1999 ANNUAL REVIEW
KENTUCKY INVESTORS, INC.

TABLE OF CONTENTS

Letter to our Stockholders                    2
In Memoriam                                   8
Management's Discussion and Analysis          9
Board of Directors                           23
Corporate Officers                           24

Kentucky Investors, Inc.

Selected Financial Data                      25
Report of Independent Auditors               25
Consolidated Financial Statements            26


Notes to Consolidated Financial Statements   30
Stock Prices and Annual Meeting              44


LETTER TO OUR
STOCKHOLDERS

Dear Kentucky Investors, Inc. stockholder,

Other than 1960 when Investors Heritage Life Insurance Company ("Investors
Heritage") was organized, 1961 when the sale of life insurance began and 1963
when Kentucky Investors, Inc. ("Kentucky Investors") was formed to buy
controlling interest of Investors Heritage, no year has been more eventful to
our companies than 1999. The pictures shown through page 7 represent a few
significant moments in our nearly 40 year history.

During 1999 Kentucky Investors and Investors Heritage entered into a share
exchange agreement whereby Kentucky Investors became the sole stockholder of
Investors Heritage Life Insurance Company.  The share exchange, which was
effective December 31, 1999, was approved by the Investors Heritage stockholders
on November 18, 1999.  In the share exchange Investors Heritage stockholders
received 1.24 shares of Kentucky Investors stock for each share of Investors
Heritage stock they owned.  At the time of the exchange Kentucky Investors owned
74% of Investors Heritage and now owns 100%.

Much thought Went into this strategic decision and the potential benefits the
share exchange would provide stockholders of both companies.  Some of the
potential benefits for stockholders of both companies are:

*    A single, publicly-traded entity with a consolidated stockholder base;
*    Simplification of the financial reporting structure;
*    Creation of economies of scale, thereby reducing administrative costs.

For former Investors Heritage stockholders the share exchange creates an
ownership interest in Kentucky Investors permitting them to share in the
continued growth of Investors Heritage.

Kentucky Investors stockholders should benefit from enhancement of Kentucky
Investors capital structure and increasing opportunities for growth through
merger and acquisitions, including the possible use of its equity securities in
those transactions.  Kentucky Investors and Investors Heritage plan to seek
blocks of business and unaffiliated companies to acquire and administer that fit
our strategic business plan.

(Appearing here are pictures along with a description which reads, "1930's-2000,
Frankfort, Kentucky - Development of the corner of Capital Avenue and Second
Street, the location of our Home Office.")

We welcome the former Investors Heritage stockholders as owners of Kentucky
Investors.  As a result of our combined financial reporting in the Annual
Reviews over the past several years most of our stockholders should be
acquainted with our financial reporting format.  This year and in the future the
financials will be presented only for Kentucky Investors, whose numbers are
derived primarily from the results of Investors Heritage.

Sales and premium income are a solid indication of the strength of our sales
force: the life-blood of our insurance operations and the entire organization.
Ordinary life sales exceeded our sales goal by 10% and this represented a 19%
increase over 1998 production.

Investors Heritage has an enviable record of sales growth over the past decade
and the graph on page 6 shows our new premium production for each year of the
1990's.  As a result of our niche markets (preneed funeral insurance and credit
life insurance) and our strong marketing assets (people, products, providing
service), we have shown consistent and profitable sales growth throughout the
decade while the industry as a whole has been reporting flat sales results in
recent years.  Our sales managers have once again set an ambitious sales goal
for 2000 and the first two months of the year point to success in achieving this
goal.

Kentucky Investors, as a result primarily of Investors Heritage, but also
wholly-owned subsidiaries Investors Heritage Financial Services Group, Inc.
('Financial Services Group') and Investors Heritage Printing, Inc., enjoyed
another record year of earnings.  On revenue of $62,772,000, an increase of 8.8%
over 1998, Kentucky Investors had pre-tax profit of $4,852,000 compared to
$4,010,000 in 1998, an increase of 21%.

From an insurance regulatory standpoint, statutory surplus growth for the
insurance company is more important than ever. We have had a number of charges
to statutory surplus over the past five years that are now complete.  We
anticipate that the statutory surplus of Investors Heritage will increase over
the next few years.   However, as we continue to have strong life insurance
sales the statutory surplus growth will be slowed as a result of the additional
statutory reserves necessary to support our new and increased insurance in
force. Although GAAP earnings remain strong, Kentucky Investors has held its
dividend to stockholders at the same rate as last year in part to alleviate the
strain on Investors Heritage statutory surplus.  As the statutory surplus of
Investors Heritage increases and GAAP earnings improve, management anticipates
that Kentucky Investors' dividend will increase.

(Appearing here are pictures along with a description that reads, "1963-1964 -
Construction of Home Office.  Building as it is today.")

Investors Heritage continues to be a very vital part of the preneed and final
expense insurance market.  Over 600 funeral homes do business with Investors
Heritage.  Numerous funeral homes joined with us last year and we anticipate an
increase in funeral home accounts this year.

In addition to our continued sales emphasis in the states currently targeted,
our business plan for 2000 in the funeral home market includes development of
consistent sales in Alabama, Arkansas, Louisiana, Michigan, Missouri and
Mississippi.  We also anticipate applying for certificates of authority to
conduct business in Maryland and Pennsylvania.

As reported last year, we have a strategic alliance with Family Assistance,
Inc., a company that provides at-need financing and accounts receivable
management for our funeral home clients.  During the past year this alliance
resulted in helping clients of these funeral homes access over $1,000,000 in
loans to pay for funeral expenses.  We believe this important service
strengthens us in the funeral home market.

We also have a non-exclusive, strategic alliance with Aurora Casket Co. and Paul
Casket Co. whereby funeral homes that use their caskets and fund prearranged
funerals with Investors Heritage products will have casket price guarantees from
the prearranged contract date until the date of death.  We look forward to a
successful relationship with these two outstanding companies.

(Appearing here are pictures along with a description which reads, "April 26,
1961 - First insured, Janie Hunsaker (now Terry), her mother, Jean Hunsaker, and
agent Glenn Crum. Janie's policy is still in force.  1963 - Harry Lee
Waterfield, Kentucky Investors, Inc., presents Jess Odom a check for the
purchase of 51% of Investors Heritage.  April 30, 1964 - First annual
stockholders' meeting of Kentucky Investors, Inc.")

As a result of the strong economy and our dedicated marketing team, credit life,
credit accident & health and mortgage redemption sales were strong in 1999.  We
market these products through Financial Services Group.  Investors Heritage
administers all of this business and management is pleased with the progress
made in this market over the past year.

The only negative we foresee in the credit life market at this time is the
impact the cuts in tobacco allotments and the overall attacks on the tobacco
industry will have on the economy of tobacco producing states and particularly
Kentucky where most of our credit insurance is written.  A potential effect
would be a decrease in loan demand, which would in turn decrease credit
insurance sales.  We anticipate expanding our credit insurance operation into
other states for general sales growth but also as a hedge against possible
decreased sales in Kentucky.  During the fourth quarter of 1999 we expanded into
Michigan and we anticipate increasing production of credit life products there
early this year and expanding to other states later in 2000.

During 1999, Congress passed the Financial Modernization Act.   We have watched
and studied this legislation and considered the effect it might have on our
companies.  At this early stage we believe this law will enhance life insurance
sales for our companies.  This new law, among other things, allows banks entry
into the insurance business.  However, we do not believe many banks will, in the
foreseeable future, want to form or buy insurance companies.  We believe banks
will move to take advantage of the marketing and sales opportunities, which will
provide them access to all lines of insurance.  This should present many
marketing opportunities for us.  We are prepared to take advantage of this
legislation.

Our Information Services Department is to be commended for the outstanding job
they did in preparing our companies for Y2K.  We entered the new year without
any problems thanks to the foresight and hard work of our Information Services
staff.

(Appearing here are pictures along with a description which reads, "1965 - The
IHC Contract (policy) laid the foundation for our success.  The policy design
won an Award of Merit from the Southern Graphic Arts Association in 1965.  Harry
Lee Waterfield received the award from Dan Allen, representative of C-J
Lithographing Company that designed and printed the policy.  June 1973, Kentucky
Dam Village, 12th Annual Sales Leaders Convention - Children of company
associates.  Those still associated with companies:  Jenny Philpot Clark,
Bradley Philpot, Michael Dudgeon first 3 on left); Matt Philpot (7th from left),
Mary Dudgeon Edelen (3rd from right).")

A graph appears here showing the growth in new premium sales for Ordinary Life
Business.
     1990 - $ 5,481,000
     1991 - $ 7,335,000
     1992 - $12,902,000
     1993 - $12,600,000
     1994 - $14,463,000
     1995 - $17,289,000
     1996 - $22,363,000
     1997 - $27,238,000
     1998 - $28,442,000
     1999 - $33,839,000

Investors Heritage Printing had a very good year.  It brought additional revenue
of $199,000 to Kentucky Investors and saw outside printing jobs increase 35%
over 1998.  We are particularly proud of the printing of several promotional
materials for the new Kentucky History Center in downtown Frankfort.

As in all previous years we can again report that the quality of our assets is
one of the very strongest parts of our operations.  Once again at year-end 100%
of fixed income assets were rated investment grade.

As a means of showing the adequacy of our assets, I refer you to page 19, the
Analysis of Asset Adequacy tests performed each year, even though we are
required to do so only every three years.  As in the past 11 years, the analysis
shows very favorable results.

(Appearing here are pictures along with a description which reads, "July 1976,
Asheville, North Carolina, Grove Park Inn - Attendees at 15th Annual Sales
Leaders Convention and our first convention in North Carolina.  July 1977 -
Sales Meeting and announcement that Investors Heritage had reached one billion
dollars of total life insurance in force.")

During 1999 four outstanding people died who made extraordinary contributions to
our companies as sales representatives, stockholders and friends from the
earliest days of our companies.  Each had retired from active sales but their
impact on our success can never be adequately expressed nor their friendship
ever forgotten.  A Memoriam to Howard Dempsey, Lonnie Furr, May Williams and
Ruth Moore Craig is on Page 8.

The Kentucky Investors, Inc. family of companies closed the 20th  Century with
the share exchange, record sales, record earnings and with a sales and
administrative staff dedicated to continuing our history of solid growth and
service to our sales clients and insureds.

We have a solid business plan in place and with the continued support of
stockholders and sound advice and direction given by our board of directors we
will move our companies forward profitably and with purpose.

/s/
Harry Lee Waterfield II

(Appearing here are pictures along with a description that reads, "August 1978 -
Frey Todd, sales representative and manager, 1962-present, submitting the first
$1,000,000 life insurance application to Harry Lee Waterfield.  July 1986,
Frankfort, Kentucky - Company founder, Harry lee Waterfield, his wife Laura and
company president Harry Lee Waterfield I at the 25th Annual Sales Leaders
Convention.  March 31, 1998, Frankfort, Kentucky - Company officers
commemorating the day Investors Heritage reached one billion dollars of ordinary
life insurance in force.")

IN MEMORIAM

(Picture of Howard Dempsey appears here.)
HOWARD DEMPSEY died January 4.  Howard was a loyal friend an associate and true
gentleman.  He and his wife Clyde were both in the first agents' class of
Investors Heritage Life and the 12th and 19th agents hired.  Clyde preceded
Howard in death by several years.  Howard celebrated his 90th birthday with many
of his family and friends on October 23, 1998.

(Picture of Lonnie Furr appears here.)
LONNIE FURR, of Calloway Co., Kentucky was a native of Louisiana and licensed
with Investors Heritage on June 5, 1961.  He was a leading producer during the
60's and 70's.  He loved to fish and decided to slow down in the 70's, but
continued to provide excellent service to his and other company clients in
several west Kentucky counties.

