EXHIBIT 1

1995 ANNUAL REVIEW

KENTUCKY INVESTORS, INC.

INVESTORS HERITAGE
LIFE INSURANCE COMPANY



TABLE OF CONTENTS

Mission and Strategy Statement               2
Letter to Stockholders                       3
Management's Discussion and Analysis         9
Corporate Officers                           22

Kentucky Investors, Inc.

     Consolidated Financial Statements       24
     Selected Financial Data                 28
     Report of Independent Auditors          28


Investors Heritage Life Insurance Company

     Selected Financial Data                 29
     Report of Independent Auditors          29
     Consolidated Financial Statements       30

Notes to Consolidated Financial Statement    34
Board of Directors                           47
Stock Prices and Annual Meeting              48



Photography by Lucy Johnson

Page 1

OUR MISSION

The mission of Investors Heritage Life Insurance Company is to provide quality
life insurance products and services, and maintain financial strength for the
benefit of our insureds, stockholders, agents and employees.

Investors Heritage Life Insurance Company is committed to achieving long term
financial objectives by implementing strategies to increase the volume and
quality of insurance in force.  We will improve the quality of the delivery
system with programs to enhance the skills and timely response of marketing and
support service functions.



OUR STRATEGY

The strategic plan focuses on timely product development, technology,
education,
communication, human resources practices, and market concentration as key
elements to the attainment of financial objectives.

The overall strategy is to provide competitive products and superior quality
services while improving productivity and job enrichment.

Page 2

LETTER TO OUR SHAREHOLDERS


Kentucky  Investors,  Inc. ("Kentucky Investors") and Investors Heritage Life
Insurance Company ("Investors Heritage") (collectively the "Companies")
continued during 1995  to  respond  to  market   conditions   and  marketing
opportunities.  Most of my comments to you relate to the sales and
administrative  activities of the Companies that  ultimately  lead to the
financial results reported in the Management's Discussion & Analysis.  First,
however, I would  like to address two specific items which provide and improve
the financial strength of the Companies: the quality of our  investments  and 
the  asset/liability   management process.

As  in  the  past, the quality rating of our fixed income assets continues to
be
outstanding with an average rating of AA.  Investors Heritage purchases only
investment grade bonds.  At the end of 1995, 99.3% of our fixed  income assets 
(corporate bonds, US government agency paper and treasury bills) were rated
investment grade by Standard & Poor's.  This compares to 99.2% in 1994 and 100%
in 1993.  None of our fixed income assets are in default.  At year end
Investors 
Heritage had only one small  mortgage  loan  ($46,526)  more  than  sixty days
past due out of a mortgage loan portfolio of $13.1 Million.  The pie chart on
Page 8 shows the Distribution of Invested Assets.

Additionally, we  continue  to  perform  an  Asset Adequacy  Analysis  each 
year,  as we have done since 1991, even though we are required to do so every
three years.   As in  prior  years,  these  tests  demonstrated very favorable
results for the assets and liabilities of Investors Heritage held as of
December 31, 1995.    Since 1991, Investors Heritage's model has become more
sophisticated and more useful.  We are using the model for a variety of
applications beyond the  required cash flow testing.   For example, we can now
compare actual to expected  results  for specific  product lines or explore the
outcomes of different marketing strategies.  The model will  be  used 
extensively this next year when working  to  comply with the new "Illustration
Actuary" requirements promulgated by the National Association of Insurance
Commissioners.  The next logical step is financial projections and  dynamic
solvency testing.

A  very  important  result  of  the Asset Adequacy Analysis is illustrated  by 
the  graph on Page 7.  These curves show the option  adjusted prices of assets,
liabilities and surplus at various shifts  in  the  interest rate  environment. 
Note that surplus remains at relatively the same level regardless of the
magnitude of  the  interest rate  shifts.    The  asset/liability  management
process is outstanding,  and  in  combination with the quality  and
distribution
of  assets clearly illustrates the strength of Investors Heritage's portfolio. 
We believe this process  is an  integral  part of proper management of the
Companies and we will continue to expand and refine it.

Page 3

A myriad of changes has occurred in our  industry during  the  past  several
years.  Investors Heritage and Kentucky Investors have had the ability to adapt 
to  these changes  due  in  large part to our investment in technology over the
years and our ability to create software geared  to our  products to take
advantage of the technology.  Further, we have concentrated sales efforts in
specific  markets  and as  a  result,  have  seen  the  continued  development
of a dynamic and successful sales organization.

Our  investment  in  technology  has enabled us to move forward in providing
administrative service as products become more complex and marketing  and
financial  reporting requirements rapidly expand.  It has also enabled us  to 
cost  effectively  modernize  sales practices  using  personal  computers  and 
laptop computers throughout our distribution system,  especially  in  funeral
homes  and  financial  institutions  as  well  as  our  base Ordinary Life
agents who choose  to  use  them.    Financial institutions  selling  Credit 
related  products can utilize software for personal  computers  that  among 
other  things calculates rates and coverages and completes the  application
process.

We  are  currently  working  on  a  plan to  have software available for use in
our  funeral  home  accounts  that will  enable  Preneed  and  Final Expense
applications to be completed by a personal computer rather than  requiring  the
manual   process   of  filling  out  the  application.    We anticipate
implementation of this new technology by the  end of  the  second  quarter.  
This  will  be  in  addition to providing sales presentation information, up to 
date  death benefit information, and premium remittance through disks or
telecommunications.

You may have seen news reports of a major computer problem facing most   users
of Information Services (computers).   The problem is created  with  the 
impending arrival of the year 2000 and a computer system's ability to correctly 
process  dates.    Without  going  into the complicated  details as to the
reason for the future service problems, I  want to  assure  stockholders  that 
Investors Heritage  and Kentucky Investors recognized this problem and acted a 
number  of  years  ago  to  solve it.   As  we implemented  normal  changes  to
our Information Services, we took the necessary steps to handle the processing 
of  dates from  the year 2000 and beyond.  Therefore, we will not face the
herculean task and enormous cost of the changes facing many users of
Information  Services in the next four years. 

In  the  Preneed  and  Final Expense markets where products are sold by funeral
directors or affiliated  agents to  fund  prearranged funerals, there are a
small number of companies competing.  Investors Heritage is not the  largest in 
the field in terms of asset size or market share, but we are making progress
each year.

Page 4

For twenty years North Carolina has been our major state  in  the funeral home 
market.   In recent years, as Preneed sales started to  come to the forefront 
we  have expanded  to  several  other  states,  targeting  eleven for special
attention.  We have assembled  a  truly  outstanding marketing  team  who  have 
done  an outstanding job getting funeral homes to join Investors Heritage.  In
1995,  Preneed sales  were  up 11% over 1994.  Seven of the eleven targeted
states  had   significantly increased sales and more importantly, the sales
organization in most of these states has begun to really take shape and develop
into the type  of sales operation we want.

Last year  we reported we were phasing out of the Credit Insurance market as  a 
direct  writer but would continue marketing Credit Life  and  Credit  Accident 
& Health for Franklin Life Insurance Company ("Franklin") through Investors 
Heritage Financial Services Group, Inc. (FSG), a wholly owned  marketing 
subsidiary of  Kentucky  Investors.    We successfully  did  that  during the
last quarter of 1994 and all of 1995. However, Franklin advised us in December
that  they were getting out of the Credit Insurance business as result of a
change in ownership.

We re-examined our position  in the Credit Insurance market and determined that
we could, and should, continue to generate alternative  sources  of  revenue by
marketing and administering Credit insurance  products.  Investors Heritage
entered into a reinsurance agreement with Connecticut General Life Insurance
Company  at  the  end  of 1995  that  enables  us  to  take advantage of our
marketing through FSG and the  administrative  expertise  of Investors Heritage 
in the financial institutions market.  All of the Credit insurance business
produced by FSG will be  reinsured with Connecticut General. 

We are pleased with FSG's first year of operation.  FSG was able to retain the
vast majority of accounts during the transition at year end 1994. With the exit
of  Franklin, FSG presented  Investors Heritage with new opportunities and  the
possibility to fully utilize our capabilities in administering the Credit
Insurance business. Additionally, FSG has improved its prospects by bringing in 
another marketing group that has historically produced  more than twice FSG's
production.

Our  traditional Ordinary Life sales were slightly higher than last year  and 
we  anticipate  them  to  remain steady  in  1996.   It sometimes appears that
agents selling more traditional  life  insurance  products  receive  little
attention due to the emphasis placed on the funeral home and Credit related
market.  However, that is not our intent.  We will   continue   to  emphasize 
traditional  Ordinary  Life insurance sales.  Most of the technology  utilized 
for  the special  markets  is  also used for our traditional Ordinary products.
1995  was  a  very  eventful  year  for  Investors Heritage  Printing, Inc., a
wholly owned subsidiary of  Kentucky  Investors.   New  marketing   efforts  
were successful   and   new  equipment  and  internal technology mentioned last


Page 5

year improved our  base  of  operation.    In 1995,  we purchased Community and
Suburban Press, one of the oldest printing operations in Frankfort, Kentucky. 
For  the past   several  years  Community  Press'  primary  work was syndicated
newspaper filler articles which we will  continue to  emphasize.  This purchase
together with an increase from our own marketing efforts increased  our  job 
printing  and enabled  us  to  more fully utilize our equipment and staff.  For
the first time ever, Investors Heritage Printing paid  a dividend to Kentucky
Investors.

For  a  number  of years within the Life insurance industry, there  have  been
many consolidations, buyouts and mergers.  State regulations, driven to a great
extent by the NAIC  and many  other  requirements by other governing bodies
drive up administrative costs  and  make  it  common  discussion  and concern 
within  the industry that small companies will find it too costly and
complicated to compete in the future.

Management totally agrees that costs have gone up, sometimes unnecessarily from
so many new  requirements,  but we  have  over the years taken steps that help
us conform to the requirements as  cost  efficiently  as  possible. Groundwork 
investment  over time has spread out these costs for us to some extent.  By
concentrating on specific markets and looking for, and finding, alternative
sources of income, thereby   utilizing   our   marketing   and   administrative
capabilities,  we  are  confident  we will continue to be a solid small company
that will be able to compete and  thrive in the future.

The  investment  and  continued confidence of the stockholders of Investors 
Heritage  and   Kentucky   Investors have enabled both Companies to succeed and
are truly appreciated.   We are also very proud of the hard work and dedication
for success by our sales and administrative  staff.  We are on the move with
great expectations for the future.  On behalf of the Board of Directors, I 
thank all associated with Investors Heritage and Kentucky Investors for your
interest and support throughout our first thirty-five years.
 
Respectfully submitted,
/s/
Harry Lee Waterfield II signature

Page 6

OPTION ADJUSTED VALUE VS TERM STRUCTURE SHIFT GRAPH


A graph appears on this page which shows the results of the Asset Adequacy
Analysis performed by Investors Heritage Life Insurance Company.  The graph
demonstrates the option adjusted prices of assets, liabilities, and surplus at
various shifts in the interest rate environment.

