SECURITIES AND EXCHANGE COMMISSION

                               Washington, D.C.  20549

                                      FORM 10-Q

                  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE

                                SECURITIES ACT OF 1934


          For the Quarterly Period Ended September 30, 1996
          Commission File Number 0-4690 

                           FINANCIAL INDUSTRIES CORPORATION
                (Exact Name of Registrant as specified in its charter)

                   Texas                                 74-2126975  
          (State  of  Incorporation)      (I.R.S.  Employer  Identification
          Number)

          The Austin Centre, 701 Brazos, 12th Floor
          Austin, Texas                                  78701  
          (Address of principal executive offices)       (Zip Code)

          Registrant's telephone number, including area code (512) 404-5000


          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 12  months
          (or for such shorter  period that the registrant was  required to
          file  such  reports), and  (2) has  been  subject to  such filing
          requirements for the past 90 days.

                                                     YES  X    NO     

          Number of common shares  outstanding ($1.00 par value) at  end of
          period:  1,085,593

                  FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES

                                        INDEX

                                                               Page No.

          Part I - Financial Information

          Consolidated Balance Sheets 
            September 30, 1996  and December 31, 1995...................3

          Consolidated Statements of Income 
           For the three and nine month periods ended 
           September 30,  1996 and 1995................................ 5

          Consolidated Statements of Cash Flows
           For the three and nine month periods ended 
           September 30,  1996 and 1995................................ 7

          Notes to Consolidated Financial Statements...................11

          Management's Discussion and Analysis of 
               Financial Conditions and Results of Operations..........12

          Part II

          Other Information............................................19

          Signature Page...............................................20

          Item 1.   Financial Statements

                  FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                             CONSOLIDATED BALANCE SHEETS
                              (in thousands of dollars) 


                                                       Sept 30,  Dec. 31,
                                                         1996      1995  
                                                       Unaudited

          ASSETS

          Investments:

               Fixed maturities available for sale,
                at market value (amortized cost of 
                $82,741 and $79,961, respectively)     $ 82,619  $ 83,632

               Equity securities, at market (cost
                approximately $11)                            4         4

               Policy loans                               2,119     1,774

               Short-term investments                    25,966    27,180

                    Total investments                   110,708   112,590

          Cash                                            1,896     1,414

          Investment in affiliate                        49,927    45,736

          Accrued investment income                         926     1,102

          Agent advances and other receivables            7,552    10,368

          Reinsurance receivables                         5,359     2,383

          Due and deferred premiums                      10,276     9,726

          Property and equipment, net                     8,767     7,452

          Deferred policy acquisition costs              40,396    36,537

          Present value of future profits of 
               acquired business                         41,513    45,415

          Deferred financing costs                          -0-       168

          Other assets                                    5,631     6,264

          Separate account assets                         8,681     8,523

               Total assets                            $291,632  $287,678


                   (See Notes to Consolidated Financial Statements)


                  FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                             CONSOLIDATED BALANCE SHEETS
                              (in thousands of dollars) 


                                                       Sept 30,  Dec. 31, 
                                                         1996      1995  
                                                       Unaudited

          LIABILITIES & SHAREHOLDERS' EQUITY

          Liabilities: 
           Policy liabilities and contractholder
            deposit funds:
               Future policy benefits payable          $ 58,088  $ 54,909
               Contractholder deposit funds              41,434    41,456
               Unearned premiums                            129       132
               Other policy claims & benefits payable     5,754     5,836
                                                        105,405   102,333

            Senior loans                                    -0-     6,765
            Subordinated notes payable to affiliate      61,477    61,224
            Deferred federal income taxes                16,470    14,783
            Other liabilities                            12,339    11,315
            Separate account liabilities                  8,681     8,523
               Total liabilities                        204,372   204,943


          Commitments and contingencies 

          Shareholders' equity:
           Common stock, $1.00 par value, 
            3,304,200 shares authorized;
            1,169,060 shares issued, 1,085,593
            shares outstanding in 1996 and 1995           1,169     1,169
          Additional paid-in capital                      7,225     7,225
          Net unrealized (loss) gain on investments in
           fixed maturities available for sale             (990)    8,052 
          Net unrealized gain on equity securities           18        11 
          Retained earnings                              80,260    66,700
                                                         87,682    83,157
          Common treasury stock, at cost, 83,467
           shares in 1996 and 1995                         (422)     (422)
               Total shareholders' equity                 87,260    82,735

               Total liabilities and shareholders'
                equity                                 $291,632  $287,678


                   (See Notes to Consolidated Financial Statements)

