SECURITIES AND EXCHANGE COMMISSION
                       Washington, D.C.  20549

                             FORM 10-K/A

                           AMENDMENT NUMBER 1 TO
            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1997Commission File Number 0-18540

                         UNITED INCOME, INC.
        (Exact name of registrant as specified in its charter)

                    2500 CORPORATE EXCHANGE DRIVE
                         COLUMBUS, OH  43231
     (Address of principal executive offices, including zip code)

           OHIO                                             37-1224044
(State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization)                    Identification No.)

Registrant's telephone number, including area code: (614) 899-6773

                              Amendment No. 1

The  undersigned  registrant hereby amends the following  items,  financial
statements, exhibits, or other portions of its December 31, 1997 filing  of
Form 10-K as set forth in the pages attached hereto:

          Each amendment as shown on the index page is amended to
          replace   the  existing  item,  statement  or   exhibit
          reflected in the December 31, 1997 Form 10-K filing.

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

                                            UNITED INCOME, INC.

                                                (Registrant)



                                   By:  /s/ James E. Melville
                                        James E. Melville
                                        President and Chief
                                        Operating Officer
                                   
                                   
                                   
                                   By:  /s/ Theodore C. Miller
                                        Senior Vice President and
                                        Chief Financial Officer
                                   
Date:     June 1, 1998

                                   1                                   
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                            UNITED INCOME, INC.
                                     
                                FORM 10-K/A
                                     
                                   INDEX





PART I

ITEM 1.   BUSINESS

               Products                                              3

               Marketing                                             4


PART II

ITEM 7.   MANAGEMENT'S  DISCUSSION  AND   ANALYSIS   OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS           5-18



                                    2
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PART I, ITEM 1, BUSINESS, PRODUCTS OF UII SHOULD BE AMENDED AS FOLLOWS:

PRODUCTS

The  Company's portfolio consists of two universal life insurance products.
Universal  life  insurance is a form of permanent  life insurance  that  is
characterized  by  its  flexible  premiums,  flexible  face  amounts,   and
unbundled pricing factors.  The primary universal life insurance product is
referred  to  as  the "Century 2000".  This product was introduced  to  the
marketing  force  in  1993  and  has  become  the  cornerstone  of  current
marketing.  This product has a minimum face amount of $25,000 and currently
credits  6% interest with a guaranteed rate of 4.5% in the first  20  years
and  3% in years 21 and greater.  The policy values are subject to a  $4.50
monthly  policy fee, an administrative load and a premium load of  6.5%  in
all years. The premium load is a general expense charge that is added to  a
policy's  net  premium to cover the insurer's cost of doing  business.  The
administrative  load and surrender charge are based on the issue  age,  sex
and  rating class of the policy.  A surrender charge is effective  for  the
first  14 policy years.  In general, the surrender charge is very  high  in
the  first  couple  of years and then declines to zero at  the  end  of  14
years..   Policy  loans  are  available at 7%  interest  in  advance.   The
policy's accumulated fund will be credited the guaranteed interest rate  in
relation to the amount of the policy loan.

The second universal life product referred to as the "UL90A", has a minimum
face amount of $25,000.  The administrative load is based on the issue age,
sex and rating class of the policy.  Policy fees vary from $1 per month  in
the  first  year to $4 per month in the second and third years and  $3  per
month each year thereafter.  The UL90A currently credits 5.5% interest with
a  4.5%  guaranteed  interest  rate.  Partial  withdrawals,  subject  to  a
remaining minimum $500 cash surrender value and a $25 fee, are allowed once
a year after the first duration.  Policy loans are available at 7% interest
in  advance.  The policy's accumulated fund will be credited the guaranteed
interest  rate  in  relation to the amount of the policy  loan.   Surrender
charges  are based on a percentage of target premium starting at  120%  for
years 1-5 then grading downward to zero in year 15.  This policy contains a
guaranteed  interest  credit bonus for the long  term  policyholder.   From
years 10 through 20, additional interest bonuses are earned with a total in
the  twentieth  year of 1.375%.  The bonus is calculated  from  the  policy
issue date and is contractually guaranteed.

The  Company's  actual  experience  for earned  interest,  persistency  and
mortality  vary from the assumptions applied to pricing and for determining
premiums.  Accordingly, differences between the Company's actual experience
and  those assumptions applied may impact the profitability of the Company.
The  minimum interest spread between earned and credited rates is 1% on the
"Century  2000"  universal life insurance product.   The  Company  monitors
investment  yields, and when necessary adjusts credited interest  rates  on
its  insurance  products to preserve targeted interest  spreads.   Credited
rates  are  reviewed  and  established by the Board  of  Directors  of  the
respective life insurance affiliates.

The premium rates are competitive with other insurers doing business in the
states in which the Company is marketing its products.

The  Company  markets  other  products, none of  which  is  significant  to
operations.  The Company has a variety of policies in force different  from
those which are currently being marketed.  The previously defined Universal
life  and  interest sensitive whole life, which is a type of  indeterminate
premium life insurance which provides that the policy's cash value  may  be
greater  than that guaranteed if changing assumptions warrant an  increase,
account for approximately 46% of the insurance in force.  Approximately 29%
of  the  insurance  in  force is participating business,  which  represents
policies  under  which  the policyowner shares in the  insurance  companies
divisible surplus.  The Company's average persistency rate for its policies
in  force  for  1997 and 1996 has been 89.4% and 87.9%, respectively.   The
Company does not anticipate any material fluctuations in these rates in the
future that may result from competition.

Interest-sensitive life insurance products have characteristics similar  to
annuities with respect to the crediting of a current rate of interest at or
above  a  guaranteed  minimum  rate and the use  of  surrender  charges  to
discourage  premature withdrawal of cash values. Universal  life  insurance
policies  also  involve variable premium charges against the policyholder's
account  balance  for  the  cost of insurance and administrative  expenses.
Interest-sensitive  whole  life  products generally  have  fixed  premiums.
Interest-sensitive life insurance products are designed with a  combination
of  front-end  loads,  periodic variable charges,  and  back-end  loads  or

                                   3
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surrender  charges. Traditional life insurance products have  premiums  and
benefits  predetermined at issue; the premiums are set at levels  that  are
designed  to  exceed expected policyholder benefits and  Company  expenses.
Participating business is traditional life insurance with the added feature
of  an  annual  return of a portion of the premium paid by the policyholder
through  a  policyholder dividend.  This dividend is set  annually  by  the
Board   of   Directors  of  each  insurance  company  and   is   completely
discretionary.


