1993 has been $132,510,000.

      As stated above, IHL is in the process of converting to group insurance
products in the preneed market.  As the group preneed products are introduced,
group life premiums and in-force business will increase significantly while
individual premiums and in-force business will decrease commensurately.

          Principal Markets.  The principal markets for IHL's products are in
the Commonwealths of Kentucky and Virginia, and the States of North Carolina,
South Carolina, Georgia, Ohio, Indiana, Florida, Tennessee, Illinois, Kansas,
West Virginia and Texas. IHL has licensed ordinary agents and regional managers
throughout these states and credit life agents in over 75 banks and automobile
dealerships.

          IHL is also licensed in sixteen other states:  Alabama, Arkansas,
Mississippi, and Louisiana in the South and Southeast; Colorado, Missouri, New
Mexico, North Dakota, South Dakota, Oklahoma, Montana, Nebraska, Arizona and
Utah in the West; and Michigan in the North.  The business in these states is
written mostly through general agents.

          Risk.  IHL in many cases requires evidence of insurability before
issuing individual life policies including, in some cases, a medical
examination or a statement by an attending physician.  Home office underwriters
review the evidence of insurability required and approve the issuance of the
policy in accordance with the application if the risk is acceptable.  Some
applicants who are substandard risks are rejected, but many are offered
policies with higher premiums, restricted coverages or reduced benefits during
the first two policy years.  The majority of the single premium business is
written through the prearranged funeral market without evidence of
insurability, relying on safeguards such as product design, limits on the
amount of coverage, and premiums which recognize the resultant higher level of
claims.

      Risk is integral to insurance but, as is customary in the insurance
business, IHL obtains reinsurance with respect to amounts in excess of its
retention limits.  The maximum limit of retention by IHL on its standard
contract for any one life is $100,000 plus the amount of the return of premium
benefits, if any.  The maximum is reduced for sub-standard classes of risk.
The maximum retention on Credit Life is also $100,000 per life.  Excess
coverages are reinsured externally.  As of December 31, 1996, approximately
$316,499,000, or 12% of total life insurance in force was reinsured with non-
affiliated, well established insurance companies.  IHL would become liable for
the reinsured risks if the reinsurers could not meet their obligations.

      IHL is party to a number of reinsurance and coinsurance agreements with
non-affiliated companies. Approximately $316,499,000 of insurance in force for
IHL was reinsured with eighteen companies.The reinsurers for IHL and amounts of
insurance in force that are reinsured are as follows:

Company                    Reinsurance Amount        Percent of Total

Connecticut General Life
   Insurance Company         $187,567,000              59.3%
Crown Life Insurance Co.       11,350,000               3.6%
The Lincoln National Life
    Ins. Co.                   83,510,000              26.4%
J.M. Limited                    9,162,000               2.9%
Banc One Kentucky Insurance Co.   508,000                .2%
AEtna Life Insurance Co.        1,099,000                .4%
Indiana-Kentucky Ins. Co. Ltd.  2,063,000                .6%
Riverside Reinsurance Ltd.      2,981,000                .9%
Pirtle Ltd.                     1,146,000                .4%
Lancaster Life Insurance Co.    3,595,000               1.1%
Business Men's Assurance Co.    6,234,000               2.0%
Swiss Re America Co.            2,675,000                .8%
Groves Reinsurance Ltd.         1,037,000                .3%
Munich American Reinsurance Co. 2,792,000                .9%
Other Companies (4)               780,000                .2%
TOTAL                        $316,499,000             100.0%


      AEtna and Crown Life reinsured Credit Life and Credit A&H policies sold
between July 1, 1988 and June 30, 1992.  These reinsurance agreements were
terminated with respect to new issues by IHL during 1991 and 1992,respectively.
Neither reinsurer accepted the risk on any new policies issued after the
termination date of each agreement. However, both AEtna and Crown Life continue
to provide reinsurance on all Credit Insurance policies sold prior to March 16,
1991 (AEtna) and June 30, 1992 (Crown Life).  During 1996, IHL reinsured all of
the risk on the Credit Insurance policies sold by its agents to Connecticut
General, and will continue to do so in 1997.  As explained above, some of these
risks will also be reinsured to Life Investors.

      IHL has not experienced a reinsurer default under any of the reinsurance
agreements to which IHL is a party.  Further, IHL has no knowledge of and does
not anticipate any material default in any existing reinsurance obligation.

