FORM 10-Q

               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D. C. 20549
                                
         Quarterly Report Under Section 13 or 15(d) of
              the Securities Exchange Act of 1934


For the quarter ended September 30, 1998
Commission File Number 2-39729


              COTTON STATES LIFE INSURANCE COMPANY    
     (Exact name of registrant as specified in its charter)


          GEORGIA                                58-0830929                  
(State or other jurisdiction of     (I.R.S. Employer Identification Number)
incorporation or organization)

 244 Perimeter Center Parkway, N.E., Atlanta, Georgia        30346    
  (Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code:     (770) 391-8600   

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding twelve months (or for such shorter period that
the Registrant was required to file such reports) and (2) has been subject
to the filing requirements for at least the past 90 days.
YES     X      NO           

The Registrant, as of September 30, 1998, has 6,427,642 shares of common stock
outstanding.  All shares and per share amounts have been retroactively restated
to reflect the January 20, 1998 three for two stock split.



                 PART I - CONSOLIDATED FINANCIAL STATEMENTS
 
The following consolidated statements have been prepared by management.  In
management's opinion, all adjustments and certain reclassifications necessary
for a fair statement of financial position at September 30, 1998 and December
31,1997 and the results of operations for the three months and nine months
ended September 30, 1998 and 1997 have been made.


 
                           COTTON STATES LIFE INSURANCE COMPANY
                    Unaudited Consolidated Condensed Balance Sheets
                        September 30, 1998 and December 31, 1997


ASSETS                                                    1998          1997

Investments
  Fixed maturities, held for investment, at amortized
     cost (market value $18,608.644  in 1998 and
     $18,315,152 in 1997)                             $17,093,620   $18,104,440
  Fixed maturities, available for sale, at market
     (amortized cost $95,960,515 in 1998 and
     $89,538,221 in 1997)                             100,338,818    91,891,271
  First mortgage loans on real estate                   3,726,650     4,215,962
  Policy loans                                          8,146,484     7,976,103
  Short-term investments                                6,480,908     3,755,294
  Other Invested Assets                                 1,000,000             0

     Total investments                                136,786,480   125,943,070

Cash                                                    1,559,047     1,303,739
Accrued investment income                               1,796,383     1,928,498
Accounts receivable, principally premiums               2,957,620     3,242,432
Amount due from reinsurers                              2,914,187     2,376,473
Deferred policy acquisition costs                      32,540,829    29,842,783
Other assets                                              607,216       700,314
                                                     $179,161,762  $165,337,309

LIABILITIES AND STOCKHOLDERS' EQUITY

Policy liabilities and accruals:
  Future policy benefits                             $110,260,896  $104,269,283
  Policy and contract claims                            1,356,180     1,356,308
Deferred federal income taxes                           5,770,472     3,920,376
Other liabilities                                       7,397,024     6,395,329

     Total liabilities                                124,784,572   115,941,296

Stockholders' Equity:
  Common Stock                                          6,754,504     6,754,504
  Additional paid-in capital                            1,294,144     1,283,745
  Accumulated other comprehensive
     income                                             2,421,623     1,285,556
  Retained earnings                                    45,586,372    41,204,889
  Unearned compensation-restricted stock                 (380,904)            0
  Less treasury stock, at cost, (326,862 shares in
     1998 and 353,629 in 1997)                         (1,298,549)   (1,132,681)

     Total stockholders' equity                        54,377,190    49,396,013

                                                     $179,161,762  $165,337,309

  See accompanying notes to consolidated financial statements.

                             COTTON STATES LIFE INSURANCE COMPANY
                             Unaudited Consolidated Summary of Earnings
                  

<TABLE>
                                              <S>
                                              Nine months ended           Three months ended 
                                                September 30                 September 30,
                                              <C>           <C>            <C>           <C>
                                              1998          1997           1998          1997

Income:
  <S>                                       <C>           <C>            <C>          <C>
  Premium income                            $7,012,057    $5,528,270     7,012,057    $1,969,344
  Mortality and expense charges earned       7,658,206     7,106,874     7,658,206     2,481,680
  Investment income                          6,522,867     6,013,521     6,522,867     2,022,011
  Realized investment gains                    378,288        50,505       378,288         2,244
  Brokerage and other income                 2,190,924     1,623,525     2,190,924       556,205