PART I, ITEM 1, BUSINESS, MARKETING OF UII SHOULD BE AMENDED AS FOLLOWS:

MARKETING

The  Company  markets  its products through separate  and  distinct  agency
forces.  The Company has approximately 45 captive agents who actively write
new  business,  and  15  independent agents  who  primarily  service  their
existing   customers.   Captive  agents  work  under  an  ordinary   agency
distribution  system  which relies on career agents  to  sell  and  service
insurance  and  annuity policies of a single company.   Independent  agents
work  under  a  brokerage distribution system which relies  on  brokers  to
distribute  the  insurance and annuity policies of more than  one  company.
Both  captive  and independent agents work on a contractual basis  and  are
paid  commissions on a percentage of premiums written.  No individual sales
agent accounted for over 10% of the Company's premium volume in 1997.   The
Company's sales agents do not have the power to bind the Company.

Marketing  is  based  on  referrals from  existing  policyholders  and  new
prospect  lists obtained from newly recruited sales agents.  Recruiting  of
sales  agents is based on referrals from existing agents and the invitation
to  attend  our Company's comprehensive training school. The  industry  has
experienced  a  downward  trend in the total  number  of  agents  who  sell
insurance  products,  and  competition for  the  top  sales  producers  has
intensified.   As this trend appears to continue, the recruiting  focus  of
the  Company  has been on introducing quality individuals to the  insurance
industry through an extensive internal training program.  The Company feels
this  approach is conducive to the mutual success of our new  recruits  and
the  Company  as  these  recruits market our products  in  a  professional,
company structured manner.

New  sales  are  marketed by UG and USA through their agency  forces  using
contemporary   sales  approaches  with  personal  computer   illustrations.
Current marketing efforts are primarily focused on the Midwest region.

USA is licensed in Illinois, Indiana and Ohio.  During 1997, Ohio accounted
for 99% of USA's direct premiums collected.

ABE  is  licensed  in  Alabama, Arizona, Illinois, Indiana,  Louisiana  and
Missouri.   During 1997, Illinois and Indiana accounted for  46%  and  32%,
respectively of ABE's direct premiums collected.

APPL   is  licensed  in  Alabama,  Arizona,  Arkansas,  Colorado,  Georgia,
Illinois,   Indiana,   Kansas,  Kentucky,  Louisiana,  Missouri,   Montana,
Nebraska,  Ohio,  Oklahoma, Pennsylvania, Tennessee, Utah,  Virginia,  West
Virginia  and  Wyoming.  During 1997, West Virginia accounted  for  95%  of
APPL's direct premiums collected.

UG  is licensed in Alabama, Arizona, Arkansas, Colorado, Delaware, Florida,
Georgia,  Idaho,  Illinois,  Indiana, Iowa,  Kansas,  Kentucky,  Louisiana,
Massachusetts,   Michigan,  Minnesota,  Mississippi,   Missouri,   Montana,
Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma,
Oregon,   Pennsylvania,  Rhode  Island,  South  Carolina,   South   Dakota,
Tennessee,  Texas, Utah, Virginia, Washington, West Virginia and Wisconsin.
During  1997,  Illinois accounted for 33%, and Ohio accounted  for  14%  of
direct  premiums collected.  No other state accounted for more than  7%  of
direct premiums collected in 1997.

In  1997 $38,471,452 of total direct premium was written by USA, ABE,  APPL
and  UG.   Ohio  accounted for 35% , Illinois accounted for 21%,  and  West
Virginia accounted for 10% of total direct premiums collected.

New  business production has decreased 15% from 1995 to 1996 and  43%  from
1996  to  1997.   Several  factors have had a  significant  impact  on  new
business  production.   Over  the  last  two  years  there  has  been   the
possibility  of  a  change in control of UTI.  In  September  of  1996,  an
agreement  was reached effecting a change in control of UTI to an unrelated
party.   The transaction did not materialize.  At this writing negotiations

                               4
<PAGE>

are  progressing with a different unrelated party for change in control  of
UTI.   Please  refer to the Notes to the Consolidated Financial  Statements
for  additional  information.  The possible changes  in  control,  and  the
uncertainty  surrounding  each potential event,  have  hurt  the  insurance
Companies'  ability  to attract and maintain sales  agents.   In  addition,
increased   competition   for  consumer  dollars   from   other   financial
institutions,  product Illustration guideline changes  by  State  Insurance
Departments,  and a decrease in the total number of insurance sales  agents
in the industry, have all had an impact, given the relatively small size of
the Company.

Management recognizes the aforementioned challenges and is responding.  The
potential  change  in control of the Company is progressing,  bringing  the
possibility  for  future  growth,  efforts  are  being  made  to  introduce
additional  products,  and  the  recruitment  of  quality  individuals  for
intensive  sales  training,  are directed at  reversing  current  marketing
trends.



AMEND PART II , ITEM 7 AS FOLLOWS:

UII MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997


At  December 31, 1997 and 1996, the balance sheet reflects the  assets  and
liabilities  of UII and its 47% equity interest in UTG.  The statements  of
operations and statements of cash flows presented for 1997, 1996  and  1995
include the operating results of UII.


RESULTS OF OPERATIONS

1997COMPARED TO 1996

(a)  REVENUES

The  Company's source of revenues is derived from service fee income  which
is  provided  via  a  service agreement with USA.   The  service  agreement
between UII and USA is to provide USA with certain administrative services.
Pursuant to the terms of the agreement, USA pays UII monthly fees equal  to
22% of the amount of collected first year statutory premiums, 20% in second
year  and 6% of the renewal premiums in years three and after.  The Company
recognized  service agreement income of $989,295, $1,567,891 and $2,015,325
in 1997, 1996 and 1995, respectively, based on statutory collected premiums
in  USA of $10,300,332, $13,298,597, and $14,128,199 in 1997,1996 and 1995,
respectively.   First year premium revenues of USA decreased  54%  in  1997
from  1996.  This decline is primarily related to the potential  change  in
control  of  UTI  over  the last two years to two different  parties.   The
possible  changes  and resulting uncertainties have hurt USA's  ability  to
recruit   and  maintain  sales  agents.   Management  expects  first   year
production  to decline slightly in 1998, and then growth is anticipated  in
subsequent  periods following the resolution of the change  in  control  of
UTI.

The  Company holds $864,100 of notes receivable from affiliates.  The notes
receivable from affiliates consists of three separate notes.  The  $700,000
note bears interest at the rate of 1% above the variable per annum rate  of
interest  most recently published by the Wall Street Journal as  the  prime
rate.  Interest is payable quarterly with principal due at maturity on  May
8, 2006.  In February 1996, FCC borrowed an additional $150,000 from UII to
provide additional cash for liquidity.  The note bears interest at the rate
of  1%  over  prime as published in the Wall Street Journal, with  interest
payments due quarterly and principal due upon maturity of the note on  June
1,  1999.  The remaining $14,100 are 20 year notes of UTG with interest  at
8.5%  payable  semi-annually.  At current interest levels, the  notes  will
generate approximately $80,000 annually.