Page 7

DISTRIBUTION OF INVESTED ASSETS GRAPH


A pie chart appears on this page showing the Distribution of Invested Assets
for
all of the assets of Investors Heritage Life Insurance Company. The chart shows
the following breakdown: Fixed Maturities:83.6%; Contractual  in
Affiliates:0.4%;
Investments in Affiliates:1.4%; Equity Securities 1.6%; Short Term
Investments:0.7%; Policy Loans: 4.2%; Other Long Term Investments: 0.2%;
Mortgage Loans-R.E.: 7.9%.


Page 8


MANAGEMENT'S DISCUSSION AND ANALYSIS

EXPANSION IN OPERATIONS

During 1995, Kentucky Investors, Inc. ("KII") expanded its base of operations
and Investors Heritage Life Insurance Company ("IHL") continued to expand its
market share in the preneed funeral market.  While IHL is focusing on the
preneed funeral market, other methods of utilizing all of our resources to the
fullest extent are continually explored.  IHL's decision to exit the credit
insurance market as a direct writer initiated the formation of Investors
Heritage Financial Services Group, Inc. ("FSG"), a wholly owned subsidiary of 
KII.

FSG entered into marketing agreements with a number of unaffiliated insurers
and
was and will continue to be responsible for marketing several products to
financial institutions including credit life, credit accident and health
(respectively "Credit Life" and "Credit A&H" and collectively "Credit
Insurance"), Individual Disability, Involuntary Unemployment Insurance and GAP
(which covers the excess of the loan value over the value of the collateral in
the event the collateral is a total loss).  FSG also marketed and will continue
to market IHL's mortgage protection products and other ordinary life products
for IHL.  Management anticipates steady growth in this area of IHL's business
due to the continued marketing efforts of FSG.  In addition, as explained in
more detail below, during 1996 FSG will also market IHL's Credit Insurance
products.

FINANCIAL STRENGTH

The quality of our investment portfolio and the current level of shareholders'
equity of KII and IHL  continues to provide a sound financial base as we
continue to expand our marketing system to offer competitive, quality products. 
As of December 31, 1995, 99.3% of the fixed income portfolio of IHL was rated
investment grade by Standard and Poor's and none of our fixed income assets
were
in default.  At December 31, 1995, IHL had only one small mortgage loan which
was more than 60 days past due.   All other mortgage loans are performing.

REVENUES

Overall revenues were $44,076,000,$46,804,000 and $45,426,000 in 1995, 1994 and
1993, respectively for IHL.  The changes were due primarily to the method of
presentation of a new ordinary life insurance product and marketing changes in
the Credit Insurance segment.  A discussion of the changes follows.  See "Life
and Annuity" and "Credit Insurance" below.  Additionally, IHL has had steady
growth in Net Investment Income which increased $804,000 in 1995 from 1994. The
1994 increase over 1993 was $263,000.

Page 9


Life and Annuity

Revenues for the Life and Annuity business segment were $3,521,000 higher in
1995 than 1994.  The 1994 increase over 1993 was $5,219,000.  These increases
came primarily from a new ordinary life single premium product which was
introduced during the second quarter of 1994 and sold in the preneed funeral
market.  This new single premium product resulted in a change in the
presentation of certain balance sheet and income items.  The previous single
premium policy utilized in this market was interest sensitive in form and
therefore subject to Financial Accounting Standards Board Statement ("FAS") 97
which requires premiums to be considered deposits and not included in revenues. 
The new product is not interest sensitive and is subject to the requirements of
FAS 60.  Under FAS 60 revenues are considered to be premiums and not deposits,
thereby increasing premium income.

In addition, under FAS 97 deferred acquisition costs for interest sensitive
policies are capitalized and amortized over the life of the policy in
proportion
to expected gross profits. Under FAS 60 deferred acquisition costs for policies
that are not interest sensitive are capitalized and amortized in proportion to
premiums over the premium payment period.  Therefore, since these FAS 60
products are single premium products, no acquisition costs are capitalized. 
This results in a decrease to deferrals of acquisition-related costs.  The
effect on the financial statements of this change is offset, however, by the
change in the reserve as the acquisition-related costs are utilized to reduce
the required benefit reserve under the FAS 60 reserving methodology.

Ordinary life sales were in line with production goals set for 1995.  Ordinary
life production increased approximately 11% in 1995 over 1994, as anticipated,
due in large part to marketing advances in Kentucky.  New life and annuity
premiums and deposits collected during 1995, 1994 and 1993 were $16,164,000,
$14,872,000 and $12,948,000, respectively.  During 1995, IHL expanded its
preneed funeral and final expense marketing operation in several new states,
including but not limited to, Tennessee, Indiana, Illinois, Missouri, Georgia,
Virginia, Florida and South Carolina.  Additionally, IHL improved its position
in the preneed funeral market in Kentucky where single premium production was
up
39%.  IHL's marketing operation in North Carolina continues to be strong. North
Carolina accounts produced approximately 56% of IHL's single premium
production. 
Management plans to continue to develop the preneed funeral market as well as
market other traditional life insurance products and anticipates increases in
single premium production for 1996 over 1995 in the range of 10-12%.

Page 10

Increase in Net investment income earned by ordinary life products also
contributed to the overall increase in Revenues.  Net investment income
increased 10.2% in 1995 compared to  1994 and 4.8% in 1994 compared to 1993.

Revenues from annuity products decreased $294,101 from 1994 to 1995 and
increased $205,556 from 1993 to 1994.  Annuity revenues were $1,791,445,
$2,085,546 and $1,879,990 for 1995, 1994 and 1993, respectively.  The annuity
products are sold almost exclusively in conjunction with IHL's marketing
activities in the preneed funeral market.

Group Life revenues have decreased for the past three years for two primary
reasons.  First, IHL withdrew participation in the Federal Employees Group Life
Program in late 1994 because the non-underwritten conversions that IHL was
required to accept exceeded its individual limits for life insurance.  Second,
in 1993 IHL terminated two co-insurance agreements under which risks had been
assumed on group life policies.  All of the reinsured group life policies were
recaptured by the respective reinsurer on a mutually acceptable basis.The one-
time pre-tax gain in 1993 on these recapture transactions was approximately
$637,000.

Credit Insurance

As reported last year, during the third quarter of 1994 IHL began the process
of
phasing out of the Credit Life and Credit A&H market as a direct writer.  As a
result, 1995 revenues were down $6,233,000 from 1994, as anticipated.  Revenues
from 1993 to 1994 were also down $1,625,000.  Direct premiums from the Credit
Insurance segment, net of refunds of unearned premiums were ($544,000),
$5,757,000 and, $5,901,000 for 1995, 1994 and 1993, respectively.

During 1995,IHL continued to provide the administration of the Credit Insurance
operations and FSG entered into a marketing agreement with Franklin Life
Insurance Company ("Franklin") to market Franklin's Credit Insurance products. 
In addition,IHL continued to look for relationships with unaffiliated companies
which would allow IHL to provide its administrative and claims processing
services for Credit Insurance products.

In the fourth quarter of 1995, FSG and IHL were advised that Franklin was
exiting the Credit Insurance market as a result of a change in ownership.  FSG
immediately began negotiating with a number of unaffiliated insurance companies
to market Credit Insurance products for them.  In addition, FSG initiated
discussions regarding a potential transaction with unaffiliated companies where
the Credit Insurance policies would be written by IHL and all of the risk would
be immediately reinsured to the unaffiliated company.

Page 11

Under a reinsurance arrangement,IHL would be able to utilize its administrative
capabilities and generate alternative revenues from retention fees and fees for
administration and claims processing while protecting its surplus and
profitability from other lines.  Additionally, FSG will continue to generate
revenues in the form of commissions.  In December 1995, IHL entered into a
reinsurance agreement with The Connecticut General Life Insurance Company
("Connecticut General") pursuant to which all of the risk on all Credit
Insurance policies sold by IHL would be reinsured with Connecticut General.

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

Accident and Health

Revenues for this segment have experienced little change the last two years
after a significant decrease in 1994 compared to 1993 of $1,924,000.  Revenues
for 1995 were $1,126,000 compared to $1,139,000 for 1994. Virtually all of this
segment has been from insurance assumed from other insurers.  The individual
assumed reinsurance agreement was terminated as of December 31, 1993 due to the
insurer's decision to withdraw from the major medical insurance market. 
Consequently the reinsured policies were recaptured from IHL which accounts for
almost all of the decrease in revenues from 1993 to 1994.

The remainder of the individual health insurance relates to a closed block of
business which was sold directly by IHL.

Corporate

The Corporate segment, measured primarily by stockholders' paid-in capital,
contributed surplus, earned surplus and property and equipment has had only a
slight change between 1995 and 1994.  There was a decrease of $292,000 between
1994 and 1993.  Lower investment yields in recent years are the primary reason
for the decrease.

Page 12

Reallocation of Segment Data

For 1995 the segment data shown in Note I to the Consolidated Financial
Statements was developed using a revised allocation methodology. Such change in
approach was applied and amounts have been restated for the 1994 and 1993
segment data.  This change in approach was made to enhance the allocation of
costs and revenues to coincide with resources used by the segment and revenues
earned.

The primary changes occurred in Investment Income, net of expenses and Other
insurance expenses.  Revenues for the Life and Annuities segment increased
$446,000 for 1994 and $458,000 for 1993.  Revenues for the Corporate segment
decreased $497,000 for 1994 and $519,000 for 1993.  Pre-Tax Income from
Operations for the Life and Annuities segment increased $115,000 for 1994 and
$513,000 for 1993.  Pre-Tax Income from Operations for the Corporate segment
decreased $193,000 in 1994 and $379,000 in 1993.  The effect on other segment
classifications was immaterial.

OPERATING RESULTS

IHL's Net Income for 1995 was down $1,484,000 or 61.8%,from 1994 and up $99,000
or 4.3% in 1994 compared to 1993.  KII's Net Income for 1995 was down $968,000
or  63.6% from 1994 and up $330,000 or 27.7% in 1994 compared to 1993.

Earnings per share were $1.02, $2.66 and $2.54 for 1995, 1994 and 1993,
respectively for IHL. Earnings per share were $0.71, $1.97 and $1.55 during the
same periods for KII.

Life and Annuity

IHL's pre-tax income (Income from Operations Before Federal Income Tax) for the
Life and Annuity business segment was $1,143,000, $2,868,000 and $2,866,000 for
1995, 1994 and 1993, respectively.  The decrease in Pre-Tax Income in 1995 when
compared to 1994 is primarily attributable to the following:  

  The issuance of legal reserve policies to members of dissolved mutual burial
associations in North Carolina.  Management believed it was prudent to issue
these policies to open new marketing channels in the preneed insurance sector
and believes it has been successful in gaining market share as a result. 
Management intends on limiting future issues of legal reserve policies to those
that are paid up.

  A decrease in investment interest spread (i.e., interest earned over interest
credited) on IHL's annuity business.  During the fourth quarter of 1995, IHL
realigned its interest crediting rates commensurate with its earned rates.

  A higher volume of claims with lower face amounts which are within IHL's
retention were paid in 1995 compared to 1994. 