(Picture of May Williams appears here.)
MAY WILLIAMS, became a sales representative for Investors Heritage on June 22,
1964.  May was important to us as a sales representative, stockholder and all-
around supporter.  She and her late husband, Archie, were tourist industry
pioneers, establishing the Morehead Tourist Camp in 1939.  Tourist camps were
the forerunner of today's motel.  May was also very active in Democratic
politics in Kentucky.

(Picture of Ruth Moore Craig appears here.)
RUTH MOORE CRAIG, CLU, was an all-star producer for Investors Heritage.  She
died Christmas Day at the age of 81.  Ruth Moore was one of the first people
licensed by our company.  Prior to beginning her insurance career she had been a
feature writer for the Louisville Courier-Journal and The Cincinnati Post and
Times Star.  She was Investors Heritage's first Million Dollar Producer and
accomplished this in our first year of operation, 1961.  She won numerous
awards, sold lots of insurance and had great pride in the companies.  She
retired in 1993.

These outstanding associates were loyal and dedicated to serving the company and
our mutual clients in the best way possible.  We miss our good friends and will
forever be indebted to them for their contributions to the Kentucky Investors
family of companies.

MANAGEMENT'S
DISCUSSION AND ANALYSIS

ORGANIZATIONAL STRUCTURE
Effective December 31, 1999, Kentucky Investors, Inc. ('Kentucky Investors') and
Investors Heritage Life Insurance Company ('Investors Heritage') completed a
statutory share exchange whereby Kentucky Investors acquired 100% of the
outstanding shares of common stock of Investors Heritage.  Consequently,
Investors Heritage is now a wholly-owned subsidiary of Kentucky Investors. The
share exchange did not have the effect of changing control of Investors Heritage
since Kentucky Investors already owned 74% of the outstanding common stock of
Investors Heritage prior to the effective date of the transaction.

Discussions regarding the possible reorganization of Kentucky Investors and
Investors Heritage began during the first quarter of 1999 and during the second
quarter of 1999, the respective Boards of Directors of Kentucky Investors and
Investors Heritage were advised that preliminary discussions were ongoing.  The
Board of Directors of each company authorized management to continue to explore
the feasibility of a reorganization with primary emphasis on a tax-free
reorganization.

In July 1999, the respective Boards of Directors of Kentucky Investors and
Investors Heritage authorized the chairman of each company to appoint a special
committee to independently review the feasibility of a reorganization whereby
Kentucky Investors would exchange its common stock for Investors Heritage common
stock, to negotiate the terms and conditions of any reorganization and to make
recommendations to their respective boards.  The Investors Heritage special
committee was comprised of four of its board members. The Kentucky Investors
special committee was comprised of three of its board members. While some of the
members of the committee of each company also serve on the Board of Directors of
the other company, independence was maintained in the review of the proposed
share exchange by requiring each member of the special committee to abstain from
voting on the transaction during the meeting of the Board of Directors of the
company for which such board member did not serve on the special committee.

The special committee of Investors Heritage engaged The Robinson-Humphrey
Company, LLC ('Robinson-Humphrey') to provide financial advice and a fairness
opinion with regard to the share exchange.  Kentucky Investors special committee
engaged in a review of the proposed share exchange with the assistance of
independent counsel.  In August 1999, the special committees of each company
recommended for approval to their respective boards an exchange ratio of 1.24 to
1 whereby Investors Heritage stockholders were to receive 1.24 shares of
Kentucky Investors common stock for each share of Investors Heritage common
stock. On August 18, 1999 representatives of Robinson-Humphrey were present at
the Investors Heritage board meeting to provide financial advice and to render a
fairness opinion, from a financial point of view, regarding the share exchange
ratio to the Investors Heritage board.   The Board of Directors of each company
approved the recommended share exchange ratio on August 18, 1999.

After the evaluation, the special committees and the Board of Directors of each
company unanimously approved the share exchange agreement.  In reaching its
conclusion to approve the share exchange agreement, the Kentucky Investors
special committee and the Kentucky Investors Board considered a number of
factors including, but not limited to, the following:
*    Information regarding the financial condition, results of operations,
competitive position, business and prospects of Investors Heritage and Kentucky
Investors, both on a historical and future basis and on a stand-alone and
combined basis, including an improvement in earnings that would inure to the
benefit of Kentucky Investors stockholders after the share exchange;
*    The terms of the share exchange agreement, including the parties'
representations, warranties and covenants and the conditions of their
obligations;
*    The relative trading prices and volumes as well as prospects for future
growth and value of Kentucky Investors common stock and Investors Heritage
common stock;
*    The relative and intrinsic values of Investors Heritage common stock and
Kentucky Investors common stock and the implied premium which the exchange ratio
represented;
*    The combined financial condition of Kentucky Investors and Investors
Heritage following the share exchange;
*    The structure of the share exchange, which permitted Investors Heritage
stockholders to exchange their Investors Heritage common stock for Kentucky
Investors  common stock on a tax-free basis;
*    The dilutive effect of the share exchange to book value and dividends.

The Kentucky Investors Special Committee and the Kentucky Investors Board of
Directors determined the potential benefits of the share exchange would include,
but not be limited to, the following:
*    A single, publicly traded entity with a consolidated stockholder base;
*    Enhancement of Kentucky Investors' capital structure;
*    Simplification of Investors Heritage's and Kentucky Investors' financial
reporting structures;
*    The creation of economies of scale thereby reducing administrative costs;
and
*    Increasing opportunities for growth through mergers and acquisitions;
including the possible use of Kentucky Investors equity securities in those
transactions.

The officers of Kentucky Investors and Investors Heritage executed the
definitive share exchange agreement on September 24, 1999.  In accordance with
Kentucky law, only Investors Heritage stockholders needed to approve the share
exchange agreement, which occurred at a special meeting held on November 18,
1999.  The Kentucky Department of Insurance approved the transaction on December
22, 1999.  The share exchange became effective at the close of business on
December 31, 1999.

The acquisition of the remaining 26% of the Investors Heritage common stock from
its minority stockholders was accounted for as a purchase.  (Please see the
President's Letter to Stockholder's and Note B to the Consolidated Financial
Statements for additional information regarding the share exchange).

The corporate management structure of Investors Heritage and Kentucky Investors
did not change as a result of the share exchange.  Investors Heritage continues
to be an authorized Kentucky domestic life insurance company and will continue
to operate as it has in the past.  There have been no changes in the officers or
directors of either Investors Heritage or Kentucky Investors on or since the
date of the share exchange.

CONSOLIDATION
Kentucky Investors is also the holding company of Investors Heritage Printing,
Inc., a printing company ('Heritage Printing') and Investors Heritage Financial
Services Group, Inc., an insurance marketing company ('Financial Services
Group').  Kentucky Investors and its subsidiaries are collectively hereinafter
referred to as the 'Company'. The accompanying consolidated financial statements
of Kentucky Investors include the accounts of its respective wholly-owned
subsidiaries, after elimination of intercompany transactions. However, ninety-
nine percent (99%) of Kentucky Investors operations are generated by Investors
Heritage.

SIGNIFICANT GROWTH AND CONTINUED EXPANSION
For the last several years the Company has been expanding its market share in
the preneed funeral market. The result has been consistent growth in almost all
of the states that were targeted for expansion.  Financial Services Group
continues to operate under marketing agreements with Investors Heritage.  This
arrangement has proven to be successful and enabled Financial Services Group and
Investors Heritage to continue utilizing their expertise in the marketing and
administration of credit insurance products.  Further, through Financial
Services Group, Investors Heritage is able to offer products such as mortgage
protection and ordinary life insurance through financial institutions.

In November 1999, Congress passed, and President Clinton signed into law, Senate
Bill 900 which is commonly referred to as the Financial Modernization Act.  The
Company is well positioned to move forward under the Financial Modernization
Act.  Management does not anticipate significant merger and acquisition
activity. However, marketing and other joint venture relationships are
anticipated.  Because of our marketing and administrative expertise, the Company
is uniquely positioned for such relationships, especially with Kentucky based
financial institutions.  The Company will continue to take advantage of our
expertise and to explore opportunities in this new era of financial
modernization.

FINANCIAL STRENGTH
The quality of our investment portfolio and the current level of shareholders'
equity  continue to provide a sound financial base as we strive to expand our
marketing system to offer competitive, quality products.  Please see INVESTMENTS
LIQUIDITY AND FUND RESTRICTIONS for a more detailed discussion.

BUSINESS SEGMENTS
Statement of Financial Accounting Standard ('SFAS') No. 131 requires a
'management approach' in the presentation of business segments based on how
management internally evaluates the operating performance of its business units.
The segment data that follows has been prepared in accordance with SFAS No. 131.
Please refer to the Notes to the Consolidated Financial Statements for
additional information regarding segment data.

REVENUES
Overall revenues were $62,772,000, $57,708,000 and $52,707,000 in 1999, 1998 and
1997, respectively.  The increases were due primarily to our growth as a
provider of quality preneed products, growth in invested assets due to increased
sales of the preneed and burial products and our market expansion of traditional
life and credit insurance products with financial institutions.   A discussion
of the changes follows. Additionally, the Company has experienced steady growth
in net investment income which increased 7% or $1,045,000 in 1999 from 1998.
The 1998 increase over 1997 was 9% or $1,195,000.

PRENEED & BURIAL PRODUCTS
The Preneed & Burial Products segment includes both life and annuity products
sold by funeral directors or affiliated agents to fund prearranged funerals.

Revenues for the Preneed & Burial Products business segment were 14% or
$5,839,000 higher in 1999 than 1998. The 1998 increase over 1997 was 12% or
$4,324,000.

Insurance sales exceeded production goals set for 1999 by approximately 10%.
Actual new premium production increased approximately 19% in 1999 over 1998,
primarily due to record premium production in preneed and burial products.  New
premiums collected during 1999, 1998 and 1997 were $29,242,000, $24,504,000 and
$21,878,000, respectively. During 1999, Investors Heritage continued to target
thirteen states for developing new accounts and added four new states throughout
the year. Investors Heritage also received the endorsement of three state
funeral directors associations, North Carolina, South Carolina and West
Virginia. These associations will work with us in promoting preneed sales.

Premium production remains strong in North Carolina.  However, due to the
successful expansion of our marketing operation noted above, new preneed
premiums from North Carolina agents accounted for 40% of the total new preneed
premiums collected in 1999 compared to 48% for 1998.  New premium collections
from Kentucky in 1999 increased 13% in 1999 over 1998.  Other states showing
significant gains were Arizona, Georgia, Illinois, Indiana, Ohio, South
Carolina, Tennessee, Virginia and West Virginia.  Management plans to continue
to develop the preneed funeral market and anticipates increases in single
premium production for 2000 over 1999.  It is anticipated that increases will be
derived from higher production in the states set forth above and from expansion
into several new states including Alabama, Louisiana, Michigan, Mississippi and
Missouri.

Increase in net investment income earned by preneed and burial products also
contributed to the overall increase in Revenues.  Net investment income
increased 11% in 1999 compared to 1998 and 14% in 1998 compared to 1997.  The
rate of increase on net investment income slowed due to the continued decline in
interest rates under current market conditions.

During 1999, the Company contracted with Family Assistance, Inc., a firm that
provides an at-need financing program and an accounts receivable/cash management
system for funeral homes. The Company offered this program to existing preneed
funeral home clients as well as funeral homes that do not currently sell our
preneed insurance products. While this relationship has not produced significant
income for the Company, it has been a very productive relationship.  Most
importantly, Family Assistance has also been helpful in increasing our core
lines of business.  It has become a valuable service that the Company can offer
our funeral home accounts.