                                  5
<PAGE>
(b)  EXPENSES

The  Company  has a sub-contract service agreement with United Trust,  Inc.
("UTI")  for  certain administrative services. Through its  facilities  and
personnel,  UTI  performs  such services as may  be  mutually  agreed  upon
between the parties.  The fees are based on 60% of the fees paid to UII  by
USA.   The  Company  has incurred $744,000, $1,241,000  and  $1,809,000  in
service fee expense in 1997, 1996, and 1995, respectively.

Interest expense of $85,000, $84,000 and $89,000 was incurred in 1997, 1996
and  1995, respectively.  The interest expense is directly attributable  to
the  convertible debentures.  The Debentures bear interest  at  a  variable
rate  equal to one percentage point above the prime rate published  in  the
Wall Street Journal from time to time.


(c)  EQUITY IN LOSS OF INVESTEES

Equity in earnings of investees represents UII's 47% share of the net  loss
of  UTG.   Included with this filing as Exhibit 99(d) are audited financial
statements  of UTG.  Following is a discussion of the results of operations
of UTG:


    Revenues of UTG
    
    Premiums  and  policy  fee  revenues, net of reinsurance  premiums  and
    policy  fees, decreased 7% when comparing 1997 to 1996.   UTG  and  its
    subsidiaries   currently  writes  little  new   traditional   business,
    consequently,  traditional  premiums will decrease  as  the  amount  of
    traditional   business  in-force  decreases.   Collected  premiums   on
    universal  life  and interest sensitive products is  not  reflected  in
    premiums  and  policy  revenues because Generally  Accepted  Accounting
    Principles ("GAAP") requires that premiums collected on these types  of
    products be treated as deposit liabilities rather than revenue.  Unless
    UTG  and  its  subsidiaries' acquires a block of in-force  business  or
    marketing  changes its focus to traditional business,  premium  revenue
    will continue to decline.
    
    Another  cause for the decrease in premium revenues is related  to  the
    potential  change  in control of UTI over the last  two  years  to  two
    different  parties.   During September of 1996, it was  announced  that
    control  of  UTI would pass to an unrelated party, but  the  change  in
    control  did  not  materialize.   At  this  writing,  negotiations  are
    progressing with a different unrelated party for the change in  control
    of  UTI.   Please  refer  to  the Notes to the  Consolidated  Financial
    Statements of UTG for additional information.  The possible changes and
    resulting  uncertainties have hurt the insurance companies' ability  to
    recruit and maintain sales agents.
    
    New  business  production decreased significantly  over  the  last  two
    years.   New  business  production decreased  43%  or  $3,935,000  when
    comparing 1997 to 1996.  In recent years, the insurance industry  as  a
    whole has experienced a decline in the total number of agents who  sell
    insurance  products,  therefore competition  has  intensified  for  top
    producing  sales agents.  The relatively small size of  our  companies,
    and  the resulting limitations, have made it challenging to compete  in
    this area.
    
    A  positive impact on premium income is the improvement of persistency.
    Persistency is a measure of insurance in force retained in relation  to
    the  previous year.  The average persistency rate for all  policies  in
    force  for  1997  and  1996  has been approximately  89.4%  and  87.9%,
    respectively.
    
    Net  investment income decreased 6% when comparing 1997 to  1996.   The
    decrease  relates to the decrease in invested assets from a coinsurance
    agreement.   UTG's insurance subsidiary UG entered into  a  coinsurance
    agreement with First International Life Insurance Company ("FILIC"), an
    unrelated party, as of September 30, 1996.  During 1997, FILIC  changed
    its  name  to Park Avenue Life Insurance Company ("PALIC").  Under  the
    terms of the agreement, UG ceded to FILIC substantially all of its paid-
    up life insurance policies.  Paid-up life insurance generally refers to
    non-premium  paying  life  insurance  policies.   At  closing  of   the
    transaction, UG received a coinsurance credit of $28,318,000 for policy
    liabilities  covered under the agreement.  UG transferred assets  equal
    to  the  credit  received.  This  transfer  included  policy  loans  of
    $2,855,000 associated with policies under the agreement and a net  cash
    transfer of $19,088,000, after deducting the ceding commission  due  UG
    of  $6,375,000.   To provide the cash required to be transferred  under
    the agreement, UG sold $18,737,000 of fixed maturity investments.

                                    6
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    The overall investment yields for 1997, 1996 and 1995, are 7.25%, 7.31%
    and  7.14%, respectively.  Since 1995 investment yield improved due  to
    the  fixed  maturity investments.  Cash generated  from  the  sales  of
    universal life insurance products, has been invested primarily  in  our
    fixed maturity portfolio.
    
    The  investments are generally managed to match related  insurance  and
    policyholder  liabilities.  The comparison of  investment  return  with
    insurance or investment product crediting rates establishes an interest
    spread.  The minimum interest spread between earned and credited  rates
    is  1%  on  the "Century 2000" universal life insurance product,  which
    currently  is  the  primary sales product.  UTG and  its  subsidiaries'
    monitor investment yields, and when necessary adjusts credited interest
    rates  on its insurance products to preserve targeted interest spreads.
    It  is  expected that monitoring of the interest spreads by  management
    will  provide the necessary margin to adequately provide for associated
    costs on the insurance policies the Company currently has in force  and
    will write in the future.
    
    Realized investment losses were $279,000 and $466,000 in 1997 and 1996,
    respectively.  UTG and its subsidiaries sold two foreclosed real estate
    properties  that resulted in approximately $357,000 in realized  losses
    in  1996.   There  were other gains and losses during the  period  that
    comprised  the remaining amount reported but were immaterial in  nature
    on an individual basis.
    
    
    Expenses of UTG
    
    Life benefits, net of reinsurance benefits and claims, decreased 11% in
    1997 as compared to 1996.  The decrease in premium revenues resulted in
    lower  benefit  reserve  increases in 1997.  In addition,  policyholder
    benefits  decreased  due  to  a decrease in  death  benefit  claims  of
    $162,000.
    
    In  1994, UG became aware that certain new insurance business was being
    solicited by certain agents and issued to individuals considered to  be
    not  insurable  by  UTG  and its subsidiaries' standards.   These  non-
    standard policies had a face amount of $22,700,000 and represented  1/2
    of 1% of the insurance in-force in 1994.  Management's initial analysis
    indicated  that  expected  death claims on the  business  in-force  was
    adequate  in  relation  to  mortality  assumptions  inherent   in   the
    calculation of statutory reserves.  Nevertheless, management determined
    it  was in the best interest of UTG and its subsidiaries' to repurchase
    as many of the non-standard policies as possible.  Through December 31,
    1996, the UTG and its subsidiaries' spent approximately $7,099,000  for
    the  settlement of non-standard policies and for the legal  defense  of
    related litigation.  In relation to settlement of non-standard policies
    UTG  and  its  subsidiaries' incurred life benefit costs of $3,307,000,
    and $720,000 in 1996 and 1995, respectively.  UTG and its subsidiaries'
    incurred  legal  costs  of  $906,000 and $687,000  in  1996  and  1995,
    respectively.   All  policies associated  with  this  issue  have  been
    settled  as  of  December 31, 1996.  Therefore, expense reductions  for
    1997 would follow.
    