                  FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF INCOME
                              FOR THE THREE MONTH PERIOD
                          ENDED SEPTEMBER 30, 1996 AND 1995
                                     (Unaudited)
                   (in thousands of dollars, except per share data)

                                                         3 Months Ended
                                                            Sept 30, 

                                                         1996       1995   

          Revenues: 
           Net premiums                                $ 11,025  $ 11,625
           Net investment income                          1,815     1,929
           Earned insurance charges                       1,311     1,731
           Other                                            827       803
               Total revenues                            14,978    16,088

          Benefits and expenses:
           Benefits and other expenses                    5,974     5,420
           Interest on insurance policies                   664       510
           Amortization of present value of
            future profits of acquired business           1,429     1,510
           Amortization of deferred policy 
            acquisition costs                               862       958
           Operating expenses                             3,054     4,075
           Interest expense                                 923     1,197
                Total benefits and expenses              12,906    13,670

          Income before federal income taxes
           and equity in net earnings of                
           affiliate                                      2,072     2,418

          Provision for federal income taxes                481       495

          Income before equity in net earnings 
           of affiliate                                   1,591     1,923

          Equity in net earnings of affiliate, net 
           of tax                                           574       435

          Net income                                   $  2,165  $  2,358


          Per Share Data: 
           Common stock and common stock equivalents      1,113     1,109

           Net income per share available to common
            shareholders                               $   1.94  $   2.13


                   (See Notes to Consolidated Financial Statements)


                  FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF INCOME
                              FOR THE NINE MONTH PERIOD
                          ENDED SEPTEMBER 30, 1996 AND 1995
                                     (Unaudited)
                   (in thousands of dollars, except per share data)

                                                         9 Months Ended
                                                            Sept 30,
                                                         1996      1995 
         
          Revenues:
           Net premiums                                $ 32,636  $ 33,016
           Net investment income                          5,438     5,682
           Earned insurance charges                       4,260     5,396
           Other                                          2,731     2,429
               Total revenues                            45,065    46,523

          Benefits and expenses:
           Benefits and other expenses                   16,768    15,264
           Interest on insurance policies                 1,679     1,433
           Amortization of present value of
            future profits of acquired business           3,902     4,112
           Amortization of deferred policy
            acquisition costs                             2,745     2,710 
           Operating expenses                            10,104    10,987
           Interest expense                               2,896     3,566
               Total benefits and expenses               38,094    38,072

          Income before federal income taxes
           and equity in net earnings of
           affiliate                                      6,971     8,451

          Provision for federal income taxes              1,691     2,061

          Income before equity in net earnings
           of affiliate                                   5,280     6,390

          Equity in net earnings of affiliate, net 
           of tax                                         8,279     1,394

          Net income                                   $ 13,559  $  7,784


          Per Share Data:
           Common stock and common stock equivalents      1,112     1,108

           Net income per share available to common
            shareholders                               $  12.19  $   7.03


                   (See Notes to Consolidated Financial Statements)


                  FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                              FOR THE THREE MONTH PERIOD
                          ENDED SEPTEMBER 30, 1996 AND 1995
                                     (Unaudited)
                              (in thousands of dollars) 


                                                         3 Months Ended
                                                            Sept 30,
                                                         1996      1995  
          CASH FLOWS FROM OPERATING ACTIVITIES:

          Net income                                   $  2,165  $  2,358

          Adjustments to reconcile net income to net
           cash provided by operating activities:
          Amortization of present value of future 
           profits                                        1,429     1,510
          Amortization of deferred policy acquisition
           costs                                            862       958
          Financing costs amortized                         -0-      (141)
          Loss on sale of equipment                         -0-       -0-
          Equity in undistributed earnings of 
           affiliate                                     (2,815)   (1,183)

          Changes in assets and liabilities net of 
           effects from purchase of insurance 
           subsidiaries:
          Decrease in accrued investment income             197       314
          (Increase) decrease in agent advances and 
           other receivables                             (2,126)      212
          Increase in due and deferred
           premiums                                        (352)     (686)
          Increase in deferred policy acquisition
           costs                                         (2,106)   (2,418)
          (Increase) decrease in other assets               513      (723)
          Increase in policy liabilities                
           and accruals                                   3,630     1,298
          (Decrease) Increase in other liabilities         (542)    2,743 
          Increase in policy loans                         (133)     (181)
          Increase (decrease) in deferred federal 
           income taxes                                     693    (2,672)

          Other, net                                      1,860        (4)

          Net cash provided by operating 
           activities                                  $  3,275  $  1,385



                   (See Notes to Consolidated Financial Statements)