     Total income                           23,762,342    20,322,695     8,379,094     7,031,484
                  

Benefits and expenses:
  Life benefits and claims                   9,295,037     7,969,595     9,295,037     2,861,374
  A & H benefits and claims                    268,652       182,496       268,652        50,692
  Amortization of policy acquisition cost    2,171,365     2,014,582     2,171,365       796,050
  Operating expenses                         4,860,931     4,223,390     4,860,931     1,300,648

     Total benefits and expenses            16,595,985    14,390,063     5,635,458     5,008,764


Earnings before income tax expense           7,166,357     5,932,632     2,743,636     2,022,720

Federal income taxes:
  Current tax expense                        1,112,655       935,613     1,112,655       333,244
  Deferred tax expense                         901,973       385,438       901,973        61,575
     Total Federal income taxes              2,014,628     1,321,051       720,255       394,819


Net Earnings                                $5,151,729    $4,611,581    $2,023,381    $1,627,901


Basic earnings per share of common stock         $0.80         $0.72         $0.31         $0.26

Diluted earnings per share of common stock       $0.78         $0.70         $0.30         $0.25

Weighted average number of shares 
  used in computing basic earnings per share 6,414,751     6,400,639     6,427,599     6,400,639

Per share amounts for the nine months and the three months ended September 30, 1997 have been 
adjusted for the January 1998 three for two stock split.

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

                                    COTTON STATES LIFE INSURANCE COMPANY
                              Unaudited Consolidated Statements of Cash Flows
                                Nine months ended September 30, 1998 and 1997



<TABLE>
                                                           <C>           <C>
                                                           1998          1997
Cash flows from operating activities:
  <S>                                                   <C>           <C>
  Net Earnings                                          $5,151,729    $4,611,581
  Adjustments to reconcile net earnings to net
     cash provided from operating activities:
        Increase in policy liabilities and accruals      5,610,581     5,219,632
        (Increase) in deferred policy acquisition costs (2,898,450)   (2,043,932)
        Change in Federal income taxes                   1,327,970        79,635
        Changes in accounts receivable and 
            amounts due from reinsurers                   (252,902)      246,476
        Other, net                                       1,301,343      (649,113)

  Net cash provided from operating activities           10,240,271     7,464,279

Cash flows from investing activities:
  Purchase of fixed maturities available for sale      (23,797,400)  (12,577,589)
  Sale of fixed maturities available for sale           12,998,633     3,973,090
  Purchase of other invested assets                     (1,000,000)            0
  Proceeds from maturity and redemption of fixed
       maturities held for investment                    1,000,000     2,115,827
  Proceeds from maturity and redemption of fixed
       maturities available for sale                     4,318,409     2,210,230
  Principal collected on first mortgage loans              489,312       544,608
  Net increase in policy loans                            (170,381)     (556,663)
  Other, net                                              (172,255)     (515,724)

  Net cash used in investing activities                 (6,333,682)   (4,806,221)

Cash flows from financing activities:
  Cash dividends paid                                     (770,246)     (599,712)
  Proceeds from exercise of stock options and             (155,471)        2,766
  issuance of restricted stock

  Net cash used by financing activities                   (925,717)     (596,946)

Net increase in cash and cash equivalents:              $2,980,872    $2,061,112

Cash and cash equivalents:
  Beginning of period                                    5,059,083     2,530,293

  End of period                                         $8,039,955    $4,591,405                             (8,039,955)

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

                            COTTON STATES LIFE INSURANCE COMPANY
                   Unaudited Consolidated Statements of Comprehensive Income

<TABLE>
                                                         <S>
                                                         Nine months ended            Three months ended 
                                                           September 30                 September 30,
                                                         1998          1997           1998          1997

<S>                                                   <C>           <C>           <C>           <C>
Net earnings                                          $5,151,729    $4,611,581    $2,023,381    $1,627,901
Other comprehensive income, before tax:

  Unrealized gains on securities available for sale    2,202,941       987,580     1,753,678     1,211,497
  Reclassification adjustment for realized (gains)
     included in net earnings                           (378,288)      (50,505)     (378,288)       (2,244)

     Total other comprehensive income, before taxes    1,824,653       937,075     1,375,390     1,209,253