    Commissions  and  amortization  of deferred  policy  acquisition  costs
    decreased  14% in 1997 compared to 1996. The decrease is due  primarily
    due  to a reduction in commissions paid.  Commissions decreased 19%  in
    1997  compared  to 1996.  The decrease in commissions was  due  to  the
    decline  in  new  business production.  There is a direct  relationship
    premium revenues and commission expense.  First year premium production
    decreased  43% and first year commissions decreased 33% when  comparing
    1997  to  1996.   Amortization  of deferred  policy  acquisition  costs
    decreased  6%  in  1997  compared  to 1996.   Management  would  expect
    commissions  and amortization of deferred policy acquisition  costs  to
    decrease in the future if premium revenues continue to decline.
    
    Amortization  of  cost  of insurance acquired  decreased  56%  in  1997
    compared  to 1996.  Cost of insurance acquired is amortized in relation
    to expected future profits, including direct charge-offs for any excess
    of  the  unamortized asset over the projected future profits.  UTG  and
    its  subsidiaries'  did  not have any charge-offs  during  the  periods
    covered  by  this  report.   The decrease in  amortization  during  the
    current  period  is  a  normal fluctuation due to the  expected  future
    profits.   Amortization of cost of insurance acquired  is  particularly
    sensitive to changes in persistency of certain blocks of insurance  in-
    force.   The improvement of persistency during the year had a  positive
    impact on amortization of cost of insurance acquired.  Persistency is a
    measure  of  insurance in force retained in relation  to  the  previous
    year.  The average persistency rate for all policies in force for  1997
    and 1996 has been approximately 89.4% and 87.9%, respectively.

                                  7
<PAGE>
    
    Operating  expenses  decreased  21% in  1997  compared  to  1996.   The
    decrease  in  operating expenses is directly related to  settlement  of
    certain  litigation  in  December of 1996.  UTG and  its  subsidiaries'
    incurred  legal  costs of $0, $906,000 and $687,000 in 1997,  1996  and
    1995,  respectively in relation to the settlement of  the  non-standard
    insurance policies.
    
    Interest expense decreased 4% in 1997 compared to 1996.  Since December
    31,  1996,  notes  payable decreased approximately  $758,000.   Average
    outstanding indebtedness was $19,461,000 with an average cost  of  8.6%
    in 1997 compared to average outstanding indebtedness of 20,652,000 with
    an average cost of 8.5% in 1996.  In March 1997, the base interest rate
    for  most of the notes payable increased a quarter of a point. The base
    rate  is  defined  as  the floating daily, variable  rate  of  interest
    determined  and  announced by First of America Bank.  Please  refer  to
    Note  12  "Notes  Payable" in the Notes to the  Consolidated  Financial
    Statements of UTG for more information.
    
    
    Net loss of UTG
    
    UTG  had  a  net  loss of $923,000 in 1997 compared to a  net  loss  of
    $1,661,000  in  1996.   The  improvement is  directly  related  to  the
    decrease  in life benefits and operating expenses primarily  associated
    with  the  1996 settlement and other related costs of the  non-standard
    life insurance policies.


(d) NET LOSS

The  Company  recorded a net loss of $79,000 for 1997 compared to  $319,000
for the same period one year ago.  The net loss is from the equity share of
UTG's operating results.


RESULTS OF OPERATIONS

1996 COMPARED TO 1995

(a)  REVENUES

The  Company's source of revenues is derived from service fee income  which
is  provided  via  a  service agreement with USA.   The  service  agreement
between UII and USA is to provide USA with certain administrative services.
The  fees  are  based  on  a percentage of premium  revenue  of  USA.   The
percentages  are  applied  to  both first  year  and  renewal  premiums  at
different rates.

The  Company holds $864,100 of notes receivable from affiliates.  The notes
receivable from affiliates consists of three separate notes.  The  $700,000
note bears interest at the rate of 1% above the variable per annum rate  of
interest  most recently published by the Wall Street Journal as  the  prime
rate.  Interest is payable quarterly with principal due at maturity on  May
8, 2006.  In February 1996, FCC borrowed an additional $150,000 from UII to
provide additional cash for liquidity.  The note bears interest at the rate
of  1%  over  prime as published in the Wall Street Journal, with  interest
payments due quarterly and principal due upon maturity of the note on  June
1,  1999.  The remaining $14,100 are 20 year notes of UTG with interest  at
8.5%  payable  semi-annually.  At current interest levels, the  notes  will
generate approximately $80,000 annually.

                                8
<PAGE>
(b)  EXPENSES

The  Company  has a sub-contract service agreement with United Trust,  Inc.
("UTI")  for  certain administrative services.  Through its facilities  and
personnel,  UTI  performs  such services as may  be  mutually  agreed  upon
between  the parties.  The fees are based on a percentage of the fees  paid
to  UII  by  USA.   The  Company has incurred $1,241,000,  $1,809,000,  and
$1,210,000 in service fee expense in 1996, 1995, and 1994, respectively.

Interest expense of $84,000, $89,000 and $59,000 was incurred in 1996, 1995
and  1994, respectively.  The interest expense is directly attributable  to
the  convertible debentures.  The Debentures bear interest  at  a  variable
rate  equal to one percentage point above the prime rate published  in  the
Wall Street Journal from time to time.


(c)  EQUITY IN LOSS OF INVESTEES

Equity in earnings of investees represents UII's 47% share of the net  loss
of  UTG.   Included with this filing as Exhibit 99(d) are audited financial
statements  of UTG.  Following is a discussion of the results of operations
of UTG:

    Revenues of UTG
    
    Premium  and policy fee revenues, net of reinsurance premium, decreased
    7%  when  comparing  1996 to 1995. The decrease in  premium  income  is
    primarily attributed to a 15% decrease in new business production.  UTG
    and  its  subsidiaries' changed its marketing strategy from traditional
    life   insurance   products  to  universal  life  insurance   products.
    Universal life and interest sensitive products contribute only the risk
    charge  to  premium  income,  however  traditional  insurance  products
    contribute  all  monies  received  to  premium  income.   UTG  and  its
    subsidiaries'  changed  its marketing strategy  to  remain  competitive
    based on consumer demand.
    
    In addition, UTG and its subsidiaries' changed its focus from primarily
    a  broker  agency  distribution  system  to  a  captive  agent  system.
    Business written by the broker agency force, in recent years,  did  not
    meet  UTG and its subsidiaries' expectations.  With the change in focus
    of  distribution  systems, most of the broker agents  were  terminated.
    (The  termination  of  the broker agency force caused  a  non-recurring
    write  down  of the value of agency force asset in 1995, see discussion
    of  amortization of agency force for further details.).  The change  in
    distribution  systems effectively reduced the total  number  of  agents
    representing and producing business.  Broker agents sell insurance  and
    related  products for several companies.  Captive agents sell for  only
    one company.
    