Page 13

Credit Life and Credit Accident and Health

As noted above, during the third quarter of 1994 IHL began the process of
phasing out of the Credit Life and Credit A&H 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 $826,000, $1,095,000 and $1,521,000 for 1995,1994 and 1993. 
The improvement in this segment is due primarily to policy reserves being
released as the business matures which in turn is offset by claims and the
amortization of policy acquisition costs.

Policy reserve decreases in 1995, 1994 and 1993 were $5,521,000, $1,781,000 and
$3,343,000. Claim expenses were $1,928,000, $2,501,000 and $3,387,000. 
Amortization of Deferred Acquisition Expense was $2,863,000, $1,287,000 and
$3,704,000.  These three areas, in the aggregate, increased or (decreased) Pre-
Tax Income by $730,000, ($2,007,000) and  ($3,748,000) for 1995, 1994 and 1993
respectively.

Accident and Health

Pre-Tax Income for the Group and Individual Accident and Health segment was
$108,000, $430,000 and $396,000 for 1995, 1994 and 1993, respectively.  The
majority of this segment is from Involuntary Unemployment Insurance written
on a
group basis. Until 1995 it was about equally divided between direct writings
and assumed reinsurance.  In 1994 the direct writings were discontinued which
accounts for the decrease in Pre-Tax Income in 1995.  The remainder of this
segment is individual health insurance relating to a closed block of business
written directly by IHL.

Corporate

Pre-tax income for the Corporate segment was $460,000,$589,000 and $707,000 for
1995, 1994 and 1993, respectively.  Primarily due to a decrease in investment
yield resulting from lower interest rates, and the increased use of surplus for
the sale of new Ordinary Life business, IHL experienced a reduction in the pre-
tax income for the last two years in this segment.

The statutory capital and surplus of IHL increased $1,194,000 in 1995,following
an increase of $1,706,000 in 1994 and $1,629,000 in 1993.  During the year IHL
completed its negotiations with the Kentucky Department of Insurance (the
"Department") with regard to the valuation of certain assets held by IHL. Under
the agreement reached with the Department, IHL will write down the statutory
value of the home office real estate owned from market to depreciated cost over
a five-year period and will write down to zero its investment in the common
stock of its affiliates over a three-year period.  For GAAP reporting purposes
the home office real estate is already carried at depreciated cost and the
common stock is carried at cost.  While adjusting the statutory value of these
assets constitutes a change in IHL's long-standing method of valuation which
had
been approved by the Department, it is not anticipated that these adjustments
will affect IHL's financial position or net income based on generally accepted
accounting principles, or its statutory net income.  For additional discussion
on this issue, refer to Note H to the Consolidated Financial Statements.

Page 14

INVESTMENTS, LIQUIDITY AND FUND RESTRICTIONS

IHL's investment portfolio continues to provide financial stability.  It is
management's opinion that KII and IHL have 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.  IHL's internal cash flows are derived
from insurance premiums and investments. The cash flows of KII are derived from
the dividends paid to it by IHL, FSG and Investors Heritage Printing, Inc.
("IHP").  Management anticipates these cash flows to experience steady growth
due to improved profitability of FSG and IHP.  During 1995, FSG's first full
year of operation, revenues were $171,000 and FSG paid a dividend to KII in
December 1995 in the amount of $32,000.    In addition, revenues from IHP were
$483,000 in 1995, up 6.2% compared to $451,000 in 1994, and IHP paid a dividend
to KII for the first time since its inception.  Management of IHP will continue
to work to improve revenues from unaffiliated sources as well as providing
printing services for IHL.  While revenues from these sources constitute less
than 1% of  KII's overall revenues, management is working on the continued
growth and profitability of both FSG and IHP.

Management is not aware of any commitments or unusual events that could
materially affect KII's or IHL's capital resources.  Further, there is no long-
term or 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 IHL's liquidity, capital
resources
or operations. Management does not perceive a need for any external financing
and there are no plans to acquire same.  However, KII and IHL will continue to
explore various opportunities including corporate 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 to IHL as to the payment of cash dividends to
shareholders which is discussed in more detail in Note G to the Consolidated
Financial Statements.

Page 15

Since inception, IHL has maintained a sound, conservative investment strategy. 
IHL's fixed income portfolio of public bonds is managed by an independent
portfolio manager, Aeltus Investment Management, Inc. ("Aeltus").  As of
December 31, 1995, 83.6% of IHL's total invested assets are managed by Aeltus
pursuant to specific investment guidelines which have been approved by the
Board
of Directors. Since the inception of IHL's relationship with Aeltus, 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 further diversifying the portfolio methodically over
the last 7 years.

The fixed income portfolio is diversified among sectors.  The market value and
the Standard & Poor's average quality rating of this portfolio are $137.4
million and AA,  respectively.  The market value of this portfolio at year end
1994 was $114.9 million.  At year end the fixed income portfolio was allocated
as follows:  50.1% - corporate; 18.6% - government; 23.6% - mortgage-backed
securities; 3.9% - foreigns; 2.3% - asset backed securities; and 1.5% - tax
exempt.  Within the corporate bond sector, the portfolio is also diversified
with 32.1% of that sector invested in bank and finance, 44.3% in industrial and
miscellaneous, and 23.8% in utilities.  Pie charts showing the Distribution of
Fixed Income Assets and Distribution of Corporate Bonds are located on page 17.

The fixed income portfolio also includes $32.5 million (at carrying value) of
mortgage-backed securities ("MBS") which represents 19.8% of total invested
assets and 23.7% of the fixed income portfolio.  Mortgage-backed securities add
value to the portfolio and Aeltus has provided the expertise to purchase MBS
with the confidence that the credits have been properly analyzed and that the
investment properly suits the asset and liability needs of IHL.

There have been concerns expressed by rating agencies, various regulators and
other constituencies regarding investments in MBS by insurers and other
financial institutions.  Although these highly rated securities provide
excellent credit quality, their liquidity and risk must be monitored.  All of
the collateral of the MBS owned by IHL 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 a MBS is uncertainty of
timing of cash flows due to prepayment assumptions rather than the possibility
of loss of principal.

IHL's CMO holdings represent approximately 46.9% of the total MBS portfolio. 
When these securities are purchased at a discount or premium, the income 

Page 16

DISTRIBUTION OF FIXED INCOME ASSETS GRAPH
AND 
DISTRIBUTION OF CORPORATE BONDS GRAPH


Two pie charts appears on this page showing the Distribution of Fixed Income
Assets and the Distribution of Corporate Bonds.  The Fixed Income Chart shows
the following breakdown:  corporate: 50.1%; government:  18.6%; mortgage-backed
securities:  23.6%; foreigns:  3.9%; asset-backed securities: 2.3%; tax exempt: 
1.5%.  The Corporate Bond Chart shows the following breakdown:  bank and
finance:  32.1%; industrial and miscellaneous:  44.1%; utilities 23.8%.

Page 17

DISTRIBUTION OF MORTGAGE LOANS GRAPH

A pie chart appears on this page showing the Distribution of Mortgage Loans. 
This chart shows the following breakdown:  retail:  35.9%; apartments:  26.7%;
office properties:  16.8%; Residential (1 to 4 family):  3.8%;
industrial: 2.3%; hotels/motels:  0.8%; other 13.7%.


Page 18

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 of IHL.  More importantly, IHL has no
exposure to the more volatile, high-risk CMO's, such as those structured to
share in residual cash flows or which receive only interest payments. The CMO's
held by KII are primarily planned amortization class ("PAC") or support ("SUP")
class bonds (except for one sequential pay CMO of approximately $980,000) which
are structured to provide a more certain cash flow to the investor and
therefore have reduced prepayment risk.

Pass-throughs are the largest type of MBS owned by IHL, representing
approximately 53.1% 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, IHL also engages in commercial and residential mortgage lending
with more than 90% 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 120% are generally required.  IHL
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
diversification by property type.  The average loan balance is $246,386 and the
largest loan currently held by IHL is $685,469.  IHL has $13.1 million invested
in mortgage loans which represents 7.9% of total invested assets. The portfolio
is diversified across various property types as follows:  16.8% - office;
35.9% - retail; 2.3% -industrial; - 3.8% 1 to 4 family; 26.7% -
apartments; 0.8% - hotels/motels; and 13.7% - other. A pie chart showing
the Distribution of Mortgage Loans is located on Page 18.

Although approximately 83% of IHL's mortgage loans are located in the various
geographic regions of Kentucky, IHL 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 IHL's mortgage loan properties are located. 
IHL 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 2 to 4.5 percent higher than yields
realized from fixed income investments.  Further, value has been added because
the mortgage loan portfolio has consistently performed well. As of December 31,
1995, IHL had only one non-performing mortgage loan, which would include loans
past due 60 days or more, loans in process of foreclosure, restructured loans
and real estate acquired through foreclosure  The non-performing mortgage loan,
which is more

Page 19

than 60 days past due, is a residential mortgage with an outstanding balance of
$46,526 and 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 1995, IHL's fixed income investments were
99.3% investment grade as rated by Standard & Poor's,an increase from 99.2% for
1994.  None of KII'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 4.4 years with approximately $3.7
million due within 12 months and approximately $43.3 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.

In accordance with FAS 115, which was implemented effective January 1, 1994,
debt securities that IHL did not have the positive intent and ability to  hold-
to-maturity and all marketable equity securities were reclassified as
available-
for-sale and are carried at fair value.  Unrealized gains and losses on
securities classified as available-for-sale are carried as a separate component
of Stockholders' Equity, net of taxes, and an adjustment
to deferred acquisition
costs.  The Balance Sheets reflect this reclassification. Because management
believes it is prudent to have the ability to sell a fixed income investment if
market conditions warrant such action, approximately 94% of the fixed income
portfolio of IHL was classified as available-for-sale during 1994.  The
remainder of the fixed income portfolio was classified as being
hold-to-maturity and those investments were carried at amortized cost.  

However, as explained in detail in Note A to the Consolidated Financial
Statements, in 1995 IHL reclassified its hold-to-maturity securities so that
all
of IHL's fixed income securities are now classified as available-for-sale. The
decision to change the classification was based primarily on two factors. 
First, during the Kentucky Department of Insurance examination, IHL was advised
that the Department was going to required IHL to write down four local
municipal
bonds because the Standard Valuation Office of the National Association of
Insurance Commissioners refused to value them.  Rather than write the assets
down to zero, management and the Board of Directors determined that it was in
IHL's best interest to sell the securities.  The second reason for the
reclassification was the pronouncement issued by the Financial Accounting
Standards Board allowing a window of opportunity to reclassify securities from
a
hold-to-maturity portfolio to available-for-sale without tainting IHL's FAS 115
classifications.

Page 20

As described in the President's Letter to Stockholders, a key element of
profitability and risk management is the asset/liability management process. To
test its financial strength and investment strategy, IHL has performed asset
adequacy analyses (cash flow testing) for the last several years.  Although
regulatory requirements dictate this process be done every three years, IHL
performs these analyses every year.  This asset/liability management process is
designed to monitor product and asset characteristics that affect future
profitability and risk management strategies. Dynamic models of both assets and
liabilities were created to project financial results under several different
interest rate scenarios.  Items taken into account on the asset side include
maturity 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 directly related to
the interest rate environment being tested.