TRADITIONAL & UNIVERSAL LIFE PRODUCTS
This segment includes traditional life and group life insurance products,
annuities (primarily qualified) and universal life products.

Revenues for 1999, 1998 and 1997 were $13,573,000, $14,146,000 and $13,950,000,
respectively. New premiums collected during 1999, 1998 and 1997 were $2,884,000,
$2,953,000 and $3,454,000, respectively. For the past few years emphasis on
recruiting has been primarily concentrated in the preneed and burial markets.
Traditional and Universal Life products will continue to be a sales division
within Investors Heritage and we will continue to service our business in force
as well as actively recruit new agents and associates to supplement the agency
force in this sales division.

Net investment income for this segment increased 1% in 1999 compared to 1998 and
3% in 1998 compared to 1997.  The increase in net investment income was not as
significant in 1999 compared to 1998 due to the decline in premium production
and the decline in interest rates on investments under current market
conditions.

Financial Services Group will also continue to market traditional insurance
products of Investors Heritage through banks and other financial institutions.

CREDIT INSURANCE PRODUCTS & ADMINISTRATIVE SERVICES
This segment includes the marketing and administration of credit life and credit
accident and health insurance products (respectively 'Credit Life' and 'Credit
A&H', and collectively 'Credit Insurance').

Credit Insurance premiums written during 1999, 1998 and 1997 were $18,774,000,
$17,390,000 and $13,692,000, respectively.  All of the related underwriting risk
is being reinsured 100% with major, well-known life companies. In addition,
Financial Services Group has obtained reinsurance relationships for Investors
Heritage with three other companies.  Each of these agreements generates
marketing and retention fees, but not administration fees.

Revenues for this segment were $345,000, $307,000 and $152,000 for 1999, 1998
and 1997, respectively.

CORPORATE & OTHER
This segment consists of corporate accounts measured primarily by stockholders'
paid-in capital, contributed surplus, earned surplus, property and equipment and
other minor business lines which include group annuities and group and
individual accident and health products.

Revenues from this segment were $1,696,000 in 1999, $1,936,000 in 1998 and
$1,610,000 in 1997.  The primary reason for the increase in revenues during 1998
was a $126,000 realized capital gain.  Realized capital losses were $307,000
during 1999 and $34,000 during 1997.

OPERATING RESULTS
The Company's Net Income for 1999 increased $404,000 or 20% from 1998 and for
1998 increased $453,000 or 30% from 1997.

Earnings per share were $2.79, $2.34 and $1.84 for 1999, 1998 and 1997,
respectively.

PRENEED & BURIAL PRODUCTS
Pre-tax income (Income from Operations Before Federal Income Tax) for this
business segment of the Company was $3,590,000, $2,408,000 and $2,096,000 for
1999, 1998 and 1997, respectively.  The increase in pre-tax income in 1999 and
1998 is primarily due to record production.  The increases for the last few
years is the result of actively managing its investment portfolio and reduced
levels of relative policyholder benefits and expenses related to in force
business.  However, current market conditions, including competitive pricing for
this segment and the low interest rate environment continue to narrow profits
generated from new sales.

TRADITIONAL & UNIVERSAL LIFE PRODUCTS
Pre-tax income for this segment was $1,047,000, $1,194,000 and $706,000 in 1999,
1998 and 1997, respectively. 1999 and 1998 were close to projections for
revenues and expenses. Higher than expected unreinsured claims in 1997 and
expense levels reduced pre-tax income considerably.

CREDIT INSURANCE PRODUCTS & ADMINISTRATIVE SERVICES
During the third quarter of 1994 Investors Heritage began the process of phasing
out of the credit insurance market as a direct writer.  Since that time this
block of business has been decreasing at a significant rate due to the short
duration (approximately a two-year average term) of the policies.  Pre-tax
losses were $43,000, $142,000 and $123,000 for 1999, 1998 and 1997,
respectively. Losses have been generated by the run-off of Credit Insurance and
the related deferred acquisition costs amortization.  This line's performance
should continue to improve due to the growth of the income from fully reinsured
business and reduced amortization from run-off business.

DISTRIBUTION OF INVESTED ASSETS
A pie chart appears on this page showing the Distribution of Invested Assets for
all of the assets of the Company.  The chart shows the following breakdown:
Fixed Maturities:  87.0; Mortgage Loans - R.E.:  7.9%; Policy Loans:  3.3%;
Equity Securities:  1.1%; Short Term Investments:  0.5%; Other Long Term
Investments:  0.2%.

CORPORATE & OTHER
Pre-tax income for this segment was $258,000, $550,000 and $164,000 for 1999,
1998 and 1997, respectively.  Pre-tax realized capital gains of $126,000
allocated to this segment during 1998 was the primary reason for the improvement
in pre-tax income.  Pre-tax realized capital losses were $307,000 and $34,000
for 1999 and 1997, respectively.

INVESTMENTS, LIQUIDITY AND FUND RESTRICTIONS
The Company's investment portfolio continues to provide financial stability.  It
is management's opinion that the Company has adequate cash flows both on a long-
term and short-term basis as evidenced by the Consolidated Statements of Cash
Flows presented in this Annual Review. The Company's cash flows were derived
from insurance premiums and investments. Management anticipates these cash flows
to experience steady growth due to improved profitability of all three
subsidiaries.

During 1999, Financial Services Group's fifth full year of operation, revenues
were $610,000 up 35% or $158,000 compared to 1998, and dividends in the
aggregate amount of $253,500 were paid to Kentucky Investors.  Revenues from
Heritage Printing were $542,000 in 1999, up 19% compared to $456,000 in 1998,
and Heritage Printing paid $108,990 in dividends to Kentucky Investors in 1999.
Management of Heritage Printing will continue to work to improve revenues from
unaffiliated sources as well as to provide printing services for Investors
Heritage.  Revenues from these sources constitute approximately 1% of the
Company's overall Revenues in 1999 and management is working on the continued
growth and profitability of both Financial Services Group and Heritage Printing.

DISTRIBUTION OF FIXED INCOME ASSETS
A pie chart appears on this page showing the Distribution of Fixed Income
Assets.  The chart shows the following breakdown:  Corporate:  49.3%; Mortgage-
backed Securities:  20.6%; Government:  15.0%; Foreigns:  9.7%; Asset-backed
Securities:  4.4%; States & Political Subdivisions:  1.0%.

Management is not aware of any commitments or unusual events that could
materially affect the Company's capital resources.  Further, there is no long-
term and only $70,000 short-term external debt.  Other than the items disclosed
in Note H to the Consolidated Financial Statements and the increased regulatory
reporting requirements which generally increase administrative expenses,
management is not aware of any current recommendations by any regulatory
authority which if implemented would have any material effect on the Company's
liquidity, capital resources or operations.

The Company will continue to explore various opportunities including mergers and
acquisitions and purchasing blocks of business from other companies, which may
dictate a need for either long-term or short-term debt.  There are no
restrictions as to use of funds except the restriction on Investors Heritage as
to the payment of cash dividends to shareholders which is discussed in more
detail in Note G to the Consolidated Financial Statements.

Since inception, we have maintained a sound, conservative investment strategy.
The fixed income portfolio of public bonds is managed by an independent
portfolio manager, Charter Oak Capital Management, Inc. ('Charter Oak').  As of
December 31, 1999, 87% of the Company's total invested assets are managed by
Charter Oak pursuant to specific investment guidelines which have been approved
by the Board of Directors.  Since the inception of the relationship with Charter
Oak, the primary objectives have been to maintain the quality and integrity of
the fixed income portfolio while improving the total return on investments.
These goals have been accomplished by methodically diversifying the portfolio
over the last 11 years.

DISTRIBUTION OF CORPORATE BONDS
A pie chart appears on this page showing the Distribution of Corporate Bonds.
This chart shows the following breakdown:  Industrial and Miscellaneous:  53.3%;
Bank and Finance:  36.6%; and Utilities:  10.1%.

The fixed income portfolio is diversified among sectors.  The market value and
the Standard & Poor's average quality rating of this portfolio as of December
31, 1999 are $195.0 million and AA, respectively.  At year-end 1999 the fixed
income portfolio was allocated as follows:  49.3% - corporate; 15.0% -
government; 20.6% - mortgage-backed securities; 9.7% - foreign; 4.4% - asset
backed securities; and 1.0% - states and political subdivisions.  Within the
corporate bond sector, the portfolio is also diversified with 36.6% of that
sector invested in bank and finance, 53.3% in industrial and miscellaneous, and
10.1% in utilities.  Pie charts showing the Distribution of Fixed Income Assets
and Distribution of Corporate Bonds are located on pages 16 and 17.

The fixed income portfolio also includes $40.1 million (at fair value) of
mortgage-backed securities ('MBS') which represents 18% of total invested assets
and 21% of the fixed income portfolio.  MBS's add value to the portfolio and
Charter Oak has provided the expertise to purchase MBS with the confidence that
the credits have been properly analyzed and that the investment properly suits
the Company's asset and liability needs.

DISTRIBUTION OF MORTGAGE LOANS
A pie chart appears on this page showing the Distribution of Mortgage Loans.
This chart shows the following breakdown:  Retail:  37.8%; Other:  23.7%;
Apartments:  13.2%; Office Properties:  12.0%; residential (1-4 families):
6.9%; and Industrial:  6.4%.

There have been concerns expressed by rating agencies, various regulators and
other constituencies regarding investments in MBS's by insurers and other
financial institutions.  Although these highly rated securities provide
excellent credit quality, their liquidity and risk must be monitored.  Except
for two commercial backed mortgages of approximately $1.4 million, all of the
collateral of the MBS owned are guaranteed by the Government National Mortgage
Association ('GNMA'), Federal National Mortgage Association ('FNMA') or Federal
Home Loan Mortgage Corporation ('FHLMC').

The FNMA and FHLMC securities are structured either as publicly-traded
collateralized mortgage obligations ('CMO') or pass-throughs.  Unlike most
corporate or real estate debt, the primary concern with an MBS is the
uncertainty of timing of cash flows due to prepayment assumptions rather than
the possibility of loss of principal.

CMO holdings represent approximately 69% of the total MBS portfolio.  When these
securities are purchased at a discount or premium, the income yield will vary
with changes in prepayment speeds due to the change in accretion of discount or
amortization of premium, as well as the timing of the basic principal and
interest cash flows.  The overall impact of the CMO's variability in yields on
the portfolio is not significant in relation to the yield and cash flows of the
total invested assets.  More importantly, the investment portfolio has no
exposure to the more volatile, high-risk CMO's, such as those structured to
share in residual cash flows.  Except for one sequential pay CMO of
approximately $941,000, the CMO's held are either planned amortization class
('PAC') bonds, including one planned amortization class-Z account ('PAC-Z'), or
support class ('SUP') bonds, both of which are structured to provide more
certain cash flows to the investor and therefore have reduced prepayment risk.

OPTION ADJUSTED VALUE VS TERM STRUCTURE SHIFT GRAFT
A graft appears on this page showing the results of the Asset Adequacy Analysis
performed by the Company.  The graph demonstrates the option-adjusted prices of
assets, liabilities, and surplus at various shifts in the interest rate
environment.