                  FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                              FOR THE THREE MONTH PERIOD
                          ENDED SEPTEMBER 30, 1996 AND 1995
                                     (Unaudited)
                              (in thousands of dollars) 



                                                         3 Months Ended
                                                            Sept 30,
                                                         1996      1995  
          CASH FLOWS FROM INVESTING ACTIVITIES:

          Investments purchased                        $   (976) $    -0-
          Proceeds from sale and maturities of                 
           investments                                     (156)      399
          Net change in short-term investments           (1,451)     (207)
          Retirement of equipment                           -0-         1

          Net cash (used in) provided by 
           investing activities                          (2,583)      193


          CASH FLOWS FROM FINANCING ACTIVITIES:

          Issuance of subordinated notes payable
           to affiliate                                     -0-       -0-
          Repayment of debt                                 -0-    (2,091)

          Net cash used in financing activities             -0-    (2,091)

          Net increase (decrease) in cash                   692      (513)

          Cash, beginning of period                       1,204     2,341

          Cash, end of period                          $  1,896  $  1,828


                   (See Notes to Consolidated Financial Statements) 


                  FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                        CONSOLDIATED STATEMENTS OF CASH FLOWS
                              FOR THE NINE MONTH PERIOD
                          ENDED SEPTEMBER 30, 1996 AND 1995
                                     (Unaudited)
                              (in thousands of dollars)
                                                         9 Months Ended
                                                            Sept 30,
                                                         1996      1995  
          CASH FLOWS FROM OPERATING ACTIVITIES:
                                                        
          Net income                                   $ 13,559  $  7,784

          Adjustments to reconcile net income to net
           cash provided by operating activities:
          Amortization of present value of future 
           profits                                        3,902     4,112
          Amortization of deferred policy acquisition
           costs                                          2,745     2,710 
          Financing costs amortized                         168       195
          Loss on sale of equipment                         -0-       -0-
          Equity in undistributed earnings of                      
           affiliate                                    (11,244)   (3,642)

          Changes in assets and liabilities net of 
           effects from purchase of insurance 
           subsidiaries:
          Decrease in accrued investment income             176       386 
          Decrease in agent advances and
           other receivables                               (160)      (83)
          (Increase) decrease in due and deferred               
           premiums                                        (550)      245
          Increase in deferred policy acquisition
           costs                                         (6,604)   (8,737)
          Decrease (increase) in other assets               632    (1,086)
          Increase in policy liabilities
           and accruals                                   3,073     1,954 
          Increase in other liabilities                   1,024     6,501
          Increase in policy loans                         (345)     (375)
          Increase in deferred federal                                   
           income taxes                                   1,687     1,319

          Other, net                                      1,812       (12)

          Net cash provided by operating 
           activities                                  $  9,875  $ 11,271

                   (See Notes to Consolidated Financial Statements)

                  FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                        CONSOLDIATED STATEMENTS OF CASH FLOWS
                              FOR THE NINE MONTH PERIOD
                          ENDED SEPTEMBER 30, 1996 AND 1995
                                     (Unaudited)
                              (in thousands of dollars) 

                                                         9 Months Ended
                                                            Sept 30,
                                                         1996      1995  
          CASH FLOWS FROM INVESTING ACTIVITIES:
                                                        
          Investments purchased                        $ (3,735) $    -0-
          Proceeds from sale and maturities of 
           investments                                      955     1,001
          Net change in short-term investments            1,214        (3)
          Purchase of equipment, net                     (1,315)   (3,396)

          Net cash used in investing activities          (2,881)   (2,398)


          CASH FLOWS FROM FINANCING ACTIVITIES:

          Issuance of subordinated notes payable
           to affiliate                                     253       226
          Repayment of debt                              (6,765)   (8,204)

          Net cash used in financing activities          (6,512)   (7,978)

          Net increase in cash                              482       895

          Cash, beginning of period                       1,414       933

          Cash, end of period                          $  1,896  $  1,828


                   (See Notes to Consolidated Financial Statements)


                  FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES

              NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

          The financial statements included herein reflect  all adjustments
          which are, in the  opinion of management, necessary to  present a
          fair  statement of the interim results.  The statements have been
          prepared to conform to the  requirements of Form 10-Q and do  not
          necessarily   include  all  disclosures   required  by  generally
          accepted accounting  principles (GAAP).  The  reader should refer
          to  Form 10-K  for the  year ended  December 31,  1995 previously
          filed with  the Commission  for financial statements  prepared in
          accordance  with  GAAP.   Certain  prior year  amounts  have been
          reclassified to conform with current year presentation. 