These tests demonstrate very favorable financial results for the assets and
liabilities of IHL held as of December 31, 1995.  As indicated by the price
behavior curves shown in Page 7 of this Annual Review, there is always a
substantial positive difference between the present value of our assets as
compared to the present values of our liabilities.  Our cash flow testing has
proven our investment strategy to be sound.  Positive surplus is projected at
the end of ten years for each of the interest scenarios tested. Because it is a
vital tool in monitoring our financial stability, Management will continue to
refine the cash flow testing process.

CONSOLIDATION

The accompanying consolidated financial statements of Kentucky Investors, Inc.
and Investors Heritage Life Insurance Company include the accounts of their
respective majority-owned subsidiaries, after elimination of intercompany
transactions.  This discussion and analysis is intended for both Investors
Heritage Life Insurance Company and Kentucky Investors, Inc.  because their
respective financial statements are similar in presentation and identical  in
most cases.

Page 21

CORPORATE OFFICERS

OFFICERS

Harry Lee Waterfield II           Nancy W. Walton
Chairman of the Board, President, Vice President, UnderwritingI
Chief Executive Officer IKPF      First Vice PresidentK

Jimmy R. McIver                   Clair S. Manson
TreasurerIKPF                     Vice President, Chief ActuaryI

Robert M. Hardy, Jr.              John E. Simmons
General Counsel IK                Vice President, Credit Life 
Vice President, Legal F           & Office ServicesI
                                  Vice President, Marketing F

Wilma Yeary CPS                   Jane Wise
SecretaryIK                       Vice President, Policy ServicesI

Jane S. Jackson                   Margaret J. Kays
Assistant SecretaryIK             Vice President, Human
SecretaryPF                       Resources I

Howard L. Graham                  Don R. Philpot
Vice President, Corporate         Vice President, AgencyI
Services IK

Raymond L. Carr                   H. Douglas Hippe
Vice President,                   Vice President, AccountingI
Administrative Operations & 
Computer ServicesI                Rick Calvert
                                  Vice PresidentP

William H. Keller, M.D.           Ernst & Young
Medical DirectorI (not pictured)  Independent AuditorIK


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

(Siloutte of picture on next page)

Page 22

PICTURE OF CORPORATE OFFICERS

Page 23


KENTUCKY INVESTORS, INC.

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 and 1994
ASSETS                                      1995             1994

INVESTMENTS
Securities available-for-sale,
at fair value:
Fixed maturities                      $137,401,716   $108,804,461
Equity securities                        2,566,023      2,002,745
Securities held-to-maturity,
at amortized cost                              -0-      6,580,321
Mortgage loans on real estate           13,058,464     11,844,582
Policy loans                             6,869,039      6,842,862
Other long-term investments                301,733        301,401
Short-term investments                   1,133,021      1,380,890
Total investments                     $161,329,996   $137,757,262

Cash and cash equivalents                2,417,375      2,336,712
Accrued investment income                2,139,836      2,133,761
Due and deferred premiums                4,714,057      4,365,644
Deferred acquisition costs              28,260,113     30,499,435
Property and equipment                   1,881,038      1,955,204
Goodwill                                 2,149,735      2,254,067
Other assets                             1,489,184      1,627,755
Amounts recoverable from reinsurers      3,663,782      8,437,140
                                      $208,045,116   $191,366,980


LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Policy liabilities:
Benefit reserves                      $155,182,145   $140,072,351
Unearned premium reserves                6,512,362     15,106,676
Policy claims                            1,665,949      1,835,685
Other policyholders' funds:
Dividend & endowment accumulations       1,033,503      1,095,079
Reserves for dividends & endowments
& other                                  1,066,860      2,140,720
Total policy liabilities              $165,460,819   $160,250,511
Federal income taxes                     5,119,540      1,829,837
Other liabilities                        2,707,832      2,822,040
Total liabilities                     $173,288,191   $164,902,388
MINORITY INTEREST IN SUBSIDIARY       $ 10,115,385   $  8,107,177

STOCKHOLDERS' EQUITY
Common stock                          $    811,128   $    779,895
Paid-in surplus                          3,374,704      3,357,178
Unrealized appreciation (depreciation)
of available-for-sale securities         2,916,509    (2,756,991)
Retained earnings                       17,539,199     16,977,333
Total stockholders' equity            $ 24,641,540   $  8,357,415

                                      $208,045,116   $191,366,980

See notes to consolidated financial statements.

Page 24

KENTUCKY INVESTORS, INC.

CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 and 1993


                                  1995        1994         1993
REVENUES
Premiums and other
considerations             $33,061,376   $36,443,762  $34,966,088
Investment income,
net of expenses             10,674,159     9,872,482    9,602,605
Realized gain on
investments, net                29,898       235,959      642,661
Other income                   239,178       103,491      176,258
Total revenue              $44,004,611   $46,655,694  $45,387,612

BENEFITS AND EXPENSES
Death and other benefits   $17,291,402   $17,666,871  $19,182,945
Guaranteed annual endowments   890,056       921,148      951,286
Dividends to policyholders     784,506       852,398      954,400
Increase in benefit reserves
and unearned premiums       11,157,960     8,183,045    3,586,337
Acquisition costs deferred (4,981,000)   (9,019,000)  (9,754,000)
Amortization of deferred
acquisition costs            6,085,957    10,092,870   12,315,997
Commissions                  4,177,725     8,007,178    8,779,813
Other insurance expenses     7,784,249     7,334,849    7,074,391
Total benefits and
expenses                   $43,190,855   $44,039,359  $43,091,169

Income from operations before 
Federal Income Tax and minority
interest in net income of
subsidiary                    $  813,756 $ 2,616,335  $ 2,296,443

Provision for income taxes
Current                       $  687,000 $ 1,044,000  $ 2,699,000
Deferred                       (668,000)    (583,000)  (2,277,000)
                              $  
                                19,000   $   461,000  $   422,000
INCOME FROM OPERATIONS BEFORE
MINORITY INTEREST IN NET INCOME
OF SUBSIDIARY AND CUMULATIVE
EFFECT OF ACCOUNTING CHANGE   $794,756   $ 2,155,335  $ 1,874,443

MINORITY INTEREST IN NET INCOME
OF SUBSIDIARY                  239,824       632,636      613,629

CUMULATIVE EFFECT OF ACCOUNTING
CHANGE                             -0-           -0-     (68,000)

NET INCOME                    $554,932   $ 1,522,699  $ 1,192,814

EARNINGS PER SHARE                $.71        $1.97        $1.55

See notes to consolidated financial statements.

Page 25

<TABLE>
KENTUCKY INVESTORS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 and 1993

<CAPTION>
                                                                UNREALIZED
                                                              APPRECIATION
                                                             (DEPRECIATION
                                                             OF AVAILABLE-
                                       COMMON       PAID-IN       FOR SALE        RETAINED
                                        STOCK       SURPLUS     SECURITIES        EARNINGS

<S>                                  <C>          <C>         <C>           <C>
BALANCE, JANUARY 1, 1993             $774,660     $3,284,091             
                                                              $  461,601    $14,902,122

Net Income                                                                    1,192,814
Cash Dividend                                                                 (309,257)
Cumulative effect of 
accounting change                                                  (81,000)
Change in net unrealized
appreciation (depreciation)                                         114,332
Cost of common stock
purchased, net                        (2,874)                                  (30,263)

BALANCE, DECEMBER 31, 1993           $771,786     $3,284,091   $    494,933 $15,755,416
Adjustment to beginning balance
for change in accounting method                                   2,050,923
Net Income                                                                    1,522,699
Cash Dividend                                                                 (318,462)
Change in net unrealized
appreciation (depreciation)                                     (5,302,847)
Issuance of common
stock, net                              8,109         73,087                     17,680

BALANCE, DECEMBER 31, 1994           $779,895     $3,357,178   $(2,756,991) $16,977,333
Net Income                                                                      554,932
Cash Dividend                                                                  (332,079)
Change in net unrealized
appreciation (depreciation)                                       5,673,500
Issuance of common
stock, net                             31,233         17,526                     339,013

BALANCE, DECEMBER 31, 1995           $811,128     $3,374,704   $  2,916,509  $17,539,199

<F>

See notes to consolidated financial statements.

</TABLE>

Page 26

<TABLE>
KENTUCKY INVESTORS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 and 1993


<CAPTION>
                                                        1995                1994                1993
OPERATING ACTIVITIES
<S>                                           <C>    <C>             <C>              <C>
Net Income                                    $      554,932         $ 1,522,699      $    1,192,814
Adjustments to reconcile net income
to net cash provided by operating activities:
Increase (decrease) in Benefit Reserves            7,175,593           (216,474)          19,468,453
Change in Claims Liability                         (169,736)           (513,266)           (791,946)
Change in Other Policyholder Funds               (1,135,436)              74,249             461,346
Amortization of Deferred Acquisition Costs         6,085,957          10,092,870          12,315,997
Policy Acquisition Costs Deferred                (4,981,000)         (9,019,000)         (9,754,000)
Realized Gain on Investments                        (29,898)           (235,959)           (642,661)
Increase in Accrued Investment Income                (6,075)           (157,020)           (148,471)
Change in Other Assets and
Other Liabilities                                     24,363           (947,234)             554,864
Provision for Deferred Federal Income Taxes        (668,000)           (583,000)         (2,277,000)
Federal Income Tax                                     (612)           (949,646)             800,944
Change in Due and Deferred Premiums                (348,413)           (138,862)              63,731
Net Adjustment for Premium and
Discount on Investments                              112,387             224,422             139,248
Depreciation and Other Amortization                  358,920             354,724             359,445
Change in Minority Interest and Other                (2,335)             340,751             409,404
Change in Amounts Recoverable from Reinsurers      4,773,358          10,103,840        (16,724,496)

NET CASH PROVIDED BY OPERATING
ACTIVITIES                                     $  11,744,005       $   9,953,094       $   5,427,672

<CAPTION>
INVESTING ACTIVITIES
<S>                                            <C>                 <C>                 <C>
Securities available-for-sale:
Purchases                                      $(19,036,132)       $(25,428,933)       $    (41,313)
Sales and Maturities                                                   8,946,675           8,103,582285,334
Securities held-to-maturity:
Purchases                                                -0-           (962,730)        (43,673,683)
Sales and Maturities                                 204,084           6,127,887          33,391,890
Other Investments:
Cost of Acquisition                              (2,290,555)         (1,489,150)         (3,467,828)
Sales and Maturities                               1,297,428           2,220,019           2,105,927
Net Additions to Property and Equipment            (180,422)            (44,160)           (168,277)

NET CASH USED BY INVESTING
ACTIVITIES                                     $(11,058,922)       $(11,473,485)       $(11,567,950)

<CAPTION>
FINANCING ACTIVITIES 
<S>                                            <C>                 <C>                 <C>
Receipts from universal life policies credited to
policyholder account balances                  $   3,352,687       $   5,096,198       $  10,962,224
Return of policyholder account balances on
universal life policies                          (4,012,800)         (4,087,252)         (3,202,170)
Issuances (Purchases) of Common Stock                387,772              98,876            (33,137)
Dividends                                          (332,079)           (318,462)           (309,257)

NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES                                     $   (604,420)       $     789,360       $   7,417,660

INCREASE (DECREASE) IN CASH                    $      80,663       $   (731,031)       $   1,277,382

Cash and cash equivalents at beginning of year     2,336,712           3,067,743           1,790,361

CASH AND CASH EQUIVALENTS  AT
END OF YEAR                                    $   2,417,375       $   2,336,712       $   3,067,743

<FN>
See notes to consolidated financial statements.
</TABLE>

Page 27

<TABLE>
KENTUCKY INVESTORS, INC.