  Income tax expense related
     to items of other comprehensive income              688,586       360,206       579,051       464,797

     Other comprehensive income, net of tax            1,136,067       576,869       796,339       744,456


            Total comprehensive income                $6,287,796    $5,188,450    $2,819,720    $2,372,357

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

   
              Cotton States Life Insurance Company
      Notes to Unaudited Consolidated Financial Statements
            September 30, 1998 and December 31, 1997
                                
                               
                                
Note 1 - Basis of Presentation
The accompanying financial statements include the accounts of Cotton States
Life Insurance Company and its wholly owned subsidiaries CSI Brokerage
Services, Inc., and CS Marketing Resources Inc.  Significant intercompany
transactions and accounts are eliminated in the consolidation.

The financial statements for the three and nine months ended September 30, 1998
and 1997 are unaudited and have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission.  Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations.  These consolidated
financial statements should be read in conjunction with the audited
consolidated financial statements and footnotes included in the Company's
annual report on Form 10-K for the year ended December 31, 1997.

In the opinion of management, all adjustments necessary to present fairly the
financial position and the results of operation and cash flows for the interim
period have been made.  All such adjustments are of a normal recurring nature.
The results of operations are not necessarily indicative of the results of
operations which the Company may achieve for the entire year.


Note 2 - Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
(Statement 130).  Statement 130 establishes standards for reporting and
displaying comprehensive income and its components in a full set of general
purpose financial statements.  The Company adopted Statement 130 effective
January 1, 1998.

In June 1997, the FASB issued Statement of Financial Accounting Standards No.
131, "Disclosures about Segments of an Enterprise and Related Information"
(Statement 131).  Statement 131 is effective for financial statements for years
beginning after December 15, 1997.  The Company is assessing the requirements
of Statement 131 for disclosure in its 1998 financial statements.

In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities" (Statement
133).  Statement 133 is effective for financial statements for all fiscal
quarters beginning after June 15, 1999.  The Company does not believe the
provisions of Statement 133 will have a significant impact on the financial
statements upon adoption.

In October, 1998 the FASB issued Statement of Financial Accounting Standards
No. 134, "Accounting for Mortgage-Backed Securities Retained after the
Securitzation of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise,
an amendment of FASB statement No. 65" (Statement 134).  Statement 134 is
effective for the first quarter beginning after December 15, 1998. The Company
does not believe the provisions of Statement 134 will have a significant
impact on the financial statements upon adaption.
                                
                                
                              
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                

                Liquidity and Capital Resources

Premiums, mortality and expense charges and investment income are the Company's
major sources of cash flow used to meet its short-term and long-term cash
requirements.

The Company's short-term obligations consist primarily of operating expenses
and policyholder benefits.  The Company has been able to meet these funding
requirements out of operating cash and cash equivalents.  The Company does not
anticipate that it will become necessary to sell long-term investments to meet
short-term obligations.

The Company's principal long-term obligations are fixed contractual obligations
incurred in the sale of its life insurance products.  The premiums charged for
these products are based on conservative and actuarially sound assumptions as
to mortality, persistency and interest.  The Company believes these assumptions
will produce revenues sufficient to meet its future contractual benefit
obligations and operating expenses, and provide an adequate profit margin to
finance future growth without a major entry into the debt or equity markets.


Investments
Since December 31, 1997, there has not been a material change in mix or credit
quality of the Company's investment portfolio.  All purchases have been fixed
maturities available for sale and over 95% of the holdings at September 30,
1998 and December 31, 1997 are rated "A" or better.


Mortgage Loans
The Company's mortgage loan policy stipulates that the Company will lend no
more than 80% of the value on residential loans and no more than 75% on
commercial loans.  The Company grants loans only to employees (excluding
officers and directors), agents, agents' relatives, employees of a closely
associated business, and current mortgagees.

The geographic distribution of the loan portfolio as of September 30, 1998 and
December 31, 1997 is:

    No. Of Loans                                       Book Value
09/30/98     12/31/97      State               09/30/98           12/31/97
   5            5         Alabama               242,572             259,155
   6            6         Florida               398,022             418,326
  63           70         Georgia             3,086,056           3,538,481
  74           81                            $3,726,650          $4,215,962


The Company has a large concentration of loans in Georgia. Because the
loan-to-value ratio on delinquent loans is 41%, the Company does not anticipate
any loss should it choose to foreclose.