Pass-throughs comprise the remainder of MBS owned representing approximately 31%
of the total MBS portfolio.  Pass-throughs are GNMA, FNMA or FHLMC guaranteed
MBS which, simply stated, pass-through interest and principal payments to the
investors in accordance with their respective ownership percentage.
Additionally, the Company also engages in commercial and residential mortgage
lending with approximately 93% of these investments being in commercial
properties.  All mortgage loans are originated in-house and all loans are
secured by first mortgages on the real estate.  Loan to value ratios of 80% or
less and debt service coverage from existing cash flows of 115% are generally
required.  The Company minimizes credit risk in its mortgage loan portfolio
through various methods, including stringently underwriting the loan request,
maintaining small average loan balances, reviewing its larger mortgage loans on
an annual basis and diversifying the portfolio by property type.  The average
loan balance is $342,223 and the average loan to value is 52.5%.  The largest
loan currently held is $920,177.  The Company has $17.8 million invested in
mortgage loans which represents 8% of total invested assets.  The portfolio is
diversified across various property types as follows:  12.0% - office; 37.8% -
retail; 6.4% -industrial; 6.9% - 1 to 4 family; 13.2% - apartments; and 23.7% -
other.  A pie chart showing the Distribution of Mortgage Loans is located on
page 18.

Although approximately 62.6% of the mortgage loans are located in the various
geographic regions of Kentucky, the Company is familiar with its mortgage loan
markets and is not aware of any negative factors or trends which would have a
material impact on the local economies where the mortgage loan properties are
located. The Company has been successful in adding value to the total investment
portfolio through its mortgage loan originations due to the fact that yields
realized from the mortgage loan portfolio are from 183 to 264 basis points
higher than yields realized from fixed income investments.  Value has also been
added because the mortgage loan portfolio has consistently performed well.  As
of December 31, 1999, the Company had only one non-performing mortgage loan,
which would include loans past due 90 days or more, loans in process of
foreclosure, restructured loans and real estate acquired through foreclosure.

The non-performing mortgage loan, which is more than 90 days past due, is a
Residential Mortgage with an outstanding balance of under $50,000.  The property
securing the loan has a fair market value of $75,000.

The strength of our liquidity is found in our conservative approach in the
product development area and in the strength and stability of our fixed income
portfolio and our mortgage loans.  For 1999, the fixed income investments were
100% investment grade as rated by Standard & Poor's, unchanged from 100% for
1998.  None of the Company's fixed income assets are in default.  Liquidity is
also managed by laddering maturities of our fixed income portfolio.  The average
duration of our fixed income investments is 5.5 years with approximately $7.4
million due within 12 months and approximately $26.5 million due within the
following four years.  Historically management has anticipated that all such
investments will be held until maturity.  However, one of the responsibilities
of our independent portfolio manager is to constantly monitor the credit rating
of our fixed income investments to determine if rating changes of any investment
requires action by management.  As explained in detail in Note A to the
Consolidated Financial Statements, all fixed income securities and all
marketable equity securities are classified as available-for-sale and are
carried at fair value.

MARKET RISK EXPOSURES
Measuring market risk is a key function of our asset/liability management
process.  To test financial risk and investment strategy, the Company performs
an asset adequacy analysis each year.  Dynamic models of both assets and
liabilities are created to project financial results under several shifts in the
current interest rate environment.  Results show that the Company's exposure to
a relative 10% increase or decrease in the interest rates prevalent at December
31, 1999 is a net loss of less than $400,000.  A graph of the total price
behavior curve tested is shown on Page 19 of this Annual Review.

Items taken into account on the asset side include prepayment and liquidity
risks, asset diversification and quality considerations.  On the liability side,
interest crediting strategies and policyholder and agent behavior (lapses,
loans, withdrawals and premium flow) are dynamically modeled in relationship to
the particular interest rate environment tested.  Although the Company is
careful to ensure that these assumptions are consistent with the best available
data, interest-sensitive cash flows cannot be forecast with certainty and can
deviate significantly from the assumptions made.  Because asset and liability
durations are continually changing as new policyholder contracts are issued and
as new investments are added to the portfolio, the Company manages its balance
sheet on an ongoing basis and its net exposure to changes in interest rates may
vary over time.

REGULATORY MATTERS
The statutory capital and surplus of Investors Heritage decreased $507,000 in
1999 following a decrease of $121,000 in 1998.  Depressed market values of
unaffiliated common stock at year end 1999 compared to year-end 1998 contributed
most significantly to the decrease.  The writedown of home office real estate
from market value to depreciated cost required by the Kentucky Department of
Insurance and the voluntary reserve strengthening for the block of North
Carolina burial associations business produced a $789,000 charge to surplus in
1999 and $827,000 for both 1998 and 1997.  1999 was the last year for these two
items.

For Generally Accepted Accounting Principles ('GAAP') reporting purposes, the
home office real estate is already carried at depreciated cost and the notes and
affiliated common stock are eliminated.  As anticipated, these adjustments did
not affect the Company's GAAP financial position or net income or its statutory
net income.  For additional discussion on this issue, refer to Note H to the
Consolidated Financial Statements.

IMPACT OF YEAR 2000
The Company recognized the Year 2000 Issue in 1988 and began working on a
solution at that time.  Modifications were made to existing software so that the
Year 2000 Issue would not pose significant operational problems for its computer
systems.  As of year-end 1995, Company systems were in full compliance with all
Year 2000 Issue requirements.  The cost to implement system changes related to
the Year 2000 Issue has been nominal.

On January 1, 2000, the Company did not experience any significant Year 2000
related problems.  Further, the Company does not anticipated any interruptions
of business in the future due to Year 2000 Issues; however, there can be no
guarantee that the systems of other companies on which the Company relies will
continue to perform in a manner compliant with Year 2000 systems requirements.
Non-performance of third parties could lead to an adverse effect on future
operating results of the Company.

FORWARD LOOKING INFORMATION
The Company cautions readers regarding certain forward-looking statements
contained in this report and in any other statements made by, or on behalf of,
the Company, whether or not in future filings with the Securities and Exchange
Commission (the 'SEC'). Forward-looking statements are statements not based on
historical information and which relate to future operations, strategies,
financial results or other developments. Statements using verbs such as
'expect', 'anticipate,' 'believe' or words of similar import generally involve
forward-looking statements. Without limiting the foregoing, forward-looking
statements include statements which represent the Company's beliefs concerning
future levels of sales and redemptions of the Company's products, investment
spreads and yields or the earnings and profitability of the Company's
activities.

Forward-looking statements are necessarily based on estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond the Company's control
and many of which are subject to change. These uncertainties and contingencies
could cause actual results to differ materially from those expressed in any
forward-looking statements made by, or on behalf of, the Company. Whether or not
actual results differ materially from forward-looking statements may depend on
numerous foreseeable and unforeseeable factors and developments. Some of these
may be national in scope, such as general economic conditions, changes in tax
laws and changes in interest rates. Some may be related to the insurance
industry generally, such as pricing competition, regulatory developments,
industry consolidation and the effects of competition in the insurance business
from other insurance companies and other financial institutions operation in the
Company's market area and elsewhere. Others may relate to the Company
specifically, such as credit, volatility and other risks associated with the
Company's investment portfolio. The Company cautions that such factors are not
exclusive. The Company disclaims any obligation to update forward-looking
information.

                            KENTUCKY INVESTORS, INC.
                               BOARD OF DIRECTORS
                             AND CORPORATE OFFICERS

                            Harry Lee Waterfield II
                             Chairman of the Board
                     President and Chief Executive Officer
                              Frankfort, Kentucky

BOARD

H. Glenn Doran
Board Member
Cottage Grove, Tennessee

Gordon C. Duke
Board Member
Frankfort, Kentucky

Robert M. Hardy, Jr.
Board Member
Vice President and General Counsel
Frankfort, Kentucky

Jerry F. Howell
Board Member
Leesburg, Florida

Dr. Jerry F. Howell, Jr.
Board Member
Morehead, Kentucky

David W. Reed
Board Member
Gilbertsville, Kentucky

Helen S. Wagner
Board Member
Owensboro, Kentucky

OFFICERS

Howard L. Graham
Vice President, Corporate Services
Frankfort, Kentucky

Jane S. Jackson
Assistant Secretary
Frankfort, Kentucky

Jimmy R. McIver
Treasurer
Frankfort, Kentucky

Nancy W. Walton
First Vice President
Frankfort, Kentucky

Wilma C. Yeary
Secretary
Frankfort, Kentucky

Ernst & Young LLP
Independent Auditors


                               CORPORATE OFFICERS
                                OF SUBSIDIARIES

                            Harry Lee Waterfield II
                            Chairman, President and
                          Chief Executive Officer IFP

Jimmy R. McIver
Treasurer IFP

Wilma C. Yeary
Secretary I

Jane S. Jackson
Assistant Secretary I
Secretary FP

Howard L. Graham
Vice President, Corporate Services I

Raymond L. Carr
Vice President,
Administrative Operations and
Computer Services I

Robert M. Hardy, Jr.
Vice President and General Counsel I
Vice President, Legal F

Lawrence J. Sprecher, M.D.
Medical Director I

I Investors Heritage Life Insurance Company
F Investors Heritage Financial Services Group, Inc.
P Investors Heritage Printing, Inc.

Nancy W. Walton
Vice President, Underwriting I

L. Jane Wise
Vice President, Policy Services I

Margaret J. Kays
Vice President, Human Resources I

Julie Hunsinger
Vice President and Chief Actuary I

Don R. Philpot
Vice President, Agency I

N. Douglas Hippe
Vice President, Accounting I

Michael F. Dudgeon, Jr.
Vice President, Financial Services I
Vice President F

Rick Calvert
Vice President P



                            KENTUCKY INVESTORS, INC.

                            SELECTED FINANCIAL DATA
        (000's omitted except for Earnings and Cash Dividends Per Share)

                  1999        1998         1997         1996        1995

Total Revenue  $  62,772   $  57,708    $  52,707    $  47,962   $  44,005
Total Benefits
   & Expenses     57,920      53,698       49,863       46,320      43,191
Net Income         2,379       1,975        1,523        1,147         555
Earnings Per Share  2.79        2.34         1.84         1.41         .71
Total Assets     291,215     288,369      256,872      224,997     208,045
Total
   Liabilities   260,186      43,673      217,543      190,997     173,288
Debt                 264         407          -0-          -0-         -0-
Cash Dividends Per
   Share             .38         .38          .38          .38         .38

--------------------------------------------------------------------------


                         REPORT OF INDEPENDENT AUDITORS


The Board of Directors and Stockholders
Kentucky Investors, Inc.

     We  have  audited  the  accompanying consolidated balance sheets of
Kentucky Investors, Inc. and subsidiaries as of December  31,  1999  and 1998,
and  the related consolidated statements of income, stockholders'  equity, and
cash flows for each of the three years in the  period  ended December 31, 1999.
These financial statements are the responsibility of the  Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

     We conducted our audits in  accordance with auditing standards generally
accepted in the United States.  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 financial statements referred to above  present fairly,
in all material respects, the consolidated financial position of Kentucky
Investors, Inc. and subsidiaries at December 31, 1999 and 1998, and  the
consolidated  results of their operations and their cash flows for each of the
three years in the period ended December  31,  1999,  in conformity with
accounting principles generally accepted in the United States.

                                   /s/
                                   Ernst & Young LLP


Louisville, Kentucky
March 22, 2000




                            KENTUCKY INVESTORS, INC.