          The consolidated  financial statements  include  the accounts  of
          Financial  Industries Corporation  ("FIC")  and its  wholly-owned
          subsidiaries.   The  investment of  FIC in  InterContinental Life
          Corporation ("ILCO") is presented  using the equity method.   All
          significant  intercompany   items  and  transactions   have  been
          eliminated.

          FIC's net income  is effected by its equity interest  in ILCO and
          ILCO's  insurance subsidiaries.   Net income  for the  first nine
          months of  1996 includes  $7.2  million resulting  from the  sale
          during  the first  quarter  of  1996  of  the  Austin  Centre,  a
          hotel/office complex,  located in  Austin, Texas.   The  sale was 
          completed by  Investors Life  Insurance Company of  North America
          ("Investors-NA"), a wholly-owned subsidiary of ILCO.  The selling
          price  was $62.675  million, less  $1 million  paid to  a capital
          reserve account for the purchaser.  The property was purchased in
          1991 for  $31.275 million.  The book value of the property, $36.8
          million, net  of improvements and amortization,  was retained and
          reinvested by Investors-NA.   The balance of the proceeds  of the
          sale,  net of federal  income tax, was used  to reduce the ILCO's
          senior loan obligations by $15 million.  The sale closed on March
          29, 1996.  

          New Accounting Pronouncements

          In  March 1995, the FASB issued  FAS No. 121, "Accounting For the
          Impairment of Long-Lived  Assets and For Long-Lived  Assets to be
          Disposed of."  This Statement requires that long-lived assets and
          certain identifiable intangibles to be held and used by an entity
          be  reviewed  for  impairment   whenever  events  or  changes  in
          circumstances  indicate that the carrying  amount of an asset may
          not be  recoverable.   In addition,  the Statement  requires that
          long-lived  assets  and certain  identifiable  intangibles to  be
          disposed of be reported at the  lower of carrying amount or  fair
          value less cost to sell.

          FAS No. 121 is  effective for fiscal years beginning  after 1995.
          The Company adopted  FAS No. 121 effective January  1, 1996.  The
          adoption of  this Statement did not have a material impact on the
          Company's financial statements.

          Item  2.    Management's  Discussion and  Analysis  of  Financial
          Conditions and Results of Operations:

          For the  nine-month period  ended September  30, 1996,  FIC's net
          income was $13,559,000 ($12.19 per common  share), as compared to
          $7,784,000  ($7.03 per  common share)  for the  nine-month period
          ended September 30, 1995.

          FIC's  net  income   is  affected  by  its   equity  interest  in
          InterContinental  Life Corporation ("ILCO")  and ILCO's insurance
          subsidiaries.    Net income  for the  first  nine months  of 1996
          includes $7.1  million resulting from  ILCO's sale of  the Austin
          Centre, a  hotel/office complex, located  in Austin, Texas.   The
          sale was completed by  Investors Life Insurance Company  of North
          America ("Investors-NA"), a wholly-owned subsidiary of ILCO.  The
          selling  price was  $62.675 million,  less $1  million paid  to a
          capital  reserve account  for the  purchaser.   The  property was
          purchased in  1991 for $31.275  million.  A  portion of  the sale
          proceeds,  equal  to  the book  value  of  the  property, net  of
          improvements and amortization  ($36.8 million), was  retained and
          reinvested by Investors-NA.   The balance of the proceeds  of the
          sale, net  of federal income tax,  was used to reduce  the ILCO's
          senior loan obligations by $15 million.  The sale closed on March
          29, 1996.  

          The   statutory  earnings   of  the   Company's  life   insurance
          subsidiary, Family  Life Insurance  Company,  ("Family Life")  as
          required  to  be  reported  to insurance  regulatory  authorities
          before interest  expense, capital  gains and losses,  and federal
          income taxes were $8,578,339  at September 30, 1996, as  compared
          to $10,841,027 at  September 30, 1995.   These statutory earnings 
          are the source to  provide for the repayment of  the indebtedness
          incurred in connection with the acquisition of Family Life.

          The  operating strategy  of the  Company's management  emphasizes
          several   key  objectives:   expense  management;   marketing  of
          competitively  priced insurance  products which  are designed  to
          generate an  acceptable level of profitability;  maintenance of a
          high quality  portfolio of  investment grade securities;  and the
          provision of quality customer service.