      Regulation of Insurance. The business of IHL is subject to regulation and
supervision by the insurance regulatory authority of each state in which IHL is
licensed to do business.  Such regulators grant licenses to transact business;
regulate trade practices; approve policy forms; license agents; approve certain
premium rates; establish minimum reserve and loss ratio requirements; review
form and content of required financial statements; prescribe types and amounts
of investments permitted; and assure that capital, surplus and solvency
requirements are met.  Insurance companies can also be required under the
solvency or guaranty laws of most states in which they do business to pay
assessments up to prescribed limits to fund policyholder losses or liabilities
of insolvent insurance companies.  They are also required to file detailed
annual reports with supervisory agencies, and records of their business are
subject to examination at any time. Under the rules of the National Association
of Insurance Commissioners (the "NAIC"), a self-regulatory organization of
state insurance commissioners, insurance companies are examined periodically
by one or more of the regulatory authorities.

      Domiciled in the Commonwealth of Kentucky, IHL is licensed by the
Kentucky Department of Insurance and is subject to its examination and
regulations.  The quadrennial audit was completed during 1996 for the five
years ending December 31, 1994.  IHL received an excellent report.  Kentucky
law now requires an examination every three years; therefore it is anticipated
that IHL's next examination will commence during 1998 for the three years
ending December 31, 1997.

      In December of 1992, the NAIC adopted a "Risk Based Capital for Life
and/or Health Insurers Model Act" (the "Model Act") which was designed to
identify inadequately capitalized life and health insurers.  The Model Act
defines two key measures:  (i)  adjusted capital, which equals an insurer's
statutory capital and surplus plus its asset valuation reserve, plus one-half
its liability for policyholder dividends ("Adjusted Capital") and (ii)
authorized control level risk based capital  ("RBC").  RBC is determined by a
complex formula which is intended to take into account the various risks
assumed by an insurer.  Should an insurer's Adjusted Capital fall below certain
prescribed levels (defined in terms of its RBC), the Model Act provides for the
following four different levels of regulatory attention:

      "Company Action Level:" This level of review is triggered if an insurer's
Adjusted Capital is less than 200 percent of its RBC.The insurer is required to
submit a plan to the appropriate regulatory authority that discusses proposed
corrective action.  IHL's Adjusted Capital is more than 3 times the required
amount.

      "Regulatory Action Level":  This level of review is triggered if an
insurer's Adjusted Capital is less than 150% of its RBC. The regulatory
authority formally requires the insurer to submit an RBC plan, and performs a
special examination of the insurer and issues an order specifying corrective
actions.  IHL's Adjusted Capital is more than 4.1 times the required amount.

      "Authorized Control Level":  This level of review is  triggered if an
insurer's Adjusted Capital is less than 100% of its RBC.  The regulatory
authority is authorized to take whatever action it deems necessary.  IHL's
Adjusted Capital is more than 6.1 times the required amount.

      "Mandatory Control Level":  This level of review is triggered if an
insurer's Adjusted Capital falls below 70% of its RBC. The regulatory authority
is required to place the insurer under its control.  IHL's Adjusted Capital is
more than 8.8 times the amount required.

      Since the Adjusted Capital levels of IHL currently exceed all of the
regulatory action levels as defined by the NAIC's Model Act, the Model Act
currently has no impact on the Company's operations or financial condition.

      Competition.  The life insurance business is highly competitive. With the
introduction of universal life and other interest sensitive products in recent
years, competition with other financial institutions has increased.  The
industry includes both stock and mutual companies, including some of the
largest financial institutions in the United States.  While the business is
responsive to the current economic environment, changes are not quite so
volatile, and there are indications that, except for Credit Life, the life
insurance market is stable, even in times of stress for other companies.

      IHL differentiates itself through its marketing techniques, product
features, customer service and reputation.  IHL maintains its competitive
position by its focus on areas which have historically proven profitable. Those
areas include single premium pre-need products, modal premium final expense
products, traditional whole life products, mortgage protection products and
level term products. IHL's competitive position is maintained by its ability to
provide quality customer service throughout the distribution system.  Other
competitive strengths include IHL's asset/liability management system, a
quality investment portfolio which provides liquidity and IHL's non-leveraged
financial position.

      The business of IHL is not seasonal.

      Dividend income from the Insurance Subsidiary for 1996 amounted to
approximately $503,988.