                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1999 and 1998

ASSETS                                 1999                1998
                                       ----                ----

INVESTMENTS
Securities available-for-sale, at
   fair value:
   Fixed maturities (amortized cost:
   1999-$198,948,096;
   1998-$181,886,791)              $195,009,506        $193,911,467
   Equity securities (cost:
   1999-$1,150,392; 1998-$913,714)    2,363,864           3,378,471
Mortgage loans on real estate        17,795,599          16,189,127
Policy loans                          7,379,349           7,203,344
Other long-term investments             528,850             488,828
Short-term investments                1,037,081           1,200,970
                                   ------------        ------------
          Total investments        $224,114,249        $222,372,207

Cash and cash equivalents             2,428,652           2,514,371
Accrued investment income             3,464,177           3,098,930
Due and deferred premiums             4,440,484           4,129,967
Deferred acquisition costs           23,341,062          27,288,684
Leased property under capital leases    255,381             404,877
Property and equipment                2,129,443           1,604,618
Goodwill                              1,067,952           2,088,642
Other assets                          1,333,183           1,510,848
Amounts recoverable from reinsurers  28,640,627          23,355,631
                                   ------------        ------------
                                   $291,215,210        $288,368,775
                                   ============        ============

LIABILITIES AND STOCKHOLDERS' EQUITY
   LIABILITIES
      Policy liabilities:
         Benefit reserves          $226,449,401        $207,115,725
         Unearned premium reserves   24,163,694          20,069,565
         Policy claims                2,012,392           2,086,316
         Other policyholders' funds:
            Dividend & endowment
               accumulations          1,043,436           1,053,972
            Reserves for dividends
               & endowments & other     787,172             784,630
                                   ------------        ------------
               Total policy
               liabilities         $254,456,095        $231,110,208
      Federal income taxes            1,459,622           8,122,499
      Obligations under capital
               leases                   264,324             407,462
      Other liabilities               4,006,294           4,032,569
                                   ------------        ------------
         Total liabilities         $260,186,335        $243,672,738
                                   ------------        ------------
MINORITY INTEREST IN SUBSIDIARY    $     -0-           $ 12,471,302
                                   ------------        ------------

STOCKHOLDERS' EQUITY
   Common stock (shares issued:
     1999-1,154,880; 1998-848,116)$  1,154,880         $    848,116
   Paid-in surplus                   8,499,592            3,442,248
   Accumulated other comprehensive
     (loss) income                  (2,313,784)           6,392,746
   Retained earnings                23,688,187           21,541,625
                                  ------------         ------------
         Total stockholders' equity
                                  $ 31,028,875         $ 32,224,735
                                  ------------         ------------
                                  $291,215,210         $288,368,775
                                  ============         ============



                See notes to consolidated financial statements.


                            KENTUCKY INVESTORS, INC.

                       CONSOLIDATED STATEMENTS OF INCOME
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 and 1997


                                        1999          1998            1997
REVENUES
Premiums and other considerations  $46,907,642    $42,638,289    $ 39,129,106
Investment income, net of expenses  15,211,964     14,167,232      12,972,322
Realized gain (loss) on
   investments, net                   (307,275)       126,179         (33,794)
Other income                           959,332        776,612         639,248
                                   -----------    -----------    ------------
Total revenue                      $62,771,663    $57,708,312    $ 52,706,882
                                   -----------    -----------    ------------
BENEFITS AND EXPENSES
Death and other benefits           $22,845,282    $20,767,497    $ 19,218,783
Guaranteed annual endowments           776,742        800,041         835,220
Dividends to policyholders             715,448        626,325         743,582
Increase in benefit reserves and
   unearned premiums                20,187,658     18,400,657      16,112,923
Acquisition costs deferred          (8,407,930)    (7,060,559)     (7,048,617)
Amortization of deferred acquisition
   costs                             6,335,810      6,551,456       7,133,191
Commissions                          6,358,819      5,231,882       4,702,676
Other insurance expenses             9,108,078      8,380,727       8,165,730
                                   -----------    -----------     -----------
Total benefits and expenses        $57,919,907    $53,698,026     $49,863,488
                                   -----------    -----------     -----------
INCOME FROM OPERATIONS BEFORE
FEDERAL INCOME TAX AND MINORITY
  INTEREST IN NET INCOME OF
  SUBSIDIARY                       $ 4,851,756    $ 4,010,286     $ 2,843,394
                                   -----------    -----------     -----------
Provision for income taxes
Current                            $   326,000    $   362,000     $   497,000
Deferred                             1,305,000        952,000         264,000
                                   -----------    -----------     -----------
                                   $ 1,631,000    $ 1,314,000     $   761,000
                                   -----------    -----------     -----------
INCOME FROM OPERATIONS BEFORE
MINORITY INTEREST IN NET INCOME
OF SUBSIDIARY                      $ 3,220,756    $ 2,696,286     $ 2,082,394
MINORITY INTEREST IN NET INCOME
OF SUBSIDIARY                          841,500        721,149         559,842
                                   -----------    -----------     -----------
NET INCOME                         $ 2,379,256    $ 1,975,137     $ 1,522,552
                                   ===========    ===========     ===========
EARNINGS PER SHARE                 $      2.79    $      2.34     $      1.84
                                   ===========    ===========     ===========

                See notes to consolidated financial statements.





                            KENTUCKY INVESTORS, INC.

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 and 1997


                                   ACCUMULATED
                                     OTHER                    TOTAL
           COMMON      PAID-IN   COMPREHENSIVE  RETAINED   STOCKHOLDERS'
           STOCK       SURPLUS   (LOSS) INCOME  EARNINGS      EQUITY
           -----       -------   -------------  --------      ------
BALANCE, JANUARY 1, 1997
          $   820,475 $3,374,615 $ 1,510,225 $18,452,458 $24,157,773
Comprehensive Income:
Net Income                                     1,522,552   1,522,552
Change in net unrealized appreciation
   on available-for-sale securities
                                   2,532,876               2,532,876
                                                         -----------
Total Comprehensive Income                                 4,055,428
Cash dividend                                   (349,285)   (349,285)
Issuance of common stock, net
               16,420      9,446                 197,038     222,904
          -----------   --------  ----------- ----------  ----------

BALANCE, DECEMBER 31, 1997
          $   836,895 $3,384,061 $ 4,043,101 $19,822,763 $28,086,820
Comprehensive Income:
Net Income                                     1,975,137   1,975,137
Change in net unrealized appreciation
   on available-for-sale securities
                                   2,349,645               2,349,645
                                                          ----------
Total Comprehensive Income                                 4,324,782
Cash dividend                                   (354,926)   (354,926)
Issuance of common stock, net
               11,221     58,187                  98,651     168,059
          ----------- ----------  -----------  ---------- ----------
BALANCE, DECEMBER 31, 1998
          $   848,116 $3,442,248 $ 6,392,746 $21,541,625 $32,224,735
Comprehensive (Loss) Income:
Net Income                                     2,379,256   2,379,256
Change in net unrealized depreciation
   on available-for-sale securities           (8,706,530) (8,706,530)
                                                          -----------
Total Comprehensive (Loss) Income                         (6,327,274)
Cash dividend                                   (358,185)   (358,185)
Issuance of common stock, net
               15,079    149,584                 125,491     290,154
          ----------- ----------   ----------   ---------   --------
BALANCE, DECEMBER 31, 1999
           $1,154,880 $8,499,592 $(2,313,784)$23,688,187 $31,028,875

                See notes to consolidated financial statements.




                            KENTUCKY INVESTORS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 and 1997


                                     1999              1998           1997
                                     ----              ----           ----
OPERATING ACTIVITIES
   Net Income                 $    2,379,256   $    1,975,137   $   1,522,552
   Adjustments to reconcile
      net income to net cash
      provided by operating
      activities:
      Increase in
         Benefit Reserves         25,460,007       25,220,661      22,663,249
      Change in Claims
         Liability                   (73,924)        (170,338)        662,113
      Change in Other
         Policyholder Funds           (7,994)         (79,384)        (30,697)
      Amortization of Deferred
        Acquisition Costs          6,335,810        6,551,456       7,133,191
      Policy Acquisition Costs
        Deferred                  (8,407,930)      (7,060,559)     (7,048,617)
      Realized Loss (Gain)
        on Investments               307,275         (209,187)         33,794
      Increase in Accrued
        Investment Income           (365,247)        (193,426)       (492,401)
      Change in Other Assets
        and Other Liabilities        (79,947)         646,584         672,582
      Provision for Deferred
         Federal Income Taxes      1,305,000          952,000         264,000
      Federal Income Tax          (3,384,143)             -0-             -0-
      Change in Due and
        Deferred Premiums           (310,517)        (115,790)         66,306
      Net Adjustment for Premium and
         Discount on Investments     286,189          269,283         206,299
      Depreciation and
        Other Amortization           484,853          201,157         394,116
      Change in Minority
        Interest and Other         3,627,261          487,559         468,090
      Change in Amounts
        Recoverable from
         Reinsurers               (5,284,996)      (6,411,014)     (7,325,846)
NET CASH PROVIDED BY OPERATING
   ACTIVITIES                  $  22,270,953     $ 22,064,139    $ 19,188,731
INVESTING ACTIVITIES
   Securities available-for-sale:
      Purchases                $ (45,334,028)    $(30,462,168)   $(47,713,033)
      Sales and Maturities        27,475,182       13,194,144      28,565,612
   Other Investments:
      Cost of Acquisition         (5,568,194)      (4,857,026)     (2,912,452)
      Sales and Maturities         3,965,182        2,300,420       2,482,421
   Net Additions to Property
     and Equipment                  (794,581)        (583,872)         48,574
NET CASH USED BY INVESTING
   ACTIVITIES                  $ (20,256,439)    $(20,408,502)   $(19,626,026)
FINANCING ACTIVITIES
   Receipts from universal
   life policies credited to
   policyholder account
   balances                    $   4,324,562     $  4,356,590    $  6,074,832
   Return of policyholder
   account balances on
   universal life policies        (6,356,764)      (6,250,442)     (5,256,212)
   Issuances of Common Stock         290,154          168,059         222,904
   Dividends                        (358,185)        (354,926)       (349,285)
NET CASH PROVIDED (USED)
   BY FINANCING ACTIVITIES     $  (2,100,233)    $ (2,080,719)   $    692,239
INCREASE (DECREASE) IN CASH    $     (85,719)    $   (425,082    $    254,944
   Cash and cash equivalents
     at beginning of year          2,514,371        2,939,453       2,684,509
CASH AND CASH EQUIVALENTS  AT
   END OF YEAR                 $   2,428,652     $  2,514,371    $  2,939,453

                See notes to consolidated financial statements.


                            KENTUCKY INVESTORS, INC.

                                    NOTES TO
                       CONSOLIDATED FINANCIAL STATEMENTS

NOTE  A - Nature of Operations and Accounting Policies

Kentucky Investors, Inc. (Kentucky Investors) is the holding company of
Investors Heritage Life Insurance Company (Investors Heritage), Investors
Heritage Printing, Inc., a printing company and Investors Heritage Financial
Services Group, Inc., an insurance marketing company.  These entities are
collectively hereinafter referred to as the 'Company'. Ninety-nine percent of
Kentucky Investors operations are generated by Investors Heritage.

The Company's operations involve the sale and administration of various
insurance and annuity products, including, but not limited to, participating,
non-participating, whole life, limited pay, universal life, annuity contracts,
credit life, credit accident and health and group insurance policies.  The
principal markets for the Company's products are in the Commonwealths of
Kentucky and Virginia, and the states of North Carolina, South Carolina, Ohio,
Indiana, Florida, Tennessee, Illinois, Georgia, West Virginia, Arizona and
Texas.

Basis of Presentation:  The accompanying consolidated financial statements of
Kentucky Investors, Inc. and subsidiaries have been prepared in accordance with
accounting principles generally accepted in the United States (GAAP).

Principles of Consolidation:  The consolidated financial statements include the
wholly-owned subsidiaries of Kentucky Investors which are Investors Heritage and
its subsidiary, Investors Underwriters, Inc., Investors Heritage Printing, Inc.
and Investors Heritage Financial Services Group, Inc.  Intercompany transactions
are eliminated in the Company's  consolidated financial statements.