    A  positive impact on premium income is the improvement of persistency.
    Persistency is a measure of insurance in force retained in relation  to
    the  previous year.  Average persistency rate for all policies in force
    for 1996 and 1995 has been approximately 87.9% and 87.3%, respectively.
    
    Net  investment income increased 3% when comparing 1996 to  1995.   The
    overall  investment  yields  for 1996 and 1995  are  7.31%  and  7.14%,
    respectively.   The  improvement  in  investment  yield  is   primarily
    attributed  to  fixed maturity investments.  Cash  generated  from  the
    sales of universal life insurance products, has been invested primarily
    in our fixed investment portfolio.
    
    The  investments are generally managed to match related  insurance  and
    policyholder  liabilities.  The comparison of  investment  return  with
    insurance or investment product crediting rates establishes an interest
    spread.  The minimum interest spread between earned and credited  rates
    is  1%  on  the "Century 2000" universal life insurance product,  which
    currently  is  the  primary sales product.  UTG and  its  subsidiaries'
    monitors   investment  yields,  and  when  necessary  adjusts  credited
    interest  rates on its insurance products to preserve targeted interest
    spreads.   It  is expected that monitoring of the interest  spreads  by
    management will provide the necessary margin to adequately provide  for
    associated  costs  on the insurance policies UTG and its  subsidiaries'
    currently has in force and will write in the future.

                                    9
<PAGE>

    Realized investment losses were $466,000 and $114,000 in 1996 and 1995,
    respectively.   UTG  and  its subsidiaries' sold  two  foreclosed  real
    estate  properties that resulted in approximately $357,000 in  realized
    losses  in  1996.  There were other gains and losses during the  period
    that  comprised  the remaining amount reported but were  immaterial  in
    nature on an individual basis.
    
    
    Expenses of UTG
    
    Life  benefits,  net of reinsurance benefits and claims,  increased  2%
    compared  to  1995.  The increase in life benefits is due primarily  to
    settlement expenses discussed in the following paragraph:
    
    In  1994, UG became aware that certain new insurance business was being
    solicited by certain agents and issued to individuals considered to  be
    not  insurable  by  UTG  and its subsidiaries' standards.   These  non-
    standard policies had a face amount of $22,700,000 and represented  1/2
    of 1% of the insurance in-force in 1994.  Management's initial analysis
    indicated  that  expected  death claims on the  business  in-force  was
    adequate  in  relation  to  mortality  assumptions  inherent   in   the
    calculation of statutory reserves.  Nevertheless, management determined
    it  was in the best interest of UTG and its subsidiaries' to repurchase
    as many of the non-standard policies as possible.  Through December 31,
    1996, UTG and its subsidiaries' spent approximately $7,099,000 for  the
    settlement  of  non-standard policies and  for  the  legal  defense  of
    related litigation.  In relation to settlement of non-standard policies
    UTG  and  its  subsidiaries incurred life benefits  of  $3,307,000  and
    $720,000  in  1996  and 1995, respectively.  UTG and its  subsidiaries'
    incurred  legal  costs  of  $906,000 and $687,000  in  1996  and  1995,
    respectively.   All the policies associated with this issue  have  been
    settled  as  of December 31, 1996.  UTG and its insurance subsidiaries'
    has  approximately $3,742,000 of insurance in-force and  $1,871,000  of
    reserves  from  the  issuance of paid-up life  insurance  policies  for
    settlement  of  matters related to the original non-standard  policies.
    Management  believes the reserves are adequate in relation to  expected
    mortality on this block of in-force.
    
    Commissions  and  amortization  of deferred  policy  acquisition  costs
    decreased  14%  in  1996 compared to 1995. The decrease  is  due  to  a
    decrease  in  commissions expense.  Commissions decreased 15%  in  1996
    compared  to 1995.  The decrease in commissions was due to the  decline
    in  new  business  production.  There is a direct relationship  between
    premium   revenues  and  commission  expenses.   First   year   premium
    production decreased 15% and first year commissions decreased 32%  when
    comparing  1996  to 1995.  Amortization of deferred policy  acquisition
    costs  decreased  12%  in  1996 compared to 1995.   Management  expects
    commissions  and amortization of deferred policy acquisition  costs  to
    decrease in the future if premium revenues continue to decline.
    
    Amortization  of  cost  of insurance acquired  increased  26%  in  1996
    compared  to 1995.  Cost of insurance acquired is amortized in relation
    to expected future profits, including direct charge-offs for any excess
    of  the  unamortized asset over the projected future profits.  UTG  and
    its  subsidiaries'  did  not have any charge-offs  during  the  periods
    covered  by  this  report.   The increase in  amortization  during  the
    current  period  is  a  normal fluctuation due to the  expected  future
    profits.   Amortization of cost of insurance acquired  is  particularly
    sensitive to changes in persistency of certain blocks of insurance  in-
    force.
    
    UTG  and its subsidiaries' reported a non-recurring write down of value
    of  agency  force of $0 and $8,297,000 in 1996 and 1995,  respectively.
    The  write  down  was  directly related to the change  in  distribution
    systems.  UTG and its subsidiaries' changed its focus from primarily  a
    broker  agency distribution system to a captive agent system.  Business
    produced  by  the  broker agency force in recent  years  did  not  meet
    expectations.   With the change in focus of distribution systems,  most
    of  the broker agents were terminated.  The termination of most of  the
    agents  involved  in the broker agency force caused management  to  re-
    evaluate  and  write-off the value of the agency force carried  on  the
    balance sheet.
                                    10
<PAGE>
    Operating expenses increased 6% in 1996 compared to 1995.  The  primary
    factor  that  caused  the increase in operating  expenses  is  directly
    related   to  increased  legal  costs  and  reserves  established   for
    litigation.   The legal costs are due to the settlement of non-standard
    insurance  policies as was discussed in the review  of  life  benefits.
    UTG and its subsidiaries' incurred legal costs of $906,000 and $687,000
    in 1996 and 1995, respectively in relation to the settlement of the non-
    standard insurance policies.
    
    Interest  expense  decreased  12% in  1996  compared  to  1995.   Since
    December  31,  1995,  notes payable decreased approximately  $1,623,000
    that has directly attributed to the decrease in interest expense during
    1996.   Interest  expense  was  also  reduced,  as  a  result  of   the
    refinancing  of  the senior debt under which the new interest  rate  is
    more  favorable.   Please  refer to Note  12  "Notes  Payable"  of  the
    Consolidated  Notes  to  the  Financial  Statements  of  UTG  for  more
    information on this matter.
    