      Other Subsidiaries.  IHP does job printing for IHL as well as numerous
unaffiliated sources.  This includes the printing of the application forms and
other office forms required by IHL.

      While the income from IHP is not a significant factor in the Company's
overall business, a number of significant changes were made during 1994 and the
Company experienced continued growth and improved profitability during 1995 and
1996.  However, revenues from IHP continued to be less than one percent of the
Company's total revenue for 1996.

      As anticipated the formation and operation of FSG generated additional
revenue to the Company.  Although  this additional revenue is not a significant
factor in the Company's overall business, FSG experienced growth in its second
year of operations with revenues of $282,000 in 1996 compared to $171,000 in
1995.  Even considering this growth, revenues from FSG will continue to account
for less than one percent of the Company's total revenue for 1996.

      Additionally, the Company earns fees for other services performed for the
Insurance Subsidiary.  The fees are paid by the Insurance Subsidiary for the
necessary supervision and coordination required to provide a common policy for
all the companies.  The supervision results in a coordination of contracts with
the various independent agents, common sales brochures, and a savings to each
company in the area of printing and purchasing.  The Company purchases blanket
fidelity bonds to include employees of all subsidiary companies at a savings
when compared to purchase by individual companies.  The group life,
hospitalization, and the retirement programs for the various companies are also
administered by the Company.  These fees are not significant to the Company's
total revenue.  The Company also has revenue from other investments, but it is
not a significant factor in its business.

(b) Material Changes and Developments

      There were no material changes in the Company's holdings during the year
1996.  While changes in the life insurance business are not as dramatic as in
other forms of business, new product development and innovative sales methods
must be ongoing to meet the current economic times. IHL, however, believes that
growth from increased sales is directly related to the constant attention paid
to revising and selling the products developed by IHL.

      Ordinary Production.     IHL is working diligently to increase ordinary
product sales. The largest increase in this area has been the final expense and
prearranged funeral sales.  Final expense sales include the sale of lower face
amount ordinary life insurance products, the purpose of which is to pay the
insured's final expenses. Prearranged funeral sales includes the sale of modal
premium and single premium ordinary life policies which are sold to fund a
specific prearranged funeral contract.

      IHL expanded its marketing capability for this market through the 1993
acquisition of marketing assets and agents from Legacy One, Inc., a former
independent marketing agent for IHL.  As a result, IHL steadily increased sales
during 1993 and 1994. The actual increase in 1994 over 1993 in overall ordinary
premium production was approximately 21%, significantly higher than the 10-12%
increase anticipated by management.  During 1996 IHL continued to increase its
marketing operations and to expand into new states, including but not limited
to, Tennessee, Indiana, Illinois, Kansas,  South Carolina and Georgia and
experienced growth in premium production of approximately 28 percent in the
prearranged funeral market during 1996 over 1995, $16,681,000 compared to
$13,072,000, as anticipated, and anticipates continued growth in this segment
of approximately 12-15 percent during 1997.

      Credit Insurance. From 1988 to 1991, IHL substantially increased sales of
Credit Insurance to $37 million and reinsured substantial portions of the
Credit Life and Credit A&H business with AEtna and Crown Life.  However, during
1992 IHL decreased Credit Insurance production to the pre-1988 annual premium
levels of $8-10 million. As a result of the anticipated decrease in production,
the reinsurance agreement with Crown Life was terminated effective for policies
written after June 30, 1992.  See "Business-Risk". Desired levels of Credit
Insurance production were reached in 1993 and 1994.

      Throughout 1994, IHL continued to closely monitor Credit Life and Credit
A&H claims and make adjustments in the claims administration process.  Claim
ratios on Credit A&H have stabilized.  IHL will continue to closely monitor the
claims paying process to make certain that proper payments are being made in
accordance with the policy.

      IHL's Credit Insurance operation continued to be strong throughout 1994
in financial institutions and with a selected number of automobile dealers
participating in either a reinsurance program or IHL's commission structure.
However, during 1994 IHL decided to exit the Credit Insurance market as a
direct writer in 1995.  The driving factor behind this decision was the desire
of IHL's Board of Directors and management to improve and strengthen IHL's
surplus and profitability.  Historically, the Credit A&H line has not been a
profitable segment of the Company's business; however, when balanced with the
Credit Life line, acceptable profit margins were achieved.  Since 1991, the
profitability of the lines diminished due to increased losses on the Credit A&H
line and shrinking profit margins on the Credit Life line.  Therefore, since
other lines of business have been and continue to show strong growth and
profits, and the continued sale of Credit A&H inhibits growth of the Company's
surplus and the full realization of profits from other lines of business,
management and the Board of Directors determined that it was in the best
interest of the Company and its stockholders to discontinue as a direct writer
of Credit Life and Credit A&H.