Investments:  In accordance with Statement of Financial Accounting Standards
(SFAS) No. 115, 'Accounting for Certain Investments in Debt and Equity
Securities', the Company classifies all fixed maturities and equity securities
as available-for-sale.  Under SFAS No. 115, securities classified as available-
for-sale are carried at fair value with appreciation (depreciation) relating to
temporary market value changes recorded as an adjustment to other comprehensive
income.

Premiums and discounts on fixed maturity investments are amortized into income
using the interest method.  Anticipated prepayments on mortgage-backed
securities are considered in the determination of the effective yield on such
securities.  If a difference arises between anticipated prepayments and actual
prepayments, the carrying value of the investment is adjusted with a
corresponding charge or credit to interest income.

Realized gains and losses on the sale of investments are determined based upon
the specific identification method and include provisions for other-than-
temporary impairments where appropriate.

Mortgage loans, policy loans and other long-term investments are carried at
unpaid balances.    Short term investments represent securities with maturity
dates within one year but exceeding three months.  These securities are carried
at amortized cost.

Cash equivalents include money market funds on deposit at various financial
institutions with contractual maturity dates within three months at the time of
purchase.

Deferred Acquisition Costs:  Commissions and other acquisition costs which vary
with and are primarily related to the production of new business are deferred
and amortized over the life of the related policies (refer to Revenues and
Expenses discussed later regarding amortization methods).  Recoverability of
deferred acquisition costs is evaluated annually by comparing the current
estimate of the present value of expected pretax future profits to the
unamortized asset balance.  If such current estimate is less than the existing
balance, the difference is charged to expense.

Property and Equipment:  Property and equipment is carried at cost less
accumulated depreciation, using principally the straight-line method.
Accumulated depreciation on property and equipment was $3,555,675 and $3,366,812
at December 31, 1999 and 1998, respectively.

Capital Leases: During 1998 the Company acquired new computer equipment through
a three-year capital lease.  Lease payments for 1999 and 1998 were $163,668 and
$48,646, respectively. Future minimum lease payments for 2000 and 2001 are
$163,668 and $115,023, respectively.  The present value of net minimum lease
payments at December 31, 1999 was $264,324, which is equal to the total future
minimum lease payments of $278,691 less imputed interest of $14,367. Accumulated
amortization on the leased property was $193,099 and $43,603 at December 31,
1999 and 1998, respectively.

Goodwill:  Goodwill is being amortized over forty years using the straight-line
method.  In accordance with purchase accounting the minority interest share of
goodwill of $375,227 was eliminated.  Accumulated amortization was $1,180,818
and $1,115,217  at December 31, 1999 and 1998, respectively.

Benefit Reserves and Policyholder Deposits:  Reserves on traditional life and
accident and health insurance products are calculated using the net level
premium method based upon estimated future investment yields, mortality,
withdrawals and other assumptions, including dividends on participating
policies.  The assumptions used for prior year issues are locked in. Current
year issues are reserved for using updated assumptions determined by reviewing
the Company's past experience and includes a provision for possible unfavorable
deviation.

Benefit reserves and policyholder deposits on universal life  and investment-
type products are determined by using the retrospective deposit method and
represent the policy account value before consideration of surrender charges.
In addition, unearned revenues are included as a part of the benefit reserve.
The mortality assumptions for regular ordinary business are based on the 1955-60
Basic Table, Select and Ultimate, for plans issued prior to 1982, the 1965-70
Basic Table, Select and Ultimate, for plans issued in 1982 through 1984, the
1975-80 Basic Table, Select and Ultimate, for plans issued after 1984 and on the
Company's experience for final expense plans.

Reinsurance:  The Company assumes and cedes reinsurance under various agreements
providing greater diversification of business, allowing management to control
exposure to potential losses arising from large risks, and providing additional
capacity for growth.  Amounts recoverable from reinsurers are estimated in a
manner consistent with the related liabilities associated with the reinsured
policies.  In accordance with SFAS No. 113, 'Accounting and Reporting for
Reinsurance of Short-Duration and Long-Duration Contracts', reserves ceded to
reinsurers of $27,814,276 and $22,616,183 at December 31, 1999 and 1998,
respectively, are shown gross on the Company's balance sheet.

Unearned Premium Reserves:  Credit life unearned premium reserves are calculated
for level and reducing coverage using the monthly pro rata and Rule of 78's
methods, respectively.  Credit accident and health unearned premium reserves are
determined based upon the Rule of 78's.

Policy Claims:  Policy claims are based on known liabilities plus estimated
future liabilities developed from trends of historical data applied to current
exposure.

Other Policyholders' Funds:  Other policyholders' funds consist primarily of
dividends and endowments left on deposit at interest.  Participating business
approximates 7% of ordinary life insurance in force.  Participating dividends
are accrued as declared by the Board of Directors of Investors Heritage.  The
liability for future policy benefits for participating policies was determined
based on the Net Level Premium Reserve Method, 3% interest, and the 1941 CSO
Mortality and 1958 CSO Mortality tables.  All guaranteed benefits were
considered in calculating these reserves.  The average assumed investment yields
used in determining expected gross margins ranged from 3.56% to 9.17% (for the
current and all future years an assumed investment yield of 6.80% was utilized).
Unamortized acquisition costs associated with participating business are
amortized in proportion to expected gross margins.

Federal Income Taxes:  The Company utilizes the liability method in accordance
with SFAS No. 109, 'Accounting for Incomes Taxes', to account for income taxes.
Under such method, deferred tax assets and liabilities are determined based on
differences between the financial reporting and the tax bases of assets and
liabilities and are measured using the enacted tax rates.

Revenues and Expenses:  Revenues on traditional life and accident and health
insurance products consist of direct and assumed premiums reported as earned
when due.  Liabilities for future policy benefits, including unearned premium
reserves on accident and health policies and unreleased profits on limited-pay
life policies, are provided and acquisition costs are amortized by associating
benefits and expenses with earned premiums to recognize related profits over the
life of the contracts.  Acquisition costs are amortized over the premium paying
period using the net level premium method.  Traditional life insurance products
are treated as long duration contracts since they are ordinary whole life
insurance  products which generally remain in force for the lifetime of the
insured.  The accident and health insurance products are treated as long
duration contracts because they are non-cancellable.

Revenues for universal life and investment-type products consist of investment
income and policy charges for the cost of insurance and policy initiation and
administrative fees.  Expenses include interest credited to policy account
balances, actual administrative expenses and benefit payments in excess of
policy account balances.

Deferred policy acquisition costs related to universal life and investment-type
products are amortized as a uniform percentage of each year's expected gross
profits, over the life of  the policies.  Amortization is unlocked for
significant changes in expected versus actual gross profits, including the
effects of realized gains or losses.

Common Stock and Earnings per Share:  The par value per share is $1.00 with
4,000,000 shares authorized. Earnings per share of common stock were computed
based on the weighted average number of common shares outstanding during each
year.  The number of common shares used in this computation was 854,135 in 1999,
843,251 in 1998 and 829,725 in 1997.  Cash dividends per share were $.38 in
1999, 1998 and 1997.

Accumulated Other Comprehensive (Loss) Income: SFAS No. 130, 'Reporting
Comprehensive Income', requires unrealized gains or losses on available-for-sale
securities to be included in other comprehensive income.  The reclassification
amounts (net of 34% tax) for the years ended December 31, 1999, 1998 and 1997
are summarized as follows:

                                   1999         1998          1997
                                   ----         ----          ----
Net unrealized gain (loss) arising
  during period               $(8,981,205    $3,215,115    $3,426,479
Reclassification adjustment for net
 (gains) losses included in net
 income                           274,675      (123,898)       32,216
Minority interest in other comprehensive
 income                               -0-      (741,572)     (925,819)
                               ----------     ----------   ----------
Net unrealized gain (loss) on certain
 securities                   $(8,706,530)   $2,349,645    $2,532,876
                              ===========    ==========    ==========

Reclassifications:  Certain prior year amounts have been reclassified to conform
to the 1999 presentations.

Use of Estimates:  The preparation of financial statements requires management
to make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes.  Actual results could differ from
those estimates.

On December 31, 1999 Kentucky Investors acquired the minority stockholders'
common stock of Investors Heritage through a share exchange. Under the terms of
this share exchange, Kentucky Investors issued 1.24 shares of common stock for
every 1 share of Investors Heritage common stock held by minority stockholders.

Kentucky Investors issued approximately 291,685 shares of stock with a value of
approximately $6,709,000. Prior to the share exchange, Kentucky Investors owned
approximately 74% of Investors Heritage. The acquisition of the remaining 26%
from Investors Heritage's minority stockholders was accounted for as a purchase
and the Investors Heritage results of operations will be included in the
consolidated financial statements subsequent to the date of acquisition. The
share exchange was a tax free transaction and for this reason the deferred tax
liability of Kentucky Investors at the date of the acquisition was utilized to
decrease the purchase price.

The net purchase price for the minority stockholders' interest in Investors
Heritage was approximately $5,200,000 (including costs associated with the
acquisition of approximately $324,000 and reduction of the deferred tax
liability of approximately $1,833,000).

The following proforma consolidated results of operations for the years ended
December 31, 1999 and 1998 give effect to the acquisition as though it had
occurred at the beginning of each period presented.   The primary proforma
effects relate to the amortization of deferred acquisition costs, amortization
of goodwill, depreciation of real estate and the amortization of bonds and
mortgage loans.  The proforma results are not necessarily indicative of the
consolidated results that would have occurred or which will be obtained in the
future.

Proforma Consolidated Results of Operations           1999           1998
                                                      ----           ----

Revenue                                           $62,376,510    $57,496,269
Net Income                                          4,171,914      3,792,199
Earnings Per Share                                       3.66           3.32


NOTE  C - Investments

The Company  limits  credit  risk  by emphasizing investment grade securities
and by diversifying its investment portfolio among government  and  corporate
bonds  and  mortgage loans.  The Company manages its fixed income portfolio to
diversify between and within  industry  sectors.  Mortgage loans are issued at
loan to value ratios not exceeding 80 percent.  Approximately $11,063,000 of the
loans outstanding at December 31, 1999 were to borrowers located in Kentucky.
All loans are secured by a first mortgage on the property.

Investments in available-for-sale  securities are summarized as follows:

1999                       Gross             Gross
          Amortized      Unrealized          Unrealized               Fair
             Cost          Gains             Losses                   Value
          ---------      ----------          ----------               -----

Available-for-sale securities:
U.S. Government Obligations
         $  29,645,625    $     160,724    $      523,259        $  29,283,090
States and Political Subdivisions
             1,990,263            4,112            14,615            1,979,760
Corporate  106,945,355          195,430         2,437,705          104,703,080
Foreign     19,542,937              -0-           554,527           18,988,410
Mortgage-Backed Securities
            40,823,916           75,918           844,668           40,055,166
          ------------     ------------     -------------          -----------
Total Fixed Maturity Securities
          $198,948,096    $     436,184    $    4,374,774         $195,009,506
Equity Securities
             1,150,392        1,253,859            40,387            2,363,864
          ------------    -------------    --------------         ------------
Total     $200,098,488    $   1,690,043    $    4,415,161         $197,373,370
          ============    =============    ==============         ============


1998                       Gross               Gross
          Amortized      Unrealized          Unrealized               Fair
             Cost          Gains               Losses                 Value
          ---------      ----------          ----------               -----
Available-for-sale securities:
U.S. Government Obligations
          $ 21,741,471    $   1,509,437    $     -0-              $ 23,250,908
States and Political Subdivisions
             1,992,186           72,464          -0-                 2,064,650
Corporate  105,089,331        7,586,323          42,515            112,633,139
Foreign     16,445,886        1,360,974          -0-                17,806,860
Mortgage-Backed Securities
            36,617,917        1,537,993          -0-                38,155,910
          ------------     ------------    ------------           ------------
Total Fixed Maturity Securities
          $181,886,791      $12,067,191    $     42,515          $ 193,911,467
Equity Securities
               913,714        2,468,606           3,849              3,378,471
         -------------      -----------    ------------          -------------
Total    $ 182,800,505      $14,535,797    $     46,364          $ 197,289,938
         =============      ===========    ============          =============

In accordance with SFAS No. 115, net unrealized gains (losses) for investments
classified as available-for-sale are shown, net of the effect on deferred income
taxes and deferred policy acquisition costs assuming that the appreciation
(depreciation) had been realized.   A summary follows:

                                                       December 31
                                                  1999           1998
                                                  -------------------
Net unrealized appreciation (depreciation) on
   available-for-sale securities             $(2,725,118)    $14,489,433
   Adjustment to deferred acquisition costs      254,879      (1,468,021)
   Deferred income taxes                         156,455      (4,427,279)
   Minority shareholders' interest                  -0-       (2,201,387)
                                             -----------      -----------
Net unrealized appreciation  (depreciation) on
   available-for-sale securities             $(2,313,784)    $ 6,392,746
                                             ===========     ===========

The amortized cost and fair value of debt securities at December 31, 1999, by
contractual maturity, are presented below.  Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.