    
    Net loss of UTG
    
    UTG and its subsidiaries' had a net loss of $1,661,000 in 1996 compared
    to  a  net  loss  of  $5,321,000 in 1995.  The  net  loss  in  1996  is
    attributed  to  the  increase in life benefits net of  reinsurance  and
    operating  expenses  primarily associated  with  settlement  and  other
    related costs of the non-standard life insurance policies.
    
    
(d) NET LOSS

The Company recorded a net loss of $319,000 for 1996 compared to a net loss
of  $2,148,000 for the same period one year ago.  The net loss is from  the
equity share of UTG's operating results.


FINANCIAL CONDITION

The Company owns 47% equity interest in UTG which controls total assets  of
approximately  $348,000,000.   Audited  financial  statements  of  UTG  are
presented as Exhibit 99(d) of this filing.


LIQUIDITY AND CAPITAL RESOURCES

Since  UII  is  a holding company, funds required to meet its debt  service
requirements  and other expenses are primarily provided by its  affiliates.
UII's  cash flow is dependent on revenues from a management agreement  with
USA  and  its  earnings received on invested assets and cash balances.   At
December  31, 1997,substantially all of the shareholders equity  represents
investment  in  affiliates.   UII does not  have  significant  day  to  day
operations  of  its own. Cash requirements of UII primarily relate  to  the
payment  of interest on its convertible debentures and expenses related  to
maintaining the Company as a corporation in good standing with the  various
regulatory bodies which govern corporations in the jurisdictions where  the
Company  does  business.  The payment of cash dividends to shareholders  is
not  legally restricted.  However, insurance company dividend payments  are
regulated by the state insurance department where the company is domiciled.
UTI  is the ultimate parent of UG through ownership of several intermediary
holding  companies.  UG can not pay a dividend directly to UII due  to  the
ownership  structure.  Please refer to Note 1 of the Notes to the Financial
Statements.   UG's dividend limitations are described below without  effect
of  the  ownership structure.  Please refer to Note 1 of the Notes  to  the
Financial  Statements.   UG's  dividend  limitations  are  described  below
without effect of the ownership structure.

Ohio domiciled insurance companies require five days prior notification  to
the  insurance  commissioner  for  the payment  of  an  ordinary  dividend.
Ordinary  dividends are defined as the greater of:  a) prior year statutory
earnings  or b) 10% of statutory capital and surplus.  For the  year  ended
December  31, 1997, UG had a statutory gain from operations of  $1,779,000.
At  December  31,  1997,  UG  statutory capital  and  surplus  amounted  to
$10,997,000.   Extraordinary  dividends  (amounts  in  excess  of  ordinary
dividend  limitations) require prior approval of the insurance commissioner
and are not restricted to a specific calculation.

                                  11
<PAGE>

The  Company  currently  has $711,000 in cash and  cash  equivalents.   The
Company  holds  one  mortgage loan.  Operating activities  of  the  Company
produced  cash flows of $324,097, $255,675 and $326,905 in 1997,  1996  and
1995, respectively.  The Company had uses of cash from investing activities
of  $50,764,  $180,402 and $192,801 in 1997, 1996 and  1995,  respectively.
Cash  flows  from financing activities were ($2,112), $33 and $0  in  1997,
1996 and 1995, respectively.

In  early  1994,  UII received $902,300 from the sale of  Debentures.   The
Debentures  were  issued pursuant to an indenture between the  Company  and
First  of  America  Bank  -  Southeast Michigan,  N.A.,  as  trustee.   The
Debentures are general unsecured obligations of UII, subordinate  in  right
of  payment  to any existing or future senior debt of UII.  The  Debentures
are exchangeable and transferable, and are convertible at any time prior to
March  31,  1999 into UII's Common Stock at a conversion price of  $25  per
share,  subject  to  adjustment in certain  events.   The  Debentures  bear
interest  from March 31, 1994, payable quarterly, at a variable rate  equal
to  one  percentage point above the prime rate published in the Wall Street
Journal  from time to time.  The prime rate was 8.25% during first  quarter
1997, increasing to 8.5% April 1, 1997, and has remained unchanged.  On  or
after March 31, 1999, the Debentures will be redeemable at UII's option, in
whole  or  in  part,  at redemption prices declining  from  103%  of  their
principal  amount.   No  sinking fund will be  established  to  redeem  the
Debentures.  The Debentures will mature on March 31, 2004.  The  Debentures
are  not  listed on any national securities exchange or the NASDAQ National
Market System.

The  Company  is  not  aware of any litigation that will  have  a  material
adverse effect on the financial position of the Company.  In addition,  the
Company  does  not believe that the regulatory initiatives currently  under
consideration  by various regulatory agencies will have a material  adverse
impact on the Company.  The Company is not aware of any material pending or
threatened  regulatory action with respect to the Company  or  any  of  its
affiliates.  The Company does not believe that any insurance guaranty  fund
assessments will be materially different from amounts already provided  for
in the financial statements.

Management believes that the overall sources of liquidity available to  the
Company will be more than sufficient to satisfy its financial obligations.


REGULATORY ENVIRONMENT

The  Company's insurance affiliates are assessed contributions by life  and
health   guaranty   associations  in  almost  all   states   to   indemnify
policyholders  of  failed companies.  In several  states  the  company  may
reduce  premium taxes paid to recover a portion of assessments paid to  the
states'  guaranty fund association.  This right of "offset" may come  under
review by the various states, and the company cannot predict whether and to
what extent legislative initiatives may affect this right to offset.  Also,
some  state  guaranty associations have adjusted the basis  by  which  they
assess  the  cost  of  insolvencies to individual companies.   The  Company
believes  that  its  reserve  for  future  guaranty  fund  assessments   is
sufficient to provide for assessments related to known insolvencies.   This
reserve  is based upon management's current expectation of the availability
of  this  right  of  offset, known insolvencies  and  state  guaranty  fund
assessment  bases.  However, changes in the basis whereby  assessments  are
charged  to  individual companies and changes in the  availability  of  the
right  to  offset assessments against premium tax payments could materially
affect the company's results.

Currently,  the  Company's insurance affiliates are subject  to  government
regulation  in  each  of the states in which they conduct  business.   Such
regulation  is  vested in state agencies having broad administrative  power
dealing with all aspects of the insurance business, including the power to:
(i)  grant  and  revoke licenses to transact business;  (ii)  regulate  and
supervise  trade  practices and market conduct;  (iii)  establish  guaranty
associations;   (iv)  license  agents;  (v)  approve  policy  forms;   (vi)
approve  premium rates for some lines of business;  (vii) establish reserve
requirements;  (viii) prescribe the form and content of required  financial
statements and reports;  (ix) determine the reasonableness and adequacy  of
statutory  capital and surplus; and  (x) regulate the type  and  amount  of
permitted  investments.  Insurance regulation is concerned  primarily  with
the  protection of policyholders.  The Company cannot predict the  form  of
any  future  proposals or regulation.  The Company's insurance  affiliates,
USA,  UG,  APPL  and ABE are domiciled in the states of  Ohio,  Ohio,  West
Virginia and Illinois, respectively.