      Realizing the significant contribution of our financial marketing group,
which was successful in increasing IHL's Credit Insurance production to record
levels during the late 1980's and early 1990's, and realizing the significant
relationship our employees have developed with the financial institutions in
the Commonwealth of Kentucky, the Company formed FSG.During 1996 FSG marketed
IHL's Credit Insurance products and will continue to do so in 1997.  In
addition, FSG was responsible for marketing products for unaffiliated companies
to financial institutions including Individual Disability (Illinois Mutual Life
and Casualty Company), Involuntary Unemployment Insurance (Vesta Fire Insurance
Corp.), and GAP, which covers the excess of the loan amount over the value of
the collateral if the collateral is a total loss (General Electric Capital
Assurance Company).   IHL was not  a direct writer of any of these products
during 1995.

      FSG also marketed IHL's mortgage protection products, and IHL anticipated
growth of approximately 3-5 percent in this segment of its business due to the
marketing efforts of FSG.  Actual growth during 1996 was 108% due to the fact
that several of FSG's agents who also had agency relationship with other
companies began sending more of the business to IHL. IHL's management
anticipates steady growth in this segment during 1996 due to FSG's efforts.

      During the fourth quarter of 1995, FSG and IHL were advised that Franklin
was exiting the Commonwealth of Kentucky as a direct writer of Credit Insurance
products.  FSG immediately began negotiating with a number of unaffiliated
insurance companies to market Credit insurance products for them.  In addition,
FSG initiated discussions with unaffiliated companies whereby the Credit
Insurance policies would be written by IHL and all of the risk would be
immediately reinsured to the unaffiliated company.

      Under a reinsurance arrangement, IHL would generate alternative revenues
from retention fees and fees for administration and claims processing.
Additionally, FSG would continue to generate revenues in the form of
commissions.  Therefore, in December 1995 IHL entered into a reinsurance
agreement with Connecticut General under the terms of which all of the risk on
all Credit Insurance policies sold by IHL would be reinsured with Connecticut
General.

      The decision to reenter the Credit Insurance market as a direct writer
required careful consideration of the decision to exit the market during 1995.
The driving factors behind the decision to reenter were the ability to
structure the reinsurance transaction with a highly rated insurance company,
the ability to protect, improve and strengthen IHL's surplus and profitability,
the ability to utilize our Credit Insurance administration and claims
processing capabilities and the ability to generate alternative sources of
revenue for IHL. The structure of the reinsurance agreement with Connecticut
General accomplishes each of these goals and FSG has been successful in
retaining the majority of the Credit Insurance agency accounts and has
successfully recruited another unaffiliated agency which is anticipated to more
than double overall gross written Credit Insurance premiums and will therefore
further enhance FSG's revenues.

      Employees.  The Company does not have any employees.  The Company's
officers perform various functions described in item 9(a) above; however, they
are not paid a salary by the Company for performing such functions.  The number
of persons employed by IHL is 111. The number of active independent contractual
agents of IHL is 2,250.  Management of IHL considers its relationship with the
employees and agents to be satisfactory.

Item 2.  Properties

      The Company owns no real estate, but the Company and the printing company
rent office space from IHL.  The total rental fee is $883 per month.  The
printing equipment and machines in the print shop, owned by the printing
subsidiary have a net book value of $48,067.

Item 3.  Legal Proceedings

      There are no legal proceedings to which the Registrant is a party.

Item 4.  Submission of Matters to a Vote of Security Holders

          None.
                                    PART II

Item 5.  Market for the Registrant's Common Stock and Related Security Matters

      (a)  The information relative to the market value of the Company's stock
appears on the inside back cover in the Annual Report to the Stockholders for
the year ended December 31, 1996, and is incorporated herein by reference.

      (b)  Approximate Number of Equity Security Holders
                (A)                           (B)

                                        Number of Holders
            Title of Class               of Record 12-31-96
            Common Stock                      2,515

      (c)  Dividends

      Kentucky Investors, Inc., paid dividends totaling $440,800 to
stockholders in 1996 representing a $.38 per share.  The 1997 cash dividend to
be paid April 11, 1997, to stockholders of record March 27, 1997 is $.38 per
share.