          The  consolidated balance  sheets at  September 30,  1996 include
          Separate Account assets  of Family  Life in the  amount of  $8.68
          million.   The Separate  Account  is maintained  by Family  Life,
          which was acquired by FIC on June 12, 1991.  Under the provisions
          of the purchase agreement between FIC and Merrill Lynch Insurance
          Group,  Inc., certain  life insurance  companies  affiliated with
          Merrill  Lynch agreed  to  assume (on  an assumption  reinsurance
          basis) the  variable annuity  contracts related to  such Separate
          Account assets.  The transfer of these assets, in accordance with
          the  provisions  of  the  reinsurance agreement,  is  subject  to
          certain regulatory  approvals.   Such  regulatory approvals  have
          been obtained in a number of jurisdictions, and the assumption of
          the  business has been completed  in those states.   However, the
          Company  has not obtained a definitive date from Merrill Lynch as
          to when the remaining  regulatory approvals will be  obtained, so
          as to enable Family Life to complete the transfer of the  balance
          of the Separate Account assets.

              Equity in Net Income of InterContinental Life Corporation

          General

          Prior to the  acquisition of Family Life  in June of  1991, FIC's
          primary involvement  in the  life insurance business  was through
          its equity interest  in ILCO.   The Company's  equity in the  net
          earnings,  net of federal income tax, of ILCO, was $8,279,000 for
          the nine-month period  ended September 30,  1996, as compared  to
          $1,394,000  for the  similar period  in 1995.   This  increase is
          primarily  attributable  to the  increase  in  ILCO's net  income
          resulting from ILCO's sale of the Austin Centre property.

          FIC currently owns  1,795,146 shares of ILCO's  common stock, and
          holds options to  acquire an  additional 1,702,155  shares.   The
          options were  granted under an  Option Agreement between  FIC and
          ILCO which was entered into in  March, 1986.  In addition, Family
          Life,  a subsidiary of FIC, currently owns 171,200 shares of ILCO
          common  stock.   As a  result, FIC  currently owns,  directly and
          indirectly  through Family Life,  1,966,346 shares (approximately
          47%) of  ILCO's common stock.   If all of FIC's  rights under the
          Option Agreement were to  be presently exercised, FIC's ownership
          would amount to  approximately 62% of the  issued and outstanding
          shares of ILCO's common stock.

          The  fixed  maturities  available  for  sale  portion  of  ILCO's
          investment  assets at September 30, 1996 was $461.6 million.  The
          amortized cost of the fixed maturities available for sale segment
          as of September 30,  1996 was $466.2 million, representing  a net
          unrealized  loss of  $4.6  million  over  amortized cost.    Such
          decrease reflects  unrealized losses on such investments.   Since
          FIC  owns approximately  47% of  the common  stock of  ILCO, such 
          unrealized  loss,  net of  tax,  is  reflected  in  FIC's  equity
          interest in ILCO, and  had the effect of decreasing  the reported
          value of such equity interest by approximately $7.2 million.

          ILCO's net income for  the nine-month period ended September  30,
          1996, as compared to the  same period in 1995, was affected  by a
          decrease in interest expense.  Interest expense was $2.27 million
          for the first nine months  of 1996, as compared to $4.55  million
          for the same period in  1995.  The decrease is attributable  to a
          reduction in  the average  principal balance  of the senior  loan
          from $65.96  million for  the nine-month period  ending September
          30, 1995  to  $36.58 million  for  the nine-month  period  ending
          September 30, 1996, as well as a decrease in the  average rate of
          interest  paid on  the  senior loan  - 7.78%  for the  first nine
          months of 1996 as compared to 8.72% for the same period in 1995.

          ILCO's  results for  the first  nine months  of 1996  include the
          operations  of  Investors  Life   Insurance  Company  of  Indiana
          (formerly  Meridian  Life  Insurance  Company).    Investors Life
          Insurance Company  of Indiana  ("Investors-IN") was  purchased by
          ILCO  and Investors-NA for  an adjusted  purchase price  of $17.1
          million;  the transaction  was  completed on  February 14,  1995.
          ILCO's  results for  this period  also include the  operations of
          Investors-NA   and   InterContinental   Life  Insurance   Company
          ("ILIC").

          Liquidity and Capital Resources of ILCO

          ILCO is a holding  company whose principal assets consist  of the
          common  stock of Investors-NA  and its  subsidiaries -  ILIC and,
          since  February, 1995,  Investors-IN.   ILCO's primary  source of
          funds  consists of  payments  under the  Surplus Debentures  from
          Investors-NA. 