                                  12
<PAGE>

The  insurance regulatory framework continues to be scrutinized by  various
states,  the  federal government and the National Association of  Insurance
Commissioners  ("NAIC").   The  NAIC is  an  association  whose  membership
consists  of the insurance commissioners or their designees of the  various
states.   The  NAIC  has  no  direct regulatory  authority  over  insurance
companies,  however  its primary purpose is to provide  a  more  consistent
method  of  regulation  and  reporting  from  state  to  state.   This   is
accomplished  through  the  issuance of model  regulations,  which  can  be
adopted  by individual states unmodified, modified to meet the state's  own
needs or requirements, or dismissed entirely.

Most  states  also  have insurance holding company statutes  which  require
registration  and periodic reporting by insurance companies  controlled  by
other  corporations licensed to transact business within  their  respective
jurisdictions.   The insurance affiliates are subject to  such  legislation
and  registered as controlled insurers in those jurisdictions in which such
registration is required.  Statutes vary from state to state but  typically
require periodic disclosure, concerning the corporation, that controls  the
registered  insurers and all affiliates of such corporation.  In  addition,
prior notice to, or approval by, the state insurance commission of material
intercorporate  transfers  of  assets, reinsurance  agreements,  management
agreements  (see  Note  9  in  the  notes  to  the  consolidated  financial
statements),  and  payment of dividends (see note 2 in  the  notes  to  the
consolidated  financial statements) in excess of specified amounts  by  the
insurance subsidiary, within the holding company system, are required.

Each year the NAIC calculates financial ratio results (commonly referred to
as  IRIS  ratios) for each company.  These ratios compare various financial
information pertaining to the statutory balance sheet and income statement.
The  results are then compared to pre-established normal ranges  determined
by  the  NAIC.  Results outside the range typically require explanation  to
the domiciliary insurance department.

At  year-end 1997, the insurance companies had one ratio outside the normal
range.  The ratio is related to the decrease in premium income.  The  ratio
fell  outside the normal range the last three years.  A primary  cause  for
the  decrease  in  premium revenues is related to the potential  change  in
control  of  UTI over the last two years to two different parties.   During
September  of 1996, it was announced that control of UTI would pass  to  an
unrelated party, but the transaction did not materialize.  At this writing,
negotiations  are  progressing with a different  unrelated  party  for  the
change  in  control of UTI.  Please refer to the Notes to the  Consolidated
Financial Statements for additional information.  The possible changes  and
resulting  uncertainties  have  hurt the insurance  companies'  ability  to
recruit and maintain sales agents.  The industry has experienced a downward
trend  in  the  total  number of agents who sell  insurance  products,  and
competition  for the top sales producers has intensified.   As  this  trend
appears  to  continue,  the recruiting focus of the  Company  has  been  on
introducing  quality  individuals  to the  insurance  industry  through  an
extensive  internal training program.  The Company feels this  approach  is
conducive  to  the mutual success of our new recruits and  the  Company  as
these  recruits  market our products in a professional, company  structured
manner.

The NAIC, in conjunction with state regulators, has been reviewing existing
insurance  laws and regulations.  A committee of the NAIC proposed  changes
in  the  regulations  governing insurance company investments  and  holding
company  investments in subsidiaries and affiliates which were  adopted  by
the  NAIC as model laws in 1996.  The Company does not presently anticipate
any material adverse change in its business as a result of these changes.

Legislative and regulatory initiatives regarding changes in the  regulation
of  banks and other financial services businesses and restructuring of  the
federal income tax system could, if adopted and depending on the form  they
take,  have  an  adverse impact on the Company by altering the  competitive
environment  for its products.  The outcome and timing of any such  changes
cannot  be  anticipated  at  this time, but the Company  will  continue  to
monitor  developments in order to respond to any opportunities or increased
competition that may occur.

The  NAIC adopted the Life Illustration Model Regulation.  Many states have
adopted the regulation effective January 1, 1997.  This regulation requires
products which contain non-guaranteed elements, such as universal life  and
interest  sensitive  life, to comply with certain  actuarially  established
tests.   These  tests  are  intended  to  target  future  performance   and
profitability  of a product under various scenarios.  The  regulation  does
not prevent a company from selling a product that does not meet the various
tests.  The only implication is the way in which the product is marketed to
the  consumer.   A  product that does not pass the  tests  uses  guaranteed
assumptions  rather than current assumptions in presenting  future  product
performance  to  the  consumer.  The Company conducts an  ongoing  thorough
review  of  its sales and marketing process and continues to emphasize  its
compliance efforts.

                                13
<PAGE>

A  task  force of the NAIC is currently undertaking a project to  codify  a
comprehensive set of statutory insurance accounting rules and  regulations.
This  project is not expected to be completed earlier than 1999.   Specific
recommendations  have  been set forth in papers  issued  by  the  NAIC  for
industry  review.  The Company is monitoring the process, but the potential
impact of any changes in insurance accounting standards is not yet known.


ACCOUNTING AND LEGAL DEVELOPMENTS

The  Financial  Accounting Standards Board (FASB) has issued  Statement  of
Financial Accounting Standards (SFAS) No. 128 entitled Earnings per  share,
which  is  effective  for financial statements for fiscal  years  beginning
after   December  15,  1997.   SFAS  No.  128  specifies  the  computation,
presentation, and disclosure requirements for earnings per share (EPS)  for
entities  with publicly held common stock or potential common  stock.   The
Statement's objective is to simplify the computation of earnings per share,
and  to  make the U.S. standard for computing EPS more compatible with  the
EPS standards of other countries.

Under  SFAS  No.  128,  primary EPS computed in  accordance  with  previous
opinions  is replaced with a simpler calculation called basic  EPS.   Basic
EPS  is  calculated  by  dividing income available to  common  stockholders
(i.e.,  net income or loss adjusted for preferred stock dividends)  by  the
weighted-average number of common shares outstanding.  Thus,  in  the  most
significant  change in current practice, options, warrants, and convertible
securities   are  excluded  from  the  basic  EPS  calculation.    Further,
contingently  issuable shares are included in basic EPS  only  if  all  the
necessary conditions for the issuance of such shares have been satisfied by
the end of the period.

Fully  diluted  EPS  has not changed significantly  but  has  been  renamed
diluted  EPS.   Income  available to common stockholders  continues  to  be
adjusted  for  assumed  conversion of all potentially  dilutive  securities
using the treasury stock method to calculate the dilutive effect of options
and  warrants.  However, unlike the calculation of fully diluted EPS  under
previous opinions, a new treasury stock method is applied using the average
market   price  or  the  ending  market  price.   Further,  prior   opinion
requirement  to use the modified treasury stock method when the  number  of
options  or  warrants outstanding is greater than 20%  of  the  outstanding
shares  also  has been eliminated.  SFAS 128 also includes  certain  shares
that  are contingently issuable; however, the test for inclusion under  the
new rules is much more restrictive.