Item 6.  Selected Financial Date

      Selected financial data for the past five years appears on page 28 in the
Annual Report to the Stockholders for the year ended December 31, 1996, and is
incorporated herein by reference.

Item 7.  Management's Discussion and Analysis of Financial Condition and
Results of Operations
   
      Management's Discussion and Analysis of financial condition and results
of operations appears on pages 9-21 in the Annual Report to the Stockholders
for the year ended December 31, 1996, and is incorporated herein by reference.

Item 8.  Financial Statements and Supplementary Data

     The  financial statements and notes appear on page 24-27 and 34-46 in the
Annual Report to Stockholders for the year ended December 31, 1996 and are
incorporated herein by reference.  See Part IV,  Item 14.

Item 9.  Disagreements on Accounting and Financial Disclosure

      None.
                                    PART III

Item 10. Directors and Executive Officers of the Registrant

      (a)     The Executive officers and directors of the Company are:

Name, Position & Year                             Family
Became Officer/Director  Age                 Relationship

Harry Lee Waterfield II  53
Chairman of the Board,
President/1963

Jimmy R. McIver          45
Treasurer/1988

Nancy W. Walton          57                       Sister of
First Vice                                        Harry Lee
President/ 1988                                   Waterfield II

Robert M. Hardy, Jr.     39                       Nephew of
Director, Vice President                          Harry Lee
and General                                       Waterfield II
Counsel/ 1988

Howard L. Graham         62
Vice President
Corporate Services
1989

Wilma Yeary              65
Secretary/ 1989

Jane S. Jackson          42
Asst. Secretary
1989

Helen S. Wagner          60
Director/ 1986

Gordon Duke              51
Director/ 1991

H. Glenn Doran           71
Director/ 1963

Jerry F. Howell          83
Director/ 1963

Jerry F. Howell, Jr.     55                       Son of Jerry
Director/ 1983                                    F. Howell

David W. Reed            43
Director/ 1982
Warner Hines             69
Director/ 1963


      (b)    Each of the Directors has occupied the position indicated for a
period of more than five years.  Information regarding the business experience
of the Directors who are not officers of the Company is shown on pages 2 and 3
of the Proxy  Statement of the Annual Meeting of Shareholders to be held on May
8, 1997, and is incorporated herein by reference.

      There have been no events under any bankruptcy act, no criminal
proceedings and no judgments or injunctions material  to the evaluation of the
ability and integrity of any Director or Executive Officer during the past five
years.

      Officers are appointed annually by the Board of Directors at the Board
meeting immediately following the Annual Meeting of Shareholders.  There are no
arrangements or any understandings between any officer and any other person
pursuant to which the office was selected.

Item 11.  Executive Compensation and Transactions

      Information regarding compensation of executive officers and transactions
with executive officers and directors is not restated in this Annual Report
because the response to this item is shown on page 4 of the Proxy Statement for
the Annual Meeting of Shareholders to be held May 8, 1997 and is incorporated
herein by reference.

Item 12.   Security Ownership of Certain Beneficial Owners and Management

      Security ownership by Officers, Directors, and management, is not
restated in this Form 10-K because the response to this item is shown on pages
2 and 3 of the Proxy Statement for the Annual Meeting of Stockholders to be
held May 8, 1997, and is incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions

      Certain relationships and related transactions are shown on the last page
of the Proxy Statement for the Annual Meeting of Stockholders to be held May 8,
1997, under the heading "Certain Relationships and Related Transactions"  and
are incorporated herein by reference.

                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

      (a)1.  Financial Statements incorporated herein by reference in Item 8 to
the Company's Annual Report to Stockholders for the year ended December 31,
1996 (pages  24-27 and 34-46) filed as Exhibit 1:
          Consolidated Balance Sheets -- December 31, 1996 and 1995
      For the years ended December 31, 1996, 1995 and 1994:
          Consolidated Statements of Income
          Consolidated Statements of Stockholders' Equity
      Consolidated Statements of Cash Flow
          Notes to Consolidated Financial Statements

      (a)2.  Financial Statement Schedule
      Schedule II -- Condensed Financial Information of Registrant
      The financial statements and schedules of Investors Heritage Life
Insurance Company, as incorporated by reference in its Annual Report on Form 
10-K filed with the Securities & Exchange Commission for the year ended
December 31, 1996, are incorporated herein by reference.