                                            Available-for-Sale
                                          Amortized         Fair
                                            Cost           Value
                                        ------------    ------------

Due in one year or less                 $  7,397,930    $  7,424,820
Due after one year through five years     26,500,485      26,521,527
Due after five years through ten years    65,794,163      64,115,370
Due after ten years                       45,909,064      44,583,206
Due at multiple maturity dates            53,346,454      52,364,583
                                        ------------    ------------
Total                                   $198,948,096    $195,009,506
                                        ============    ============

Proceeds during 1999, 1998 and 1997 from sales and maturities of investments in
available-for-sale securities were $27,473,932, $13,194,150 and $28,565,510,
respectively.  Gross gains of $121,729, $162,746 and $360,679 and gross losses
of $396,404, $38,848 and $392,895 were realized on those sales during 1999, 1998
and 1997, respectively.

Presented below is investment information, including the accumulated and annual
change in net unrealized investment gain or loss.  Additionally, the table below
shows the annual change in net unrealized investment gain (loss) and the amount
of realized investment gain (loss) on debt and equity securities for the years
ended December 31, 1999, 1998 and 1997:

                                   1999              1998           1997
                                   ----              ----           ----
Change in unrealized
   investment gain (loss):
   Available-for-sale:
     Debt securities         $(15,963,266)    $   4,921,880    $  5,167,977
     Equity securities         (1,251,285)          207,845         683,427
Realized investment gain (loss):
   Available-for-sale:
      Debt securities        $   (276,554)    $     123,892    $    (47,341)
      Equity securities             1,879                 6          15,125

Major categories of investment income  are summarized as follows:

                                   1999              1998            1997
                                   ----              ----            ----

Fixed maturities             $ 13,489,661     $  12,442,337    $ 11,329,773
Mortgage loans on real estat    1,324,602         1,311,727       1,212,102
Other                             952,956           932,821         865,213
                             ------------     -------------    ------------
                             $ 15,767,219     $  14,686,885    $ 13,407,088
Investment expenses               555,255           519,653         434,766
                             ------------     -------------    ------------
                             $ 15,211,964     $  14,167,232    $ 12,972,322
                             ============     =============    ============

The Company is required to hold assets on deposit for the benefit of
policyholders in accordance with statutory rules and regulations.  At December
31, 1999 and 1998, these required deposits had book values of $23,619,365 and
$23,571,493, respectively.

The following disclosure of the estimated fair values of financial instruments
is made in accordance with the requirements of SFAS No. 107, 'Disclosures about
Fair Value of Financial Instruments'.  The estimated fair value amounts have
been determined using available market information and appropriate valuation
methodologies.  However, considerable judgement was necessarily required to
interpret market data to develop these estimates.  Accordingly, the estimates
are not necessarily indicative of the amounts which could be realized in a
current market exchange.  The use of different market assumptions or estimation
methodologies may have a material effect on the fair value amounts.


                                           December 31
                                           -----------
                                   1999                     1998
                         Carrying       Fair       Carrying     Fair
                         Value          Value      Value        Value
                         -------        -----      --------      -----
Assets:
   Fixed maturities  $195,009,506  $195,009,506 $193,911,467 $193,911,467
   Equity securities    2,363,864     2,363,864    3,378,471    3,378,471
   Mortgages on real estate:
      Commercial       16,556,357    16,888,874   15,010,785   16,971,064
      Residential       1,239,242     1,272,462    1,178,342    1,355,737
   Policy loans         7,379,349     7,379,349    7,203,344    7,203,344
   Other long-term
       investments         28,850       528,850      488,828      488,828
   Short-term
      investments       1,037,081     1,037,081    1,200,970    1,200,970
   Cash and cash
      equivalents       2,428,652     2,428,652    2,514,371    2,514,371
   Accrued investment
      income            3,464,177     3,464,177    3,098,930    3,098,930

Liabilities:
   Policyholder deposits
   (investment-type
      contracts)    $  57,635,081  $ 53,475,174 $ 56,519,216 $ 52,220,665
Policy claims           2,012,392     2,012,392    2,086,316    2,086,316
Obligations under
   capital leases         264,324       264,324      407,462      407,462

The following methods and assumptions were used in estimating the 'fair value'
disclosures for financial instruments in the accompanying financial statements
and notes thereto:

Cash, cash equivalents, short-term investments, policy loans, accrued investment
income and other long term investments:  The carrying amounts reported for these
financial instruments approximate their fair values.

Fixed maturities and equity securities:  The fair values for fixed maturities
and equity securities (including redeemable preferred stocks) are based on
quoted market prices.

Mortgage loans:  The fair values for mortgage loans are estimated using
discounted cash flow analyses, using the actual spot rate yield curve in effect
at December 31.

Investment-type contracts:  The fair values for the liabilities under
investment-type insurance contracts are calculated as surrender values on these
contracts.

Policy claims and obligations under capital leases:  The carrying amounts
reported for these liabilities approximate their fair value.

The fair values for insurance contracts other than investment contracts are not
required to be disclosed under SFAS No. 107.

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.  Significant components
of the Company's deferred tax liabilities and assets as of December 31 are as
follows:

                                     1999             1998
                                     ----             ----

Deferred tax liabilities:
Policy acquisition costs          $5,700,000    $  7,541,000
Net unrealized gain on available-
   for-sale securities                  -0-        4,427,000
Other                              2,877,000         453,000
                                  ----------    ------------

Total deferred tax liabilities    $8,577,000    $ 12,421,000

Deferred tax assets:
Benefit reserves                  $4,841,000    $  5,517,000
Net unrealized loss on available-
   for-sale securities               840,000             -0-
Other                              2,120,000         417,000
                                  ----------    ------------
Total deferred tax assets         $7,801,000    $  5,934,000

Valuation allowance for deferred
   tax assets                       (684,000)            -0-
Net deferred tax assets           $7,117,000    $  5,934,000

Undistributed earnings in subsidiary     -0-       1,635,000
                                  ----------    ------------
Net deferred tax liabilities      $1,460,000    $  8,122,000
                                  ==========    ============

A valuation allowance was recorded on the net deferred tax asset related to the
net unrealized loss on available-for-sale securities.  The valuation allowance
was established to record the net asset at its estimated realizable value.

Federal income taxes in the consolidated balance sheets include deferred taxes
and taxes currently payable.

The reconciliation of income tax attributable to operations computed at the
federal statutory tax rate to income tax expense is:

                                          1999      1998      1997
                                          ----      ----      ----

Statutory federal income tax rate        35.0 %    35.0 %    35.0 %
Graduated tax rate                       (1.0)%    (1.0)%    (1.0)%
Small life insurance company deduction   (3.9)%    (7.5)%   (16.5)%
Dividend exclusion and tax-exempt income  (.5)%     (.6)%    (1.0)%
Alternative minimum taxes                  .8 %     1.4 %     2.8 %
Purchase accounting differences            .5 %      .6 %      .8 %
Other, net                                 .2 %      .4 %     1.2 %
Consolidating adjustments                 2.5 %     4.5 %     5.5 %
                                         ----      ----      ----
Effective income tax rate                33.6 %    32.8 %    26.8 %
                                         ====      ====      ====

At December 31, 1999 approximately $4,000,000 of the retained earnings of the
Company represents earnings prior to 1984 which accumulated in an account known
as policyholders' surplus, which was not subject to income taxation.  In certain
circumstances, including if distributions are made to stockholders in excess of
approximately $27,500,000, the Company could be subject to additional federal
income tax unrelated to its normal taxable income.  No provision for such income
tax has been made at December 31, 1999.

The Company made income tax payments of $343,153, $286,653 and $516,757 in 1999,
1998 and 1997, respectively.

NOTE  F - Employee Benefit Plans

The Company participates in a noncontributory retirement plan which covers
substantially all employees.  Benefits are based on years of service and the
highest consecutive 60 months average earnings within the last 120 months of
credited service.  Benefits are funded based on actuarially-determined amounts.

The following tables provide additional details for the Company on a
consolidated basis.

                                 1999          1998          1997
                                 ----          ----          ----
Change in benefit obligation:
Benefit obligation at
   beginning of year          $6,011,932    $5,662,063    $5,173,951
Service cost                     284,761       251,795       238,817
Interest cost                    462,102       430,739       382,866
Actuarial (gain) loss            147,391        72,114       (71,167)
Benefits paid                   (113,977)     (404,779)      (62,404)
                              ----------     ---------    ----------
Benefit obligation at
   end of year                $6,792,209    $6,011,932    $5,662,063
                              ----------     ---------    ----------
Change in plan assets:
Fair value of plan assets
   at beginning of year       $5,087,542    $4,771,638    $4,057,709
Actual return on plan assets     581,490       468,683       474,553
Employer contribution            300,000       252,000       301,780
Benefits paid                   (113,977)     (404,779)      (62,404)
                              ----------    ----------    ----------
Fair value of plan assets
   at end of year             $5,855,055    $5,087,542    $4,771,638
                              ----------    ----------    ----------
Funded status                 $ (937,154)   $ (924,390)   $ (890,425)
Unrecognized net actuarial
   loss                        1,009,044     1,065,329     1,115,533
Unrecognized transition asset    (68,287)     (102,430)     (136,574)
Unrecognized prior service
   credit                       (161,470)     (196,573)     (231,676)
                              ----------    ----------    ----------
Accrued pension cost          $ (157,867)   $ (158,064)   $ (143,142)
                              ==========    ==========    ==========


                                      1999          1998          1997
                                      ----          ----          ----
Components of net periodic benefit cost:
Service cost                       $  284,761   $   251,795    $  238,817
Interest cost                         462,102       430,739       382,866
Expected return on plan assets       (457,692)     (468,683)     (474,553)
Recognized net loss                    79,878       122,318       213,931
Amortization of prior service cost    (35,103)      (35,103)      (35,103)
Amortization of transition asset      (34,143)      (34,144)      (34,143)
                                   ----------   -----------     ---------
Net periodic benefit cost          $  299,803   $   266,922     $ 291,815
                                   ==========   ===========     =========

The discount rate used in determining the actuarial present value of the
projected benefit obligation was 7.5%  for 1999 and 1998.  The rate of increase
in future compensation levels was 5% for 1999, 1998 and 1997.  The expected
long-term rate of return on plan assets was 9% in 1999, 1998 and 1997.  Plan
assets represent a deposit administration fund of Investors Heritage.