          The cash requirements of ILCO consist primarily of its service of
          the indebtedness created in  connection with the 1988 acquisition
          of  the  Investors  Life  Companies.    In  connection  with  the
          acquisition of  Investors-IN in February, 1995,  ILCO borrowed an
          additional  $15 million under its Senior Loan to help finance the
          purchase.    As of  December 31,  1995,  the unpaid  principal of
          ILCO's Senior Loan  was $59.4  million.  In  January, 1996,  ILCO
          made a scheduled payment  of $4.5 million under its  Senior Loan.
          In  March, 1996, ILCO made  the scheduled payments  for April 1st
          and July 1st, totaling $9 million.  At that  same time, it made a
          payment of $941,000, an additional payment under the terms of the
          loan applied to  the principal  balance.   On April  1, 1996,  an
          optional principal payment in the amount of $15 million was made.
          In  July, 1996, ILCO made  the principal payment  for October 1st
          ($4.5  million),  plus  an  optional principal  payment  of  $0.5
          million,  thereby reducing  the total  amount of  its outstanding
          Senior Loan to $24.94 million. 

          ILCO's  principal source  of liquidity  consists of  the periodic
          payment of principal and interest to it by Investors-NA, pursuant
          to  the terms  of  the  two  surplus  debentures.    The  surplus
          debentures  were  originally issued  by  Standard Life  Insurance
          Company and its terms were previously approved by the Mississippi
          Insurance Commissioner.   One of the  surplus debentures, in  the
          original amount of $15 million, was issued in connection with the
          1986  acquisition of  Standard Life  by ILCO;  the other,  in the 
          original amount of $140 million was issued in connection with the
          1988 acquisition by ILCO  of the Investors Life Companies.   Upon
          the merger of Standard Life into Investors-NA, the obligations of
          the  surplus  debentures were  assumed  by Investors-NA.    As of
          September  30, 1996,  the  outstanding principal  balance of  the
          surplus   debentures  was   $6.4  million   and  $35.5   million,
          respectively.  Since  Investors-NA is domiciled  in the State  of
          Washington,   the   Washington  insurance   laws  apply   to  the
          administration of the terms of the surplus debentures.  Under the
          provisions of the  surplus debentures and  current law, no  prior
          approval of the Washington Insurance Commissioner is required for
          Investors-NA  to  pay  interest   or  principal  on  the  surplus
          debentures; provided that, after  giving effect to such payments,
          the statutory surplus of Investors-NA is in excess of $10 million
          (the  "surplus  floor").   However, Investors-NA  has voluntarily
          agreed with  the Washington  Insurance Commissioner that  it will
          provide  at least five days  advance notice of  payments which it
          will  make under  the surplus  debentures.   As of  September 30,
          1996, the statutory capital and surplus of Investors-NA was $54.3
          million, an amount substantially in  excess of the surplus floor.
          The  funds required by  Investors-NA to  meet its  obligations to
          ILCO under the terms of the surplus debentures are generated from
          operating   income  generated   from  insurance   and  investment
          operations.

          ILCO's ability to pay dividends to its shareholders  is affected,
          in part, by receipt of dividends from its insurance subsidiaries.
          Under current Washington  law, any proposed payment of a dividend
          or distribution by  the Company's  insurance subsidiaries  which,
          together  with  dividends  or   distributions  paid  during   the
          preceding  twelve months,  exceeds  the  greater  of (i)  10%  of
          statutory  surplus as  of  the  preceding  December  31  or  (ii)
          statutory  net gain  from operations  for the  preceding calendar
          year  is called an "extraordinary  dividend" and may  not be paid
          until either it has been approved, or a waiting period shall have
          passed during which it has not been disapproved, by the insurance
          commissioner.   Since the law  applies only to dividend payments,
          the  ability  of  Investors-NA  to make  principal  and  interest
          payments under the surplus debentures is not affected.  ILCO does
          not  anticipate that  Investors-NA  will have  any difficulty  in
          making principal and interest  payments on the surplus debentures
          in the amounts  necessary to  enable ILCO to  service its  Senior
          Loan for the foreseeable future. 

          Investors-IN is domiciled  in the  State of Indiana.   Under  the
          Indiana  insurance code,  a  domestic insurer  may make  dividend
          distributions upon proper notice  to the Department of Insurance,
          as    long  as the  distribution  is  reasonable  in relation  to
          adequate levels of policy holder surplus and quality of earnings.
           Under Indiana law the dividend must be paid from earned surplus.
          Extraordinary  dividend   approval  would  be  required  where  a
          dividend  exceeds the greater  of 10% of surplus  or the net gain
          from  operations  for  the   prior  fiscal  year.    Investors-IN
          currently has earned surplus.

          The Form  10-Q of ILCO for  each of the nine-month  periods ended
          September  30,  1996  and  September  30,  1995, sets  forth  the
          business operations and  financial results of  ILCO and its  life
          insurance subsidiaries.  Such 10-Q reports of ILCO, including the
          discussion by  ILCO's management under the  caption "Management's 
          Discussion and  Analysis of  Financial Conditions and  Results of
          Operations" are incorporated herein by reference.