SFAS   No.   128  requires  companies  reporting  discontinued  operations,
extraordinary items, or the cumulative effect of accounting changes are  to
use  income from operations as the control number or benchmark to determine
whether  potential  common  shares  are  dilutive  or  antidilutive.   Only
dilutive securities are to be included in the calculation of diluted EPS.

This  statement  was  adopted for the 1997 Financial Statements.   For  all
periods presented the Company reported a loss from continuing operations so
any  potential issuance of common shares would have an antidilutive  effect
on  EPS.  Consequently, the adoption of SFAS No. 128 did not have an impact
on the Company's financial statement.

The  FASB  has issued SFAS No. 130 entitled Reporting Comprehensive  Income
and   SFAS  No.  132  Employers'  Disclosures  about  Pensions  and   Other
Postretirement  Benefits.  Both of the above statements are  effective  for
financial statements with fiscal years beginning after December 15, 1997.

SFAS No. 130 defines how to report and display comprehensive income and its
components in a full set of financial statements.  The purpose of reporting
comprehensive income is to report a measure of all changes in equity of  an
enterprise  that  result from recognized transactions  and  other  economic
events  of the period other than transactions with owners in their capacity
as owners.

SFAS   No.   132  addresses  disclosure  requirements  for  post-retirement
benefits.   The  statement does not change post-retirement  measurement  or
recognition issues.

The  Company  will adopt both SFAS No. 130 and SFAS No. 132  for  the  1998
financial statements.  Management does not expect either adoption to have a
material impact on the Company's financial statements.

                                  14
<PAGE>

The  Company  is  not  aware of any litigation that will  have  a  material
adverse effect on the financial position of the Company.  In addition,  the
Company  does  not believe that the regulatory initiatives currently  under
consideration  by various regulatory agencies will have a material  adverse
impact on the Company.  The Company is not aware of any material pending or
threatened  regulatory action with respect to the Company  or  any  of  its
affiliates.  The Company does not believe that any insurance guaranty  fund
assessments will be materially different from amounts already provided  for
in the financial statements.


YEAR 2000 ISSUE

The  "Year  2000  Issue"  is  the  inability  of  computers  and  computing
technology  to recognize correctly the Year 2000 date change.  The  problem
results  from a long-standing practice by programmers to save memory  space
by  denoting  Years  using just two digits instead of four  digits.   Thus,
systems  that  are  not  Year 2000 compliant may be unable  to  read  dates
correctly  after  the Year 1999 and can return incorrect  or  unpredictable
results.    This   could  have  a  significant  effect  on  the   Company's
business/financial  systems  as  well as  products  and  services,  if  not
corrected.

The  Company established a project to address year 2000 processing concerns
in  September  of 1996.  In 1997 the Company completed the  review  of  the
Company's   internally  and  externally  developed   software,   and   made
corrections  to all year 2000 non-compliant processing.  The  Company  also
secured  verification of current and future year 2000 compliance  from  all
major  external software vendors.  In December of 1997, a separate computer
operating  environment was established with the system  dates  advanced  to
December  of 1999.  A parallel model office was established with all  dates
in the data advanced to December of 1999.  Parallel model office processing
is being performed using dates from December of 1999 to January of 2001, to
insure all year 2000 processing errors have been corrected.  Testing should
be  completed  by the end of the first quarter of 1998.  After  testing  is
completed,  periodic  regression  testing  will  be  performed  to  monitor
continuing  compliance.   By addressing year 2000 compliance  in  a  timely
manner,  compliance  will  be  achieved using existing  staff  and  without
significant impact on the Company operationally or financially.


PROPOSED MERGER

On March 25, 1997, the Board of Directors of UTI and UII voted to recommend
to  the  shareholders a merger of the two companies.   Under  the  Plan  of
Merger, UTI would be the surviving entity with UTI issuing one share of its
stock for each share held by UII shareholders.

UTI owns 53% of United Trust Group, Inc., an insurance holding company, and
UII  owns  47%  of United Trust Group, Inc.  Neither UTI nor UII  have  any
other significant holdings or business dealings.  The Board of Directors of
each  company thus concluded a merger of the two companies would be in  the
best interests of the shareholders.  The merger will result in certain cost
savings,   primarily  related  to  costs  associated  with  maintaining   a
corporation in good standing in the states in which it transacts  business.
A  vote of the shareholders of UTI and UII regarding the proposed merger is
anticipated to occur sometime during the third quarter of 1998.


SUBSEQUENT EVENT

On  February 19, 1998, UTI signed a letter of intent with Jesse T. Correll,
whereby   Mr.  Correll  will  personally  or  in  combination  with   other
individuals make an equity investment in UTI over a period of three  years.
Under  the  terms  of the letter of intent Mr. Correll will  buy  2,000,000
authorized but unissued shares of UTI common stock for $15.00 per share and
will also buy 389,715 shares of UTI common stock, representing stock of UTI
and  UII,  that  UTI  purchased during the last  eight  months  in  private
transactions  at the average price UTI paid for such stock, plus  interest,
or  approximately $10.00 per share.  Mr. Correll also will purchase  66,667
shares  of  UTI  common stock and $2,560,000 of face amount of  convertible
bonds  (which  are  due and payable on any change in  control  of  UTI)  in
private  transactions, primarily from officers of UTI.  Upon completion  of
the transaction, Mr. Correll would be the largest shareholder of UTI.

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<PAGE>

UTI  intends  to use the equity that is being contributed to  expand  their
operations through the acquisition of other life insurance companies.   The
transaction  is subject to negotiation of a definitive purchase  agreement;
completion  of due diligence by Mr. Correll; the receipt of regulatory  and
other   approvals;  and  the  satisfaction  of  certain  conditions.    The
transaction is not expected to be completed before June 30, 1998, and there
can be no assurance that the transaction will be completed.


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Any  forward-looking statement contained herein or in  any  other  oral  or
written  statement  by  the company or any of its  officers,  directors  or
employees  is qualified by the fact that actual results of the company  may
differ  materially  from any such statement due to the following  important
factors,  among  other risks and uncertainties inherent  in  the  company's
business:

1.   Prevailing interest rate levels, which may affect the ability  of  the
     company  to  sell  its  products, the market value  of  the  company's
     investments   and   the   lapse  ratio  of  the  company's   policies,
     notwithstanding   product   design  features   intended   to   enhance
     persistency of the company's products.

2.   Changes  in  the  federal income tax laws and  regulations  which  may
     affect the relative tax advantages of the company's products.

3.   Changes in the regulation of financial services, including bank  sales
     and   underwriting  of  insurance  products,  which  may  affect   the
     competitive environment for the company's products.

4.   Other factors affecting the performance of the company, including, but
     not   limited   to,   market   conduct  claims,   insurance   industry
     insolvencies, stock market performance, and investment performance.


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