SELECTED FINANCIAL DATA
KENTUCKY INVESTORS, INC. AND SUBSIDIARIES
(000's omitted except for Earnings and Cash Dividends Per Share)
<CAPTION>
                                     1995          1994           1993           1992           1991
<S>                              <C>           <C>            <C>           <C>            <C>
Total Revenue                    $ 44,005      $ 46,656       $ 45,388      $  45,567      $  45,349
Total Benefits & Expenses          43,191        44,039         43,091         44,597         44,548
Net Income                            555         1,523          1,193            516            418
Earnings Per Share                       .71          1.97           1.55            .65            .52
Total Assets                      208,045       191,367        198,230        171,119        161,562
Total Liabilities                 173,288       164,902        168,984        142,987        133,172
Long Term Debt                        -0-           -0-            -0-            -0-            -0-
Cash Dividends Per Share                 .38           .37            .36            .36            .36


</TABLE>


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,  1995  and 1994,  and  the
related consolidated statements of income, stockholders'  equity, and cash flows
for each of the three years in the  period  ended December 31, 1995.   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  generally  accepted auditing 
standards.   Those standards require that we plan and perform the audit to
obtain reasonable assurance  about  whether  the  financial statements  are 
free  of  material  misstatement.    An  audit includes examining,  on  a  test 
basis,  evidence  supporting  the  amounts  and disclosures  in  the  financial 
statements.    An  audit  also includes assessing the accounting principles used
and significant estimates  made by  management,  as  well  as evaluating the
overall financial statement presentation.   We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above  present fairly, in
all material respects, the consolidated financial position of Kentucky
Investors, Inc. and subsidiaries at December 31, 1995 and 1994, and  the 
consolidated  results of their operations and their cash flows for each of the
three years in the period ended December  31,  1995,  in conformity with
generally accepted accounting principles.

As  discussed  in  Note A to the consolidated financial statements, the Company
changed its method of accounting  for certain investments in debt securities
in 
1994.    Also,  as  discussed  in  Note  A  to  the consolidated  financial 
statements,  the  Company changed its method of accounting for income taxes in
1993.

Louisville, Kentucky
March 15, 1996

Page 28

<TABLE>
INVESTORS HERITAGE LIFE INSURANCE COMPANY

SELECTED FINANCIAL DATA
INVESTORS HERITAGE LIFE INSURANCE COMPANY AND SUBSIDIARY
(000's omitted except for Earnings and Cash Dividends Per Share)
<CAPTION>
                                     1995          1994           1993           1992           1991
<S>                            <C>            <C>            <C>            <C>            <C>
Premiums                       $ 33,061       $  36,444      $  34,966      $  34,671      $
                                                                                     
                                                                               34,857
Net Investment Income              10,815        10,011          9,748         10,021          9,711
Net Income                            917         2,401          2,302            915            699
Earnings Per Share                      1.02          2.66           2.54           1.00            .76
Total Assets                      210,490       194,262        201,197        173,885        163,925
Policy Reserves                   161,695       155,179        154,387        127,158        115,979
Long Term Debt                        -0-           -0-            -0-            -0-            -0-
Cash Dividends Per Share                 .76           .74            .72            .72            .72

</TABLE>

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Investors Heritage Life Insurance Company

We  have  audited  the  accompanying consolidated balance sheets of Investors
Heritage Life Insurance Company and subsidiary as of  December 31,  1995  and 
1994, and the related consolidated statements of income, stockholders' equity,
and cash flows for each of the three years in  the period  ended  December  31, 
1995.   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 generally accepted  auditing
standards.  Those standards require that we  plan  and  perform the  audit  to 
obtain  reasonable assurance about whether the financial statements are  free 
of  material misstatement. An  audit includes examining, on  a  test basis, 
evidence  supporting  the  amounts  and disclosures in  the  financial 
statements.  An  audit  also  includes assessing  the accounting principles used
and significant estimates made by management, as well as evaluating  the 
overall  financial  statement presentation.  We believe that our audits provide
a  reasonable basis for our opinion.

In  our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Investors Heritage
Life Insurance Company and subsidiary at December 31, 1995 and 1994, and the
consolidated  results  of  their  operations  and their  cash  flows  for  each 
of  the  three  years in the period ended December 31, 1995, in conformity
with generally  accepted  accounting principles.

As  discussed  in  Note A to the consolidated financial statements, the Company
changed its method of accounting for certain investments  in debt  securities 
in  1994.   Also,  as  discussed  in  Note  A  to the consolidated financial
statements, the Company  changed  its  method  of accounting for income taxes in
1993.

Louisville, Kentucky
March 15, 1996

Page 29

INVESTORS HERITAGE LIFE INSURANCE COMPANY
CONSOLIDATED  BALANCE SHEETS
DECEMBER 31, 1995 and 1994

ASSETS                                   1995           1994
INVESTMENTS
Securities available-for-sale,
at fair value:
Fixed maturities                 $137,401,716   $108,804,461
Equity securities                   2,565,936      2,002,678
Securities held-to-maturity,
at amortized cost                         -0-      6,580,321
Mortgage loans on real estate      13,058,464     11,844,582
Policy loans                        6,869,039      6,842,862
Other long-term investments           301,733        301,401
Short-term investments              1,103,021      1,330,890
                                                               
                                 $161,299,909   $137,707,195
Investments in affiliates           2,309,438      2,679,684
Contractual obligations of
affiliate                             747,753        835,666

Total investments                $164,357,100   $141,222,545

Cash and cash equivalents           2,376,981      2,309,791
Accrued investment income           2,139,333      2,133,219
Due and deferred premiums           4,714,057      4,365,644
Deferred acquisition costs         28,260,113     30,499,435
Property and equipment              1,823,784      1,921,737
Goodwill                            1,705,583      1,771,184
Other assets                        1,449,163      1,601,275
Amounts recoverable from
reinsurers                          3,663,782      8,437,140
                                 $210,489,896   $194,261,970


LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Policy liabilities:
Benefit reserves                 $155,182,145   $140,072,351
Unearned premium reserves           6,512,362     15,106,676
Policy claims                       1,665,949      1,835,685
Other policyholders' funds:
Dividend & endowment
accumulations                       1,033,503      1,095,079
Reserves for dividends
& endowments & other                1,066,860      2,140,720

Total policy liabilities         $165,460,819   $160,250,511
Federal income taxes                3,705,719        427,794
Other liabilities                   2,663,372      2,815,224

Total liabilities                $171,829,910   $163,493,529


STOCKHOLDERS' EQUITY
Common stock                     $  1,441,797   $  1,443,259
Paid-in surplus                     3,776,427      3,776,360
Unrealized appreciation
(depreciation)of
available-for-sale securities       3,948,035    (3,735,908)
Retained earnings                  29,493,727     29,284,730

Total stockholders' equity       $ 38,659,986   $ 30,768,441
                                 $210,489,896   $194,261,970

See notes to consolidated financial statements.

Page 30

INVESTORS HERITAGE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 and 1993


                                  1995          1994         1993
REVENUES
Premiums
and other considerations   $33,061,376   $36,443,762  $34,966,088
Investment income,
net of expenses             10,815,048    10,010,654    9,747,813
Realized gain
on investments, net             57,048       346,697      642,661
Other income                   142,934         3,078       69,440
Total revenue              $44,076,406   $46,804,191  $45,426,002


BENEFITS AND EXPENSES
Death and other benefits   $17,291,402   $17,666,871  $19,182,945
Guaranteed annual
endowments                     890,056       921,148      951,286
Dividends to
policyholders                  784,506       852,398      954,400
Increase in benefit
reserves and
unearned premiums           11,157,960     8,183,045    3,586,337
Acquisition costs
deferred                   (4,981,000)   (9,019,000)  (9,754,000)
Amortization of deferred
acquisition costs            6,085,957    10,092,870   12,315,997
Commissions                  4,177,725     8,007,178    8,779,813
Other insurance expenses     7,785,215     7,307,693    6,961,195
Total benefits and
expenses                   $43,191,821   $44,012,203  $42,977,973

INCOME FROM
OPERATIONS BEFORE
FEDERAL INCOME TAX      $      884,585  $  2,791,988 $  2,448,029


Provision for income taxes
Current                 $      648,000  $  1,061,000 $  2,688,000
Deferred                     (680,000)     (670,000)  (2,360,000)

                                                                           
                        $     (32,000)  $    391,000 $    328,000


INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE    $      916,585  $  2,400,988 $  2,120,029

CUMULATIVE EFFECT OF
ACCOUNTING CHANGE                  -0-           -0-      182,000

NET INCOME              $      916,585  $  2,400,988 $  2,302,029

EARNINGS PER SHARE               $1.02          $2.66       $2.54

See notes to consolidated financial statements.