                     Results of Operations

Premium Income
Total premium income was up 27% year to date and for the third quarter. 
The increase is attributable to strong sales of the Company's guaranteed
issue-simplified issue whole life policies.  The Company has contracted with
over 1500 independent agents to market these products through out the
Southeast.  The Company also continues its expansion in Kentucky and
Tennessee with multi-line exclusive agents.

Individual accident and health premiums continue to decline on this closed
block of business.

Mortality and Expense Charges Earned
Universal life contract deposits increased 5% year to date.  Mortality and
expense charges earned on these deposits also increased 8% year to date and
8% over the year earlier quarter.  The Company expects annual increases in
the 8% - 10% range. Annuity contact deposits continue to decrease as the
Company does not actively solicit annuity business.

Investment Income
Investment income was up 8% over the year earlier quarter.  Bond interest was
up 9% year to date due to a larger investment portfolio.  Policy loan interest
was up 12% when compared to September 1997 due to increased borrowing by
policyholders.

Brokerage Income
Brokerage income was up 35% year to date and 48% over the year earlier
quarter. In 1998, the Company's brokerage subsidiary, CSI Brokerage Services,
Inc. entered into an agreement with a non-standard auto insurance carrier to
receive override commissions on business placed with it by the Company's
multi-line exclusive agents.  Year-to-date and for the quarter, CSI Brokerage
Services has recognized gross override income of $226,000 and $174,000
respectively.  In addition, override commissions based on the sales of
multi-peril crop and crop hail insurance by the Company's multi-line
exclusive agents are up approximately $50,000 year to date and for the quarter
due to increased volume when compared to 1997 levels.  Excluding the above
effects, brokerage income increased 18% year to date which is in line with
Company expectations.

Brokerage income from the Company's other subsidiary, CS Marketing Resources,
Inc. was up 15% year to date which is in line with Company expectations.

Benefits
Ordinary benefits as a percentage of premium income and mortality and expense
charges earned were flat year to date and 2% lower than the quarter ended
September 30, 1997.  Due to the Company's size, it is vulnerable to quarterly
fluctuations in mortality.  During the third quarter of 1998, the Company
experienced relatively normal mortality levels.  As noted in the second
quarter, the Company experienced approximately $500,000 in increased death
claims when compared to 1997 second quarter levels.  Year to date death
claims also remain approximately $500,000 higher than year to date 1997.

Individual accident and health benefits increased 48% year to date due to one
claim in this closed block of business.  The Company has met its reinsurance
deductible on this claim and all future charges will be covered by reinsurance
up to $250,000.

Expenses
Expenses (including amortization of policy acquisition costs) as a percentage
of premium income, mortality and expense charges earned and brokerage income
decreased 2% year to date, and 2% for the quarter ended September 30, 1998.
The Company continues to emphasize cost controls which enable this ratio to
remain relatively stable.

Federal Income Taxes
Current taxes are provided based on estimates of the projected effective annual
tax rate.  Deferred taxes are provided on the basis of SFAS 109.  The effective
tax rate for the nine months ended September 30, 1998 was 28% compared to 22%
for the previous nine month period.  The increase is due primarily to the
taxation of CS Marketing Resources 1998 earnings at 34% due to this subsidiary
utilizing all of its net operating loss carry forwards at December 1997 as well
as the rate of increase of certain deferred tax liabilities.  The Company
anticipates future tax rates will range from 27% to 30%.

Year 2000 Computer Compliance
The Company currently utilizes both information technology (IT) and
non-information technology (non-IT) systems to conduct its business.  IT
systems that the Company utilizes are composed of third party application
systems, computer hardware and computer operating systems.  Non-IT systems
that the Company utilizes include embedded technology, such as
microcontrollers, which are also critical in conducting its business.  The
Company also has several material third party relationships that require
Year 2000 compliance of their IT and non-IT systems including the Company's
subsidiaries, the Company's reinsurers and third party administrators.

In 1995, the Company initiated a project designed to address the business
issues associated with Year 2000 and their impact on both IT and non-IT
systems.  The project was designed to address both internal considerations
and external considerations affecting customers, business relationships and
the resulting impact on Company operations.  This project consists of a
three-phase approach as follows.