              Results of Operations of Financial Industries Corporation

          For the three-month period ended September 30, 1996, FIC's income
          from operations before Federal income taxes  and before equity in
          net  earnings  of  affiliate,   was  $2,072,000  on  revenues  of
          $14,978,000,   as  compared   to  $2,418,000,   on   revenues  of
          $16,088,000 for the same period in 1995. 

          Premium income, net of reinsurance  ceded, for the third  quarter
          of 1996 was $11.03 million, as compared  to $11.63 million in the
          same period in 1995.

                           Liquidity and Capital Resources

          FIC  is a holding company  whose principal assets  consist of the
          common  stock of  Family Life  Insurance Company  and  its equity
          ownership in  InterContinental Life Corporation ("ILCO").   FIC's
          primary sources of capital consist  of cash flow from  operations
          of its subsidiaries and the proceeds from bank and  institutional
          borrowings. 

          The  cash  requirements  of  FIC  and  its  subsidiaries  consist
          primarily  of   its  service  of  the   indebtedness  created  in
          connection  with its ownership of  Family Life.   As of September
          30,  1996 the outstanding balance  of such indebtedness was $61.5
          million  on the  Subordinated Notes  granted by  Investors-NA. On
          April 17, 1996, the Senior  Loan granted by a group of  banks was
          completely paid off;  the balance as  of March 31, 1996  had been
          $4.67 million.

          The principal source of liquidity for FIC's subsidiaries consists
          of the periodic payment of principal and interest by Family Life,
          pursuant to the terms of  a Surplus Debenture.  The terms  of the
          Surplus  Debenture  were  previously approved  by  the Washington
          Insurance  Commissioner.   Under  the provisions  of the  Surplus
          Debenture  and current law,  no prior approval  of the Washington
          Insurance Department is required for Family Life to pay  interest
          or  principal  on the  Surplus  Debenture;  provided that,  after
          giving effect to  such payments, the statutory  surplus of Family
          Life  is in  excess  of  6%  of  assets  (the  "surplus  floor").
          However, Family  Life has voluntarily agreed  with the Washington
          Insurance  Commissioner that it  will provide at  least five days
          advance notice of payments  which it will make under  the surplus
          debenture. As  of September 30,  1996, the statutory  capital and
          surplus  of  Family  Life   was  $24.2      million,   an  amount
          substantially  in excess of the  surplus floor.   As of September
          30, 1996,  the principal  balance of  the  Surplus Debenture  was
          $42.8 million.   The funds  required by  Family Life to  meet its
          obligations  under  the  terms   of  the  Surplus  Debenture  are
          generated primarily  from premium  payments from  policy holders,
          investment income and  the proceeds from the sale  and redemption
          of portfolio investments.    

          Washington's insurance code  includes the  "greater of"  standard
          for dividends  but has requirements that prior  notification of a
          proposed  dividend   be   given  to   the  Washington   Insurance
          Commissioner and that cash dividends may be paid only from earned 
          surplus.  Family Life  does not presently have earned  surplus as
          defined by  the regulations  adopted by the  Washington Insurance
          Commissioner  and,  therefore,  is  not  permitted  to  pay  cash
          dividends.   However, since the new law applies only to  dividend
          payments,  the  ability  of Family  Life  to  make  principal and
          interest payments  under the  Surplus Debenture is  not affected.
          The  Company does not anticipate  that Family Life  will have any
          difficulty  in  making principal  and  interest  payments on  the
          Surplus  Debenture in the amounts necessary to enable Family Life
          Corporation  to  service  its  indebtedness  for the  foreseeable
          future. 

          The  sources of funds for Family Life consist of premium payments
          from policy  holders, investment income and the proceeds from the
          sale and  redemption of portfolio  investments.  These  funds are
          applied  primarily  to provide  for the  payment of  claims under
          insurance  and  annuity   policies,  operating  expenses,  taxes,
          investments  in portfolio  securities, shareholder  dividends and
          payments under the provisions of the Surplus Debenture. 

          FIC's  net cash flow  provided by  operating activities  was $9.9
          million  in the  nine-month period ended  September 30,  1996, as
          compared to $11.3 million  for the corresponding period of  1995.
          Net cash flow used  in financing activities was $6.5  million for
          the nine-month period  ended September 30,  1996, as compared  to
          $8.0 million for the corresponding period of 1995.  