Page 31

<TABLE>
INVESTORS HERITAGE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 and 1993

<CAPTION>

                                                            UNREALIZED
                                                            APPRECIATION
                                                            (DEPRECIATION)OF RETAINED
                                 COMMON         PAID-IN     AVAILABLE-FOR-SALE
                                 STOCK          SURPLUS     SECURITIES       EARNINGS

<S>                              <C>            <C>         <C>           <C>
BALANCE, JANUARY 1, 1993         $1,455,358     $3,774,115  $    630,726  $26,025,963

Net Income                                                                  2,302,029
Cash Dividend                                                               (653,157)
Cumulative effect 
of accounting change                                        (110,000)          66,435
Change in net unrealized
appreciation (depreciation)                                 152,594                  
Cost of common stock
purchased                        (6,348)        1,268                        (99,966)


BALANCE, DECEMBER 31, 1993       $1,449,010     $3,775,383  $    673,320  $27,641,304

Adjustment to beginning balance
for change in accounting method                             2,790,241
Net Income                                                                  2,400,988
Cash Dividend                                                               (666,892)
Change in net unrealized
appreciation (depreciation)                                 (7,199,469)
Cost of common stock
purchased                        (5,751)        977                          (90,670)


BALANCE, DECEMBER 31, 1994       $1,443,259     $3,776,360  $(3,735,908)  $29,284,730

Net Income                                                                    916,585
Cash Dividend                                                               (685,219)
Change in net unrealized
appreciation (depreciation)                                 7,683,943
Cost of common stock
purchased                        (1,462)        67                           (22,369)


BALANCE, DECEMBER 31, 1995       $1,441,797     $3,776,427  $ 3,948,035   $29,493,727


<FN>
See notes to consolidated financial statements.
</TABLE>
Page 32

INVESTORS HERITAGE LIFE INSURANCE COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 and 1993


                                            1995        1994           1993
OPERATING ACTIVITIES
Net Income                           $   916,585 $ 2,400,988 $    2,302,029
Adjustments to reconcile net income
to net cash provided by operating activities:
Increase (decrease) in Benefit
Reserves                               7,175,593   (216,474)     19,468,453
Change in Claims Liability             (169,736)   (513,266)      (791,946)
Change in Other Policyholder
Funds                                (1,135,436)      74,249        461,346
Amortization of Deferred
Acquisition Costs                      6,085,957  10,092,870     12,315,997
Policy Acquisition Costs
Deferred                             (4,981,000) (9,019,000)    (9,754,000)
Realized Gain on Investments            (57,048)   (346,697)      (642,661)
Increase in Accrued Investment
Income                                   (6,114)   (156,711)      (148,537)
Change in Other Assets and
Other Liabilities                            260   (921,683)        534,618
Provision for Deferred Federal
Income Taxes                           (680,000)   (670,000)    (2,360,000)
Federal Income Tax                         (411)   (951,504)        552,874
Change in Due and Deferred
Premiums                               (348,413)   (138,862)         63,731
Net Adjustment for Premium and
Discount on Investments                  112,387     224,422        139,248
Depreciation and Other Amortization      313,464        350,838     355,936
Change in Amounts Recoverable
from Reinsurers                        4,773,358  10,103,840   (16,724,496)

NET CASH PROVIDED BY OPERATING
ACTIVITIES                         $  11,999,446 $10,313,010  $   5,772,592

INVESTING ACTIVITIES
Securities available-for-sale:
Purchases                          $(19,036,132)
                                                $25,428,933)  $  (41,313)
Sales and Maturities                   8,946,675   8,214,320        285,334
Securities held-to-maturity:
Purchases                                    -0-   (962,730)   (43,673,683)
Sales and Maturities                     204,084   6,127,887     33,391,890
Other Investments:
Cost of Acquisition                  (2,297,975) (1,511,189)    (3,427,456)
Sales and Maturities                   1,770,165   2,309,447      2,145,356
Net Additions to Property
and Equipment                          (149,910)    (39,790)      (168,277)

NET CASH USED BY INVESTING
ACTIVITIES                                      
                                  $(10,563,093) $(11,290,988)  $(11,488,149)

FINANCING ACTIVITIES 
Receipts from universal
life policies credited to
policyholder account balances      $   3,352,687 $ 5,096,198  $  10,962,224
Return of policyholder account
balances on universal life policies  (4,012,800) (4,087,252)    (3,202,170)
Repurchase of Common Stock              (23,831)    (96,421)      (106,314)
Dividends                              (685,219)   (666,892)      (653,157)

NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES                         $ (1,369,163) $   245,633  $   7,000,583

INCREASE (DECREASE) IN CASH        $      67,190 $ (732,345)  $   1,285,026

Cash and cash equivalents
at beginning of year               $   2,309,791   3,042,136      1,757,110

CASH AND CASH EQUIVALENTS  AT
END OF YEAR                        $   2,376,981$  2,309,791  $   3,042,136

See notes to consolidated financial statements.

Page 33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

KENTUCKY INVESTORS, INC.

INVESTORS HERITAGE LIFE INSURANCE COMPANY

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 formed in 1994.  99% of
Kentucky Investors operations are generated by Investors Heritage.

Investors Heritage'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 Investors Heritage products are in the Commonwealths of
Kentucky and Virginia, and the states of North Carolina, South Carolina, Ohio,
Indiana, Florida, Tennessee, Illinois, Kansas, West Virginia and Texas.

Basis of Presentation:  The accompanying consolidated financial statements of
Kentucky Investors, Inc. and subsidiaries and Investors Heritage Life
Insurance
Company and subsidiary have been prepared in accordance with generally accepted
accounting principles (GAAP). Investors Heritage also submits financial
statements to insurance regulatory authorities based on statutory accounting
practices which differ from GAAP.

Principles of Consolidation:  The consolidated financial statements include the
majority-owned subsidiaries of Kentucky Investors which are Investors Heritage
Printing, Inc., Investors Heritage and its subsidiary, Investors Underwriters,
Inc., and Investors Heritage Financial Services Group, Inc.  Kentucky Investors
formed Investors Heritage Financial Services Group, a wholly-owned marketing
company which markets a variety of products for a number of companies as well
as
Investors Heritage's mortgage protection products to financial institutions in
1994.  Intercompany transactions are eliminated in consolidation.

Investments:  Effective January 1, 1994, Kentucky Investors and Investors
Heritage adopted Statement of Financial Accounting Standards (SFAS) No. 115,
"Accounting for Certain Investments in Debt and Equity Securities".  In
accordance with SFAS No. 115, Kentucky Investors and Investors Heritage
classified its fixed maturities and equity securities as available-for-sale or
held-to-maturity. Under SFAS No. 115, securities classified as held-to-maturity
are carried at amortized cost. Available-for-sale classified securities are
carried at fair value with appreciation (depreciation) relating to temporary
market value changes recorded as an adjustment to stockholders' equity.  The
effect of SFAS No. 115 resulted in an increase to stockholders' equity (net of
adjustments to deferred policy acquisition costs and deferred federal income
taxes) of $2,050,923 and $2,790,241 for Kentucky Investors and Investors
Heritage, respectively, to reflect the January 1, 1994, net unrealized gains on
securities classified as available-for-sale previously carried at amortized
cost.  The adoption of SFAS No. 115 had no effect on Kentucky Investors or
Investors Heritage net income.  During 1995 the Financial Accounting Standards
Board declared a one time "holiday" from SFAS No. 115 restrictions relating to
the transfer of held-to-maturity classified securities to the
available-for-sale
classification. Specifically, FASB decided that companies would be allowed a
one time reassessment of their classification of securities.  Pursuant to the
"holiday" Kentucky Investors and Investors Heritage reclassified its held-to-
maturity securities to 

Page 34


NOTES

NOTE  A - Continued

available-for-sale.  This was completed effective November 30, 1995.  On that
date the amortized cost, related gross unrealized gain and related gross
unrealized loss were $6,377,043, $251,188 and $46,733, respectively.   Equity
securities are carried at fair value.

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.  See Revenues and Expenses
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 of Kentucky Investors was
$3,705,560 and $3,507,133 at December 31, 1995 and 1994, respectively. 
Accumulated depreciation on property and equipment of Investors Heritage was
$3,632,463 and $3,440,760 at December 31, 1995 and 1994, respectively.

Goodwill:  Goodwill for Investors Heritage is being amortized over forty years
using the straight-line method.  Accumulated amortization was $918,414 and
$852,813  at December 31, 1995 and 1994, 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 are locked in and based on projections of past
experience and include provisions 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.

Page 35

NOTES

NOTE  A - Continued

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:  Kentucky Investors and Investors Heritage assume and cede
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.  During 1993,
Investors Heritage reached agreements with two insurers for the recapture of
certain assumed group life policies.  This resulted in a $637,000 gain from
operations before tax in 1993.  In accordance with SFAS No. 113 reserves ceded
to reinsurers of $3,361,687 are shown gross on the balance sheets of Kentucky
Investors and Investors Heritage.

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 in 1995, 1994 and 1993.  In 1992, credit
accident and health unearned premium reserves were determined as the mean of
the
pro rata and Rule of 78's reserves. The change increased Investors Heritage's
1993 income from operations before tax by $370,000.

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 12% of ordinary life insurance in force.  Participating dividends
are accrued as declared by the Board of Directors of Investors Heritage.  

Federal Income Taxes:  Effective January 1, 1993, Kentucky Investors and
Investors Heritage changed their method of accounting for income taxes in
accordance with FASB Statement 109, "Accounting for Income Taxes".  Under
Statement 109, the liability method is required to be used in accounting for
income taxes.  Under that 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.  
The cumulative effect of adopting Statement 109 as of January 1, 1993 was to
decrease net income by $68,000 ($ .09 per share) and increase net income by
$182,000 ($ .20 per share) for Kentucky Investors and Investors Heritage,
respectively.

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, 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 based on the fact that 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-cancelable.

Page 36

NOTES

NOTE  A - Continued

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 for Kentucky
Investors is $1.00 with 1,225,000 shares authorized and 811,128, 779,895 and
771,786 shares issued at December 31, 1995, 1994 and 1993, respectively. 
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 783,820 in 1995, 772,109 in 1994,  and
769,570 in 1993.  Cash dividends per share were $.38 in 1995, $.37 in 1994, and
$.36 in 1993.

The stated value of Investors Heritage common stock was $1,441,797, $1,443,259
and $1,449,010 at December 31, 1995, 1994 and 1993, respectively.  2,000,000
shares were authorized at December 31, 1995, 1994 and 1993 and 900,623,
901,537,
and 905,131 shares were issued at December 31, 1995, 1994 and 1993,
respectively.  Earnings per share of common stock were computed based on the
weighted average number of common shares outstanding during each year: 901,151
in 1995, 902,115 in 1994, and 906,989 in 1993.  Cash dividends per share were
$.76 in 1995, $.74 in 1994, and $.72 in 1993.

Reclassifications: Certain prior year amounts have been reclassified to conform
to the 1995 presentations.

Use of Estimates:  The preparation of financial statements in conformity with
generally accepted accounting principles 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.

New Accounting Pronouncements:  Kentucky Investors and Investors Heritage have
elected to adopt SFAS No. 120, "Accounting and Reporting by Mutual Life
Insurance Enterprises and by Insurance Enterprises for Certain Long Duration
Participating Contracts", effective January 1, 1996 to account for their
participating life insurance policies.  Management has evaluated the impact of
adoption to be immaterial to the financial statements of both Kentucky
Investors and Investors Heritage.

NOTE  B - Investments

Investors  Heritage  limits  credit  risk  by emphasizing investment grade
securities and by diversifying its investment portfolio among government  and 
corporate  bonds  and  mortgage loans.  Investors Heritage 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 $10,815,000 of the loans outstanding at December 31, 1995 were to
borrowers located in Kentucky. All loans are secured by a first mortgage on the
property.