     Phase 1: Business Application Systems - This phase addresses the
evaluation, testing and upgrading or replacing the Company's key business
systems.  This phase of the project is 85% complete with an expected
completion date of 12/31/98.  The costs of replacing non-compliant IT
systems or upgrading existing systems have totaled approximately $400,000
since inception.  The remaining projected costs of completing Phase 1
compliance are estimated to be less than $50,000.

     Phase 2; IT Hardware/Operating Systems - This phase addresses the
evaluation, testing and upgrading the Company's hardware and operating system
configurations.  This phase of the project is 50% complete, with an expected
completion date of 3/31/99.  The costs associated with this compliance effort
have totaled $45,000 with remaining costs project to be less than $50,000.

     Phase 3: Third Party/External Relationships and Non-IT Systems - This
phase addresses the evaluation, testing and potential replacement of the
Company's embedded technology, such as microcontrollers, and the assessment
of Year 2000 readiness of the material third party relationships. 

             
Phase 3 began in November 1998 and is expected to be completed by June 1999 for
non-IT systems and throughout 1999 for validation of third party compliance.
The Company has been in contact with material third parties and has made
several inquiries on the status of their readiness.  Although the Company has
not received any indication that these third parties will not be Year 2000
compliant, the Company has not received nor expects to assume that the third
parties will guarantee their remediation efforts will result in Year 2000
compliance.

The Company does not believe any material exposure or contingencies exist with
regard to its internal application, hardware and operating systems as the
evaluation, upgrade and/or replacement of this software is anticipated to be
completed in the above-referenced time frames.  The Company does rely on
several third party systems whose non-compliance could materially impact the
results of operations.  Certain insurance companies process override
commissions for the benefit of the Company's subsidiaries, CS Marketing
Resources, Inc. and CSI Brokerage Services, Inc. Another third party
relationship involves the policy administration, billing, collection and
reporting of financial transactions relating to the Company's payroll deduction
universal life products.  Non-Compliance by these third parties could
negatively affect the Company's revenue stream.  At this time, the Company
does not know the effect, if any, on the results of operations, liquidity and
financial condition if any of these systems fail to be year 2000 compliant.
The Company is in frequent contact with these third parties and is developing
a Year 2000 compliance questionnaire which it intends all material third
parties to complete to document their state of readiness, risks, and plans to
become compliant.

The Company does not currently have a contingency plan for the possible
non-compliance of  material third party systems.  Contingency plans will
be developed during the first quarter of 1999 concurrently with Phase 3
of the Year 2000 project.

Cautionary Note Regarding Forward-Looking Statements
The Company may, from time to time, make written or oral forward-looking
statements, including statements contained in the Company's filings with the
Securities and Exchange Commission (the Commission) and its reports to
shareholders.  Such forward-looking statements are made based on management's
belief as well as assumptions made by, and information currently available to
management pursuant to "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995.  The Company's actual results may differ
materially from the results anticipated in these forward-looking statements
due to a variety of factors, including governmental monetary and fiscal
policies, securities portfolio values, mortality fluctuations, and interest
rate risk management; the effects of competition in the insurance business
from other insurance companies and other financial institutions operating
in the Company's market area and elsewhere, including institutions operating
through the Internet; changes in government and state regulations relating
to the insurance industry; failure of assumptions underlying the establishment
of the  Company's policy reserves, and other factors.  The Company cautions
that such factors are not exclusive.  The Company does not undertake to update
any forward-looking statements that may be made from time to time by, or on
behalf of, the Company.


                  PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

The Company is a defendant in various actions incidental to the conduct of its
business.  The Company intends to vigorously defend the litigation and while
the ultimate outcome of these matters cannot be estimated with certainty,
management does not believe the actions will result in any material loss to
the Company.

Item 2.  Changes in Securities

NONE

Item 3.  Defaults Upon Senior Securities

NONE

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

NONE

Item 5.  Other Information

NONE

Item 6.  Exhibits and Reports on Form 8-K.

NONE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                      COTTON STATES LIFE INSURANCE COMPANY
                           Registrant

Date:     11/14/98                 Gary W. Meader
          ________                 _________________________
                                   Chief Financial Officer/Treasurer     
                               
Date:     11/14/98                 William J. Barlow
          ________                 __________________________
                                   Vice President/Controller