      All other schedules have been omitted as not applicable, not required, or
the required information has been included in the financial statements, notes
thereto, or are incorporated herein by reference to the Annual Report on Form
10-K of Investors Heritage Life Insurance Company for the year ended December
31, 1996.

      (a)3.  Listing of Exhibits
      Exhibit 1 - Annual Report to the Stockholders for the year ended December
31, 1996.*
      Exhibit 3.1-- Articles of Incorporation of the Company, as amended.
      Exhibit 3.2--  By-Laws of the Company, as amended.  (Incorporated by
reference as Exhibit 3.2 of the Company's Annual Report on Form 10-K/A-1 for
the year ended December 31, 1994.)
      Exhibit 11--  Statements re Computation of Per Share Earnings.**
      Exhibit 23 - Consent of Independent Auditors.

      *The material included in this Report shall not be deemed to be "filed"
with the Commission or otherwise subject to the liabilities of Section 18 of
the Act, except to the extent that this registrant specifically incorporates it
in its Annual Report on this Form 10-K by reference.

      **Exhibit 11 is not restated in this Form 10-K because the information
required is contained in Note A to the Consolidated Financial Statements,
"Common Stock and Earnings per Share", on page 37 of the Annual Report to the
Stockholders for the year ended December 31, 1996, and is incorporated herein
by reference.

      (b)  Reports on Form 8-K
      No filing of Form 8-K was made in the fourth quarter, 1996.

      (c)  See Item 14(a)(3) above.

      (d) Financial Statement Schedules - The response to this portion of Item
14 is submitted as a separate section of this report.

                                   SIGNATURES

               Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this Form 10-K
to be signed on its behalf by the undersigned, thereunto duly authorized.

                        KENTUCKY INVESTORS, INC.

March 27, 1997           /s/
   DATE                 BY:  Harry Lee Waterfield II
                        ITS: Chairman of the Board and President

               Pursuant to the requirements of the Securities Exchange Act of
1934, this report is signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

/s/
Harry Lee Waterfield II
Chairman of the Board
and President
March 27, 1997

/s/
Robert M. Hardy, Jr.
Vice President and
General Counsel
March 27, 1997

/s/
Jimmy R. McIver
Treasurer
March 27, 1997

/s/
Howard L. Graham
Vice-President
Corporate Services
March 27, 1997

/s/
Jerry F. Howell
Director
March 27, 1997

/s/
Gordon Duke
Director
March 27, 1997

/s/
Warner Hines
Director
March 27, 1997

/s/
Helen S. Wagner
Director
March 27, 1997

/s/
H. Glenn Doran
Director
March 27, 1997

/s/
David W. Reed
Director
March 27, 1997

/s/
Jerry F. Howell, Jr.
Director
March 27, 1997


                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Kentucky Investors, Inc.

      We have audited the consolidated financial statements of Kentucky
Investors, Inc. and subsidiaries listed in the accompanying Index to financial
statements (Item 14(a)).  Our audits also included the financial statement
schedule listed in the Index at Item 14(a).  These financial statements and
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedule based on
our audits.

      We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.  An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

      In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Kentucky Investors, Inc. and subsidiaries at December 31, 1996 and 1995, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.  Also, in our opinion, the financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

      As discussed in Note A to the consolidated financial statements, the
Company changed its method of accounting for certain investments in debt
securities in 1994.


/s/
Ernst & Young LLP

Louisville, Kentucky
March 25, 1997
                                   EXHIBIT 23

                        CONSENT OF INDEPENDENT AUDITORS

      We consent to the incorporation by reference in the Registration
Statement (Form S-8 NO. 33-46722-01) pertaining to the Kentucky Investors, Inc.
and Affiliated Companies 401(k) Savings Plan and Trust Agreement and in the
related prospectus of our report dated March 25, 1997, with respect to the
consolidated financial statements and schedule of Kentucky Investors, Inc.
included in the Annual Report (Form 10-K) for the year ended December 31, 1996.