Page 37

NOTES
NOTE  B - Continued

Investments in available-for-sale and held-to-maturity securities
are summarized as follows:

<TABLE>

1995                                              Gross          Gross
<CAPTION>                          Amortized  Unrealized    Unrealized      Fair
                                   Cost           Gains        Losses      Value
Available-for-sale securities:
<S>                         <C>              <C>             <C>        <C>
U.S. Government
Obligations                   
                           $  24,214,107     $1,364,794      $  15,497  $  25,563,404
States and Political
Subdivisions                   1,987,512         73,488            -0-      2,061,000
Corporate                     68,935,613      3,138,499         78,479     71,995,633
Foreign                        5,015,069        260,071            -0-      5,275,140
Mortgage-Backed Securities    31,685,496        921,819        100,776     32,506,539

Total Fixed Maturity
Securities                  $131,837,797     $5,758,671       $194,752   $137,401,716
Equity Securities              1,311,393      1,347,552         93,009      2,565,936

Total                         
                            $133,149,190     $7,106,223       $287,761   $139,967,652

1994                                              Gross         Gross
<CAPTION>                     Amortized      Unrealized    Unrealized           Fair
                                   Cost           Gains        Losses           Value

Available-for-sale securities:
<S>                         <C>              <C>            <C>          <C>
U.S. Government Obligations   
                            $ 29,489,371     $  153,353     $1,331,031   $ 28,311,693
Corporate                     63,925,650        174,999      4,263,242     59,837,407
Mortgage-Backed Securities    22,100,716         40,446      1,485,801     20,655,361

Total Fixed Maturity
Securities                    
                            $115,515,737     $  368,798     $7,080,074   $108,804,461
Equity Securities              1,249,643        928,388        175,353      2,002,678

Total                         
                            $116,765,380     $ ,297,186     $ ,255,427   $110,807,139

Held-to-maturity securities:
States and Political
Subdivisions                  
                            $  3,804,470     $   31,498     $  315,210   $  3,520,758
Corporate                      1,164,154            -0-         34,154      1,130,000
Mortgage-Backed Securities     1,611,697            -0-        148,638      1,463,059

Total                      
                            $  6,580,321     $   31,498     $  498,002   $  6,113,817

</TABLE>

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    December 31
                                    1995           1994

Net unrealized appreciation
(depreciation) on available-
for-sale securities           
                            $ 6,818,462   $ (5,958,241)               
Adjustment to deferred
acquisition costs              (836,591)       297,774 
Deferred income taxes         
                             (2,033,836)     1,924,559 
                                        

Net unrealized appreciation
(depreciation) on
available-for-sale securities for
Investors Heritage            
                             $ 3,948,035  $ (3,735,908)
Minority shareholders'
interest                      
                             (1,031,526)        978,917
                                                       

Net unrealized appreciation
(depreciation) on
available-for-sale securities for
Kentucky Investors            
                             $ 2,916,509  $ (2,756,991)               
                              

The amortized cost and fair value of debt securities at December 31, 1995, by
contractual maturity, are presented on the following page.  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.

Page 38


NOTES

NOTE  B - Continued

                              
                      Available-for-Sale
                               Amortized          Fair 
                                    Cost          Value


Due in one year or less       
                         $    3,647,354  $    3,708,957
Due after one year
through five years            41,873,594     43,283,787
Due after five years
through ten years             40,405,170     42,383,431
Due after ten years           12,266,568     13,482,102
Due at multiple maturity
dates                         33,645,111     34,543,439

Total                         
                           $131,837,797    $137,401,716

Proceeds during 1995 and 1994 from sales and maturities of investments in
available-for-sale securities were $8,946,675 and $8,214,320, respectively. 
Gross gains of $86,647 and $170,625 and gross losses of $50,315 and $35,599 
were realized on those sales during 1995 and 1994, respectively.  Proceeds
during 1995 and 1994 from sales and maturities of investments in held-to-
maturity securities were $204,084 and $6,127,887, respectively.  Gross gains of
$2,135 and $116,525 and gross losses of $7,964 and $8,012, respectively, were
realized on those sales.  Proceeds from sales and maturities of investments in
debt securities were $33,391,890 for 1993.  Gross gains of $821,051 and gross
losses of $82,890 were realized on those sales in 1993.

Presented below is investment information for Investors Heritage, 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, 1995, 1994 and 1993:

                           1995         1994         1993
Change in unrealized
investment gain (loss):
Available-for-sale:
Debt securities     $12,275,195  $(6,711,276)  $      -0-
Equity securities       501,508     (267,147)     231,774

Held-to-maturity
(held for investment
prior to 1994):
Debt securities     $   466,504  $(5,663,480)  $1,265,728

Realized investment
gain (loss):
Available-for-sale:
Debt securities     $    35,957  $   134,213   $      -0-
Equity securities           375          813        1,605

Held-to-maturity
(held-for-investment
prior to 1994):
Debt securities     $   (5,829)  $   108,513   $  738,161

In 1995 there were sales of $146,914 of held-to-maturity securities with a
realized loss of $7,705.  For statutory purposes the Company sold these
securities since they were not valued by the NAIC Securities Valuation Office. 
Net realized gains of $1,876 result from prepayments and calls of held-to-
maturity securities in 1995.  As previously mentioned in Note A, the balance of
held-to-maturity securities was transferred to available-for-sale on November
30, 1995.  There were no sales of held-to-maturity securities in 1994. Realized
gains above in 1994 ($108,513) result from prepayments and calls of held-to-
maturity securities.

Page  39

NOTES

NOTE  B - Continued

Major categories of investment income for Investors Heritage are summarized as
follows:

                           1995          1994        1993

Fixed maturities    
                  $   9,084,878   $ 8,210,890$  7,934,808
Mortgage loans on
real estate           1,124,147     1,230,481   1,205,962
Other                   961,604       908,508     951,670
                    ___________   ___________ ___________
                    $11,170,629   $10,349,879 $10,092,440

Investment expenses     355,581       339,225     344,627

                    $10,815,048   $10,010,654$  9,747,813


Investors Heritage and Kentucky Investors are required to hold assets on
deposit
for the benefit of policyholders in accordance with statutory rules and
regulations.  At December 31, 1995 and 1994, these required deposits had book
values of $22,290,293 and $22,374,245, respectively, for Kentucky Investors and
Investors Heritage.

NOTE  C - Fair Values of Financial Instruments

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.  The
following table relates solely to Investors Heritage.  Carrying values and fair
values for Kentucky Investors approximate those shown for Investors Heritage,
except for the investments in and obligations of affiliates recognized by
Investors Heritage which are eliminated for Kentucky Investors reporting.

                              
                        December 31, 1995

Investors Heritage          Carrying            Fair
                               Value           Value
Assets:
Fixed maturities        $137,401,716    $137,401,716
Equity securities          2,565,936       2,565,936
Mortgages on real
estate - commercial       12,353,835      13,627,306
Mortgages on real
estate - residential         704,629         793,064
Policy loans               6,869,039       6,869,039
Other long-term
investments                  301,733         301,733
Short-term investments     1,103,021       1,103,021
Investments in
affiliates                 2,309,438       4,406,088
Contractual obligations
of affiliate                 747,753         747,753
Cash and cash equivalents  2,376,981       2,376,981
Accrued investment income  2,139,333       2,139,333
Liabilities:
Policyholder deposits
(investment-type
contracts)              $ 48,243,071    $ 43,049,666
Policy claims              1,665,949       1,665,949

Page 40


NOTES

NOTE  C - Continued

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, other long term investments and contractual obligations of affiliates: 
The carrying amounts reported for these financial instruments approximate their
fair values.

Fixed maturity, equity securities, and investments in affiliates:  The fair
values for fixed maturity, equity securities (including redeemable preferred
stocks) and investments in affiliates 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:  The carrying amounts reported for policy claims approximate
their fair value.

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


NOTE  D - Investment in Affiliates/Contractual Obligation of Affiliate

Investors Heritage's investment in the common stock of its parent, Kentucky
Investors, either directly or indirectly, was at December 31, 1995:  Cost
$2,309,438, Market $4,406,088 and at December 31, 1994: Cost $2,679,684, Market
$4,710,107.  Additionally, Investors Heritage owns several notes due from
Kentucky Investors, with variable interest rates and due dates from 1999 to
2004.  Kentucky Investors owns approximately 74% of Investors Heritage.  Sales
of common stock owned by Investors Heritage are reported by Kentucky Investors
as stock issuances.  The consideration received from such sales is recorded by
Kentucky Investors as follows:  an adjustment to common stock at par value of
securities sold, an adjustment to retained earnings for the cost of securities
sold in excess of par value, and an adjustment to paid in surplus for the
difference in consideration received and cost of the securities paid by
Investors Heritage.


NOTE  E - Federal Income Tax

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:

Page 41


NOTES

NOTE  E - Continued

Investors Heritage              1995         1994

Deferred tax liabilities:
Policy acquisition costs$  7,972,000   $8,416,000
Net unrealized gain on
available-for-sale
securities                 2,034,000         -0- 
Other                        235,000      176,000
Total deferred tax
liabilities             $ 10,241,000   $8,592,000

Deferred tax assets:
Benefit reserves        $  6,286,000   $5,712,000
Other                        501,000      527,000
Net unrealized losses on
available-for-sale securities    -0-    1,925,000

Total deferred tax
assets                  $  6,787,000   $8,164,000
Valuation allowance
for deferred tax assets    (252,000)          -0-
Net deferred tax assets $  6,535,000   $8,164,000
Net deferred tax liabilities of
Investors Heritage      $  3,706,000   $  428,000

Kentucky Investors
Deferred tax liability:
Undistributed earnings
in subsidiary              1,414,000   1,402,000 

Net deferred tax liabilities of
   Kentucky Investors   $  5,120,000  $1,830,000 


A valuation allowance was recorded on net deferred tax assets exclusive of the
liability related to the net unrealized gain 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 in 1993, taxes currently payable. In 1995, taxes recoverable of $77,000 and
$-0- for Investors Heritage and Kentucky Investors, respectively, is included
in other assets in the consolidated balance sheets.

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

                     1995       1994         1993

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    (63.8)%      (19.5)%     (14.5)%
Dividend exclusion
and tax-exempt income(5.0)%        (1.7)%      (2.4)%
Increase in valuation              27.6 %
Alternative minimum taxes                        (2.5)%
Purchase accounting
differences          2.3 %           .7 %        .7 % 
Other, net           1.3 %           .5 %      (1.9)%


Effective income tax rate-
Investors Heritage   (3.6)%        14.0 %      13.4 %
Consolidating adjustments   5.9 %   3.6 %       5.0 %

Effective income tax rate-
Kentucky Investors   2.3 %         17.6 %      18.4 %

Page 42

NOTES

NOTE E - Continued

At December 31, 1995 approximately $4,000,000 of the retained earnings of
Investors Heritage 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 $6,900,000, Investors Heritage could be
subject to additional federal income tax unrelated to its normal taxable
income. 
No provision for such income tax has been provided for as management
foresees no events which would result in such tax being incurred.

Kentucky Investors made income tax payments of $34,750, $29,200 and $6,000 in
1995, 1994 and 1993, respectively.  Investors Heritage made income tax payments
of $445,614, $2,450,000 and $2,005,000 in 1995, 1994, and 1993, respectively.

NOTE  F - Employee Benefit Plans

Kentucky Investors and Investors Heritage participate 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 Kentucky Investors on a
consolidated basis.  Because the amounts for the parent company and Investors
Heritage Printing, Inc. are immaterial, they are not separately presented.