The Company also sponsors a 401(k) defined contribution plan.  Matching
contributions to the plan expensed for 1999, 1998 and 1997 were $204,112,
$186,000 and $171,000,  respectively.


NOTE  G - Stockholders' Equity and Dividend Restrictions

Statutory restrictions limit the amount of dividends which may be paid by
Investors Heritage.  Generally, dividends during any year may not be paid,
without prior regulatory approval, in excess of the lessor of (a) 10 percent of
statutory stockholders' equity as of the preceding December 31, or (b) statutory
net income for the preceding year.  In addition, dividends are limited to the
amount of unassigned surplus reported for statutory purposes, which was
$8,858,223 at December 31, 1999.

The Company's 1999 stock option and stock appreciation rights plan became
effective as of September 16, 1999. The 1999 plan authorizes the Company's board
to grant non-qualified stock options to the Company's and its subsidiaries' key
employees and non-employee directors. The Company authorized for issuance a
total of 250,000 shares of common stock under the 1999 plan and granted options
to purchase 75,000 shares of common stock at $23.00 per share, all of which will
vest on September 24, 2001.

The Company accounts for its stock option grants in accordance with APB Opinion
No. 25, 'Accounting for Stock Issued to Employees'. No compensation expense has
been recognized for these stock options. The effect of applying the fair value
method of accounting for the Company's stock based awards results in net income
and earnings per share that are not materially different from the amounts
reported.


NOTE  H - Statutory Accounting Practices

Investors Heritage's statutory-basis capital and surplus was $13,072,059 and
$13,579,260 at December 31, 1999 and 1998, respectively.  Statutory-basis net
income was $1,003,580, $1,297,550 and $1,294,586 for 1999, 1998 and 1997,
respectively.

Principle adjustments to statutory amounts to derive GAAP amounts include: a)
costs of acquiring new policies are deferred and amortized; b) benefit reserves
are calculated using more realistic investment, mortality and withdrawal
assumptions; c) deferred income taxes are provided; d) value of business
acquired and goodwill are established for acquired companies and e) accounting
for certain investments in debt securities.

Investors Heritage is domiciled in the Commonwealth of Kentucky and prepares its
statutory-basis financial statements in accordance with accounting practices
prescribed or permitted by the Kentucky Department of Insurance (the
'Department').  Currently, 'prescribed' statutory accounting practices are
interspersed throughout state insurance laws and regulations, as well as a
variety of publications of the National Association of Insurance Commissioners
('NAIC').  'Permitted' statutory accounting practices encompass all accounting
practices that are not prescribed; such practices may differ from state to
state, may differ from company to company within a state, and may change in the
future. In 1998, the NAIC adopted codified statutory accounting principles
('Codification') to be effective beginning in 2001. Codification will likely
change, to some extent, prescribed statutory accounting practices and may result
in changes to the accounting practices that Investors Heritage uses to prepare
its statutory-basis financial statements. Codification will require adoption by
the various states before it becomes the prescribed statutory basis of
accounting for insurance companies domesticated within those states.
Accordingly, before Codification becomes effective for Investors Heritage,
Kentucky must adopt Codification as the prescribed basis of accounting on which
domestic insurers must report their statutory basis results to the Department.
At this time it is anticipated that Kentucky will adopt Codification. Management
has not yet determined the impact of Codification on Investors Heritage
statutory basis financial statements.

During the Department's 1995 quadrennial examination of Investors Heritage,
previously permitted admitted assets were required to be written-down.  In 1999,
the remaining write-down of home-office real estate to the prescribed value, was
amortized in accordance with the Department's write-down schedule by $475,646.
These adjustments had no effect, other than requiring disclosure, on the
Company's financial statements prepared in accordance with accounting principles
generally accepted in the United States.

NOTE  I - Segment and Reinsurance Data

SFAS No. 131, 'Disclosures about Segments of an Enterprise and Related
Information', requires a 'management approach' (how management internally
evaluates the operating performance of its business units) in the presentation
of business segments. The segment data that follows has been prepared in
accordance with SFAS No. 131.

The Company operates in four segments as shown in the following table.  All
segments include both individual and group insurance.  Identifiable revenues,
expenses and assets are assigned directly to the applicable segment.  Net
investment income and invested assets are generally allocated to the insurance
and the corporate segments in proportion to policy liabilities and stockholders'
equity, respectively.  Certain assets, such as property and equipment and leased
property under capital leases, are assigned to the Corporate segment.  Goodwill
has been allocated to the insurance lines based upon the mix of business of
companies acquired. Results for the parent company, Investors Heritage Printing,
Inc. and Investors Heritage Financial Services Group, after elimination of
intercompany amounts, are allocated to the Corporate segment.

During 1999, the development of segment data was derived using a revised
allocation methodology.  Such change in approach was applied and amounts have
been restated for the 1998 and 1997 segments.  This change in approach was made
to enhance the allocation of costs to coincide with resources used by the
segment. As a result of this change, Pre-Tax Income from Operations for Preneed
& Burial Products decreased $278,000 for 1998 and $428,000 for 1997.  Pre-Tax
Income from Operations for Traditional & Universal Life Products decreased by
$42,000 for 1998 and $146,000 for 1997. Credit Insurance Products &
Administrative Services Pre-Tax Income from Operations increased by $253,000 for
1998 and $543,000 for 1997.  The Corporate & other segment Pre-Tax Income from
Operations increased by $67,000 for 1998 and $31,000 for 1997.

                                        1999         1998       1997
                                        ----         ----       ----
                                                  (000's omitted)
Revenue:
Preneed & Burial Products          $    47,158   $   41,319   $   36,995
Traditional & Universal Life Products   13,573       14,146       13,950
Credit Insurance Products &
  Administrative Services                  345          307          152
Corporate & other                        1,696        1,936        1,610
                                   -----------    ---------   ----------
                                   $    62,772    $  57,708   $   52,707
                                   ===========    =========   ==========

Pre-Tax Income from Operations:
Preneed & Burial Products          $    3,590    $    2,408   $    2,096
Traditional & Universal Life Products   1,047         1,194          706
Credit Insurance Products &
 Administrative Services                  (43)         (142)        (123)
Corporate & other                         258           550          164
                                   ----------     ---------   ----------
                                   $    4,852    $    4,010   $    2,843
                                   ==========    ==========   ==========

Assets:
Preneed & Burial Products          $  152,096    $  139,993   $  123,111
Traditional & Universal Life Products  73,117        75,168       72,586
Credit Insurance Products &
Administrative Services                27,151        21,987       15,385
Corporate & other                      38,851        51,221       45,790
                                   ----------    ----------   ----------
                                   $  291,215    $  288,369   $  256,872
                                   ===========   ==========   ==========
Amortization and Depreciation Expense:
Preneed & Burial Products          $    4,249    $    4,095   $    4,502
Traditional & Universal Life Products   2,094         2,265        1,997
Credit Insurance Products &
Administrative Services                    33           149          460
Corporate & other                         445           431          531
                                   ----------    ----------   ----------
                                   $    6,821    $    6,940   $    7,490
                                   ==========    ==========   ==========

The Company ceded 100% of the risks associated with its credit life and accident
insurance written during 1999, 1998 and 1997 through coinsurance agreements with
various companies.  The Company administers the ceded credit life and accident
insurance for an agreed-upon fee.  During 1999, 1998 and 1997, the Company
received $733,682, $612,081 and $505,400, respectively, of fee income associated
with these reinsurance arrangements which is recognized in the Credit Insurance
Products & Administrative Services and Corporate & other lines of the preceding
table.  Ceded benefit and claim reserves associated with these reinsurance
arrangements at December 31, 1999 and 1998 were $21,988,882 and $17,310,827,
respectively.  Additionally, the Company utilizes yearly renewable term
reinsurance to cede life insurance coverage in excess of its retention limit
which has been set at $100,000.  Total premiums ceded amounted to $19,575,000,
$18,123,000 and $14,468,000 in 1999, 1998 and 1997, respectively and commissions
and expense allowances received were $11,449,000, $10,900,000 and $8,657,000  in
1999, 1998 and 1997, respectively.  Unearned premium reserves were reduced by
$24,071,000 and $19,859,000 at December 31, 1999 and 1998, respectively, for
credit-related reinsurance transactions.  Benefit recoveries associated with the
Company's ceded reinsurance contracts were $3,145,000, $2,403,000 and $1,956,000
in 1999, 1998 and 1997, respectively.  The Company remains contingently liable
on all ceded insurance should any reinsurer be unable to meet their obligations.
Assumed reinsurance premiums were $2,618,000, $2,787,000 and $2,855,000 in 1999,
1998 and 1997, respectively.

NOTE  J - Contingent Liabilities

The Company is named as a defendant in a number of legal actions arising
primarily from claims made under insurance policies.  Management and its legal
counsel are of the opinion that the settlement of those actions will not have a
material adverse effect on  financial position or results of operations.

In most of the states in which the Company is licensed to do business, guaranty
fund assessments may be taken as a credit against premium taxes over a five year
period.  These assessments, brought about by the insolvency of life and health
insurers, are levied at the discretion of the various state guaranty fund
associations to cover association obligations.   It is management's opinion that
the effect of any future assessments would not be material on the financial
position or results of operations of the Company because of the use of premium
tax off-sets.

NOTE K - Quarterly Financial Data (Unaudited)

The following tables show the unaudited quarterly financial data for the
Company.

1999           1st Quarter   2nd Quarter   3rd Quarter   4th Quarter
               -----------   -----------   -----------   -----------
Premiums       $10,871,846   $11,803,041   $12,871,624   $11,361,131
Total Revenue   14,764,042    15,680,003     6,926,704    15,400,914
Net Income         509,479       485,500       749,252       635,025
Earnings Per Share    0.60          0.57          0.93          0.69


1998           1st Quarter   2nd Quarter   3rd Quarter   4th Quarter
               -----------   -----------   -----------   -----------
Premiums       $10,739,762   $11,100,540   $10,756,960   $10,041,027
Total Revenue   14,309,727    14,828,637    14,585,962    13,983,986
Net Income         409,973       519,217       649,456       396,491
Earnings Per Share    0.49          0.62          0.77          0.46


                               STOCK INFORMATION

STOCK PRICES

OTC BULLETIN BOARD MARKET QUOTATIONS


1999 MARKET PRICE RANGE
March          June           Sept.          Dec.
18 - 18        18 - 21        21 - 23        23 - 231/2

1999 Annual Dividend Per Share - $.38


1998 MARKET PRICE RANGE
March          June           Sept.          Dec.
16 - 163/4    17 - 20         20 - 201/2     18 - 20

1998 Annual Dividend Per Share - $.38


The stock of Kentucky Investors is quoted on the OTC Bulletin Board.  The
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission, and may not represent actual transactions.  The symbol for Kentucky
Investors is KINV.

The 2000 cash dividend to be paid to its stockholders by Kentucky Investors on
April 7, 2000 is $.38 per share.

ANNUAL MEETING
=============================================================================
The 2000 meeting of shareholders of Kentucky Investors, Inc. is scheduled for 11
a.m. on Thursday, May 11, 2000, at the company auditorium, Second and Shelby
Streets, Frankfort, Kentucky.

FORM 10-K
=============================================================================
A copy of the Form 10-K Annual Report to the Securities and Exchange Commission
for the Company can be obtained upon request to the Secretary.

TRANSFER AGENT
=============================================================================
Investors Heritage Life Insurance Company


Stock Transfer Department
P.O. Box 717
Frankfort, Kentucky 40602

(502) 223-2364 - EXT. 305









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