/s/
Ernst & Young LLP

Louisville, Kentucky
March 25, 1997



              SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                            KENTUCKY INVESTORS, INC.
                            CONDENSED BALANCE SHEET
               FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, 1994

                                    1996        1995        1994
                                   ------      ------      ------

     Assets
  Cash and Cash
      Equivalents           $       36,943 $    40,394 $    26,921
  Investment in
      Subsidiary                26,071,120  26,679,315  20,464,463
  Other Assets                     221,215     136,391     119,570
                               -----------  ---------- -----------
                               $26,329,278 $26,856,100 $20,610,954
                               =========== =========== ===========
Liabilities:
  Notes Payable
      to Subsidiary          $     646,554 $   747,754 $   835,667
  Other
      Liabilities                   65,600      52,985      15,829
  Deferred Taxes                 1,459,351   1,413,821   1,402,043

  Stockholders'
      Equity
  Common Stock                     820,475     811,128     779,895
  Paid in Capital                3,374,615   3,374,704   3,357,178
  Unrealized
      Appreciation
      (depreciation)
      of available-
      for-sale
      securities of
      Subsidiary                 1,510,225   2,916,509  (2,756,991)
  Retained
      Earnings                  18,452,458  17,539,199  16,977,333
                                ----------  ----------  ----------
Total Stock-
  holders'
  Equity                       $24,157,773 $24,641,540 $18,357,415
                               ----------- ----------- -----------
                               $26,329,275 $26,856,100 $20,610,954
                               =========== =========== ===========

          SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                  (CONTINUED)
                            KENTUCKY INVESTORS, INC.
                            CONDENSED BALANCE SHEET
               FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, 1994

                             1996        1995        1994
                            ------      ------      ------

     Income
  From printing
      services to:
      Affiliated
       companies       $    369,143  $   399,240 $  362,148
     Others                 143,295       79,604     88,943

 Realized Gain/Loss
     on Investments                         (596)
 Other services
     to subsidiary          158,285       64,389     39,564
 Dividends from
     subsidiary             505,635      505,635    492,328
 Interest and
     other income           165,687      148,961     13,182
                         ----------  ----------- ----------
                         $1,342,045  $ 1,197,233 $  996,165

Operating
 Expenses                   655,308      627,152    458,014
                         ----------  ----------- ----------
 Operating
     income before
     equity in
     undistributed
     earnings of
     subsidiary          $  686,737  $   570,081 $  538,151

 Equity in
     undistributed
     earnings of
     subsidiary for
     the year               581,882       44,851  1,092,548
                         ----------  -----------  ---------

 Income before
     provision for
     income taxes        $1,268,619  $   614,932 $1,630,699
                         ----------  ----------- ----------
 Provision for
     Income Taxes
     Current             $   76,000  $    48,000 $   21,000
     Deferred                46,000       12,000     87,000
                         ----------  ----------- ----------
                         $  122,000  $    60,000 $  108,000
                         ----------  ----------- ----------
Income before
 cumulative
 effect of
 accounting
 change                  $1,146,619  $   554,932 $1,522,699
Cumulative
 effect of
 accounting
 change                  $      -0-  $       -0- $       -0-
                         ----------  ----------- -----------
Net Income               $1,146,619  $   554,932 $ 1,522,699
                         ==========  =========== ===========
Earnings Per
 Share                   $     1.41  $       .71 $      1.97
                         ==========  =========== ===========

          SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                  (CONTINUED)
                            KENTUCKY INVESTORS, INC.
                            CONDENSED BALANCE SHEET
               FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, 1994

                                    1996        1995        1994
                                   ------      ------      ------

     NET CASH
  PROVIDED
  BY OPERATING
  ACTIVITIES                   $   538,549 $   542,186 $   472,114
                               ----------- ----------- -----------

FINANCING
  ACTIVITIES
  Decrease in
      Notes
      Payable                  $ (101,200) $  (87,913) $  (41,600)
  Dividends                      (440,800)   (440,800)   (429,200)
                               ----------- ----------- -----------

CASH USED BY
  FINANCING
  ACTIVITIES                   $ (542,000) $ (528,713) $ (470,800)
                               ----------- ----------- -----------
INCREASE
  (DECREASE)
  IN CASH                     $    (3,451) $   13,473  $    1,314

Cash and Cash
  Equivalents
  at beginning
  of year                     $    40,394  $   26,921  $   25,607
                              -----------  ----------  ----------
CASH AND CASH
  EQUIVALENTS
  AT END OF
  YEAR                       $     36,943  $   40,394  $   26,921
                             ============  ==========  ==========