                               1995         1994         1993
Components of pension
expense:
Service cost           $  (222,492)  $ (212,612)  $ (164,415)
Interest cost             (289,538)    (244,073)    (212,520)
Actual return on
plan assets                 296,918      269,622      252,606
Net amortization and
deferral                   (10,667)     (71,269)     (67,913)
Net periodic pension
expense                $  (225,779)  $ (258,332)  $   92,242)


Plan assets at
fair value             $  3,460,959  $ 3,050,765  $ 2,558,190

Actuarial present value
of projected benefit obligation:
Accumulated benefit obligations:
Vested                 $(3,356,652) $(2,537,144)$ (2,224,048)
Nonvested                  (45,880)     (35,477)     (26,889)

                       $(3,402,532) $ 2,572,621)$ (2,250,937)
Provision for future
salary increase         (1,172,820)    (833,712)    (898,393)
Total projected benefit
obligation             $(4,575,352) $(3,406,333)$ (3,149,330)
Projected benefit
obligation in excess
of fair value of plan
assets                 $(1,114,393) $  (355,568)$   (591,140)
Unrecognized net loss     1,255,751      506,848      800,896
Unrecognized transition
asset                     (204,861)    (239,004)    (273,148)


ACCRUED PENSION COST   $   (63,503) $   (87,724)$    (63,392)
Excess of plan assets over
accumulated benefit
obligations            $     58,427 $    478,144$     307,253

Page 43

NOTES
NOTE  F - Continued

The discount rate used in determining the actuarial present value of the
projected benefit obligation was 7.5% and 8.5% for 1995 and 1994, respectively. 
The rate of increase in future compensation levels was 5% for 1995, 1994 and
1993. The expected long-term rate of return on plan assets was 9% in 1995, 1994
and 1993. Plan assets represent a deposit administration fund of Investors
Heritage.

Kentucky Investors and Investors Heritage also sponsor a 401(k) defined
contribution plan.  Matching contributions to the plan expensed for 1995, 1994
and 1993 were $150,000, $131,000, and $138,000, 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
$10,950,126 at December 31, 1995.

NOTE  H - Statutory Accounting Practices

Stockholders' equity, as reported by Investors Heritage, was $15,061,860 and
$13,867,715 at December 31, 1995 and 1994, respectively.  The statutory net
income was $2,063,471, $2,486,925, and $523,908 for the years ending  December
31, 1995,  1994 and 1993, 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.  "Prescribed"
statutory accounting practices include state laws, regulations, and general
administrative rules, 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.  The NAIC currently is in
the process of recodifying statutory accounting practices, the result of which
is expected to constitute the only source of "prescribed" statutory accounting
practices.  Accordingly, that project, which is expected to be completed in
1997, will likely change, to some extent, prescribed statutory accounting
practices, and may result in changes to the accounting practices that insurance
enterprises use to prepare their statutory financial statements.  It is not
feasible to discuss the expected impact to the Company of the recodification of
statutory accounting practices since no changes have been determined with any
certainty.

During the year Investors Heritage completed its negotiations with the Kentucky
Department of Insurance (the "Department") with regard to the valuation of
certain assets held by Investors Heritage. Under the agreement reached with the
Department, Investors Heritage will write down the statutory value of the home
office real estate owned from market to depreciated cost over a five-year
period and will write down to zero its investment in the 


Page 44

NOTES

NOTE  H - continued

common stock of Investors Underwriters, Inc. (subsidiary) and its investment in
the common stock of Kentucky Investors over a three-year period.  During 1995
the assets were written down by $1,527,826.  After consideration of the Asset
Valuation Reserve (AVR) related to the write downs the net effect to statutory
surplus was a reduction of $395,071.  The remaining write downs as of December
31, 1995 to be taken over the next four years against statutory surplus, before
consideration of AVR, will be approximately $5,178,000.

NOTE  I - Segment and Reinsurance Data

Investors Heritage operates in four segments as shown in the following tables. 
All segments except Corporate 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, are assigned to the Corporate segment.  Goodwill has
been allocated to the insurance lines based upon the mix of business of
companies acquired. Corporate segment results for the parent company, Investors
Heritage Printing, Inc., and Investors Heritage Financial Services Group are
immaterial, after elimination of intercompany amounts, and are not presented.

                               1995         1994         1993
                                                
                               (000's omitted)               
Revenue:                                        
Life & Annuities         $   42,437    $  38,916    $  33,697
Credit(Life & A&H)            (802)        5,431        7,056
Accident & Health             1,126        1,139        3,063
Corporate                     1,315        1,318        1,610

                         $   44,076    $  46,804    $  45,426


Pre-Tax Income from Operations:
Life & Annuities         $    1,143   $    2,868    $   2,866
Credit(Life & A&H)            (826)      (1,095)      (1,521)
Accident & Health               108          430          396
Corporate                       460          589          707

                         $      885   $    2,792    $   2,448

Assets:
Life & Annuities         $  163,834   $  143,789    $ 133,911
Credit(Life & A&H)            8,186       20,107       33,556
Accident & Health             1,692        1,811        2,861
Corporate                    36,778       28,555       30,869

                         $  210,490   $  194,262    $  01,197

Amortization and Depreciation Expense:
Life & Annuities         $    2,874   $    4,303    $   3,968
Credit(Life & A&H)            2,672        4,971        7,451
Accident & Health               605          906          962
Corporate                       248          264          291

                         $    6,399   $   10,444    $  12,672


Page 45

NOTES

NOTE I - continued

For 1995, 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 1994 and 1993 segment data presented above. This change in approach was
made to enhance the allocation of costs and revenues to coincide with resources
used by the segment and revenues earned.  As a result of this change, revenues
for the Life and Annuities segment increased $446,000 for 1994 and $458,000 for
1993.  Revenues for the Corporate segment decreased $497,000 for 1994 and
$519,000 for 1993.  Pre-Tax Income from Operations for the Life and Annuities
segment increased $115,000 for 1994 and $513,000 for 1993.  Pre-Tax Income from
Operations for the Corporate segment decreased $193,000 in 1994 and $379,000 in
1993.  The effect on other segment classifications presented above was
immaterial.

Investors Heritage cedes a portion of its credit life and accident insurance
through coinsurance agreements and 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 $1,135,000 and $1,420,000 in 1995
and 1994, respectively, and commissions and expense allowances received were
$166,000 and $317,000 in 1995 and 1994, respectively. Unearned premium reserves
were reduced by $2,048,000 and $5,296,000 at December 31, 1995 and 1994,
respectively, for credit reinsurance transactions.  Investors Heritage remains
contingently liable on all ceded insurance should any reinsurer be unable to
meet their obligations.  Assumed reinsurance premiums were $4,348,000 and
$4,538,000 in 1995 and 1994, respectively.

NOTE  J - Contingent Liabilities

Investors Heritage 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 Investors Heritage's financial position or results
of operations.

In most of the states in which Investors Heritage 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.  There has been a
significant increase in recent years of guaranty fund assessments.  There is no
reasonable way to determine if the assessments will increase or decrease in the
future, but management is of the opinion that the effect would not be material
on the financial position or results of operations of either Investors Heritage
or Kentucky Investors because of the use of premium tax off-sets.

On March 14, 1996, Investors Heritage received a letter from Crown Life
Insurance Company, a coinsurer of certain credit life and credit accident and
health policies sold by Investors Heritage, regarding certain disagreements in
the terms of their reinsurance agreement. Because of these disagreements, Crown
Life contends that Investors Heritage owes to them approximately $1,000,000. 
Investors Heritage has not completed its investigation in order to respond to
Crown Life's assertions, but based on its preliminary assessment Investors
Heritage disagrees and intends to vigorously defend its position.

Page 46

BOARD OF DIRECTORS

Harry Lee Waterfield II
Chairman of the Board I K a b c d e f g h
Frankfort, Kentucky

Warner Hines K g
Frankfort, Kentucky

Dr. Adron Doran I a b e
Lexington, Kentucky

Jerry F. Howell I K a b c d e h
Leesburg, Florida

H. Glenn Doran I K c d f g
Murray, Kentucky

Dr. Jerry F. Howell, Jr. I K c f
Morehead, Kentucky

Michael F. Dudgeon, Jr. I c
Columbia, South Carolina

Joe R. Johnson I d
Frankfort, Kentucky

Gordon C. Duke K g
Frankfort, Kentucky

David W. Reed K h
Gilbertsville, Kentucky

Robert M. Hardy, Jr. I K a f g h
Frankfort, Kentucky

Helen Wagner K b f
Owensboro, Kentucky


I Investors Heritage Life Insurance Company
d Investors Heritage Life Finance Committee
K Kentucky Investors, Inc.
e Investors Heritage Life Compensation Committee
a Investors Heritage Life Executive Committee
f Kentucky Investors Executive Committee
b Investors Heritage Life Nominating Committee
g Kentucky Investors Finance Committee
c Investors Heritage Life Audit Committee
h Kentucky Investors Nominating Committee



STOCK INFORMATION

Stock Prices
NASDAQ OVER-THE-COUNTER MARKET QUOTATIONS
(Investors Heritage
Life Insurance Company and Kentucky Investors Inc. Logos)

Investors Heritage Life Insurance Company
1995 MARKET PRICE RANGE

26-28                         March
26-28                          June
26-28                          Sept.
26-28                           Dec.

1995 Annual Dividend Per Share - $.76


1994 MARKET PRICE RANGE

26-28                         March
26-28                          June
26-28                          Sept.
26-28                           Dec.

1994 Annual Dividend Per share - $.74


Kentucky Investors, Inc.
1995 MARKET PRICE RANGE

12  1/2 - 13 1/2              March
12  1/2 - 13 1/2               June
12  3/4 - 13 3/4               Sept.
12  3/4 - 13 3/4                Dec.

1995 Annual Dividend Per Share - $.38

1994 MARKET PRICE RANGE

12  1/2 - 13 1/2              March
12  1/2 - 13 1/2               June
12  1/2 - 13 1/2               Sept.
12  1/2 - 13 1/2                Dec.

 1994 Annual Dividend Per Share - $.37


The stock of both companies is traded on over-the-counter market.  Both stocks
are on the NASDAQ system.  The quotations reflect inter-dealer prices, without
retail mark-up, mark-down, or commission, and may not represent actual
transactions. The symbol for Investors Heritage Life is INLF and the symbol for
Kentucky Investors is KINV.

The 1996 cash dividend to be paid to its stockholders by Investors Heritage
Life
on April 12, 1996 is $.76 per share, and the cash dividend to be paid on the
same date to its shareholders by Kentucky Investors is $.38 per share.

ANNUAL MEETING

The 1996 meeting of shareholders of Investors Heritage Life Insurance Company
is
scheduled for 10 a.m. on Thursday, May 9, 1996, at the company auditorium,
Second and Shelby Streets, Frankfort, Kentucky.  The annual meeting of
shareholders of Kentucky Investors, Inc., is scheduled for the same date and
location at 11 a.m.

FORM 10-K

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

TRANSFER AGENT

Investors Heritage Life Insurance Company
Stock Transfer Department
P.O. Box 717
Frankfort, Kentucky 40602

(502) 223-2364 - EXT. 305


Page 48