          In  connection with the purchase  of the Investors Life Companies
          by ILCO,  the purchase of  Investors-IN by ILCO  and Investors-NA
          and the purchase of  Family Life by a wholly-owned  subsidiary of
          FIC, FIC guaranteed  the payment of  the indebtedness created  in
          connection with  such acquisitions.   After giving effect  to the
          refinancing  of the ILCO Senior  Loan, the repayment  of the ILCO
          Subordinated  Loans and  the indebtedness  created in  connection
          with the acquisition of Investors-IN, the guaranty commitments of
          FIC with respect to the debt obligations of ILCO relate to ILCO's
          Senior Loan, with an outstanding balance at September 30, 1996 of
          $24.9 million.  

          The  guaranty  commitments of  FIC  under the  loans  incurred in
          connection with the acquisition of Family Life (after taking into
          account  the repayments  and new  loans which  occurred in  July,
          1993) relate  to:  (i)  the $22.5 million  note issued by  Family
          Life  Corporation to  Investors-NA,  and (ii)  the $34.5  million
          loaned by Investors-NA to two subsidiaries of FIC.  

          Management  believes that  its cash,  cash equivalents  and short
          term investments are sufficient to meet the needs of its business
          and to satisfy debt service.

          There are  no trends,  commitments or capital  asset requirements
          that are expected to have  an adverse effect on the liquidity  of
          FIC.

                                     Investments

          As  of September 30,  1996, the Company's  investment assets were
          $110.7, as compared to $112.6 million as of December 31, 1995. 

          The level  of short-term  investments decreased to  $25.9 million 
          for the period ended  September 30, 1996, from the  $27.2 million
          level  which  existed  as  of  December  31,  1995.    The  fixed
          maturities available for sale portion represents $82.6 million of
          invested  assets  at September  30,  1996, as  compared  to $83.6
          million  at December  31,  1995.   The  amortized cost  of  fixed
          maturities  available for sale as of September 30, 1996 was $82.7
          million,  representing an  unrealized loss of  approximately $0.1
          million.   This unrealized  loss principally reflects  changes in
          interest  rates from  the  date the  respective investments  were
          purchased.   The net  of tax  effect  of this  decrease has  been
          recorded as a reduction in shareholders' equity.

          The  assets held by Family Life must comply with applicable state
          insurance laws and regulations.  In selecting investments for the
          portfolios  of  its life  insurance  subsidiaries,  the Company's
          emphasis is  to obtain targeted profit  margins, while minimizing
          the  exposure to  changing  interest rates.    This objective  is
          implemented   by   selecting   primarily  short-to   medium-term,
          investment  grade  fixed  income  securities.    In  making  such
          portfolio selections,  the Company generally does  not select new
          investments  which are  commonly referred  to as  "high-yield" or
          "non-investment grade."  

          The  Company's fixed  maturities portfolio,  as of  September 30,
          1996, consisted solely of  fixed maturities investments which, in
          the annual  statements  of  the  companies as  filed  with  state
          insurance   departments,  were  designated   under  the  National
          Association  of Insurance Commissioners ("NAIC") rating system as
          a "1" (highest  quality).  As of September 30,  1996, 100% of the
          fixed maturities portfolio consisted  of investments with an NAIC
          rating of "1" (high quality).

          Management  believes that  the absence  of "high-yield"  or "non-
          investment  grade"   investments  (as   defined  above)   in  the
          portfolios of its life  insurance subsidiary enhances the ability
          of  the  Company to  service its  debt,  provide security  to its
          policy  holders  and to  credit  relatively  consistent rates  of
          return to its policy holders.

                                   Subsequent Event

          At a Special Meeting  of Shareholders held on November  12, 1996,
          the  shareholders  of the  Company approved  an amendment  to the
          Articles of  Incorporation, increasing  the number of  authorized
          shares  of common stock from 3,304,200 to 10,000,000 and changing
          the  par value  from $1.00 per  share to  $0.20 per  share.  This
          action allowed  the Company  to implement the  five-for-one stock
          split which was authorized by the board of directors at a meeting
          held on September 27, 1996.  The record date for  the stock split
          is  November 12,  1996  and the  distribution  date for  the  new
          certificates  is November  19, 1996.   Shareholders  will not  be
          required to  surrender their original share  certificates.  Under
          the provisions of the amendment to the Articles of Incorporation,
          such certificates  are automatically  converted to shares  with a
          par value of $0.20.  The  Company will issue to each  shareholder
          as of  the record date  a certificate representing  an additional
          four shares of common stock for each share held.

                  FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES 

          Part II.  Other Information

          Item 1.  Legal Proceedings

          The Company  and its subsidiaries are defendants in certain legal
          actions related to the normal business operations of the Company.
          Management  believes that  the resolution  of such  legal actions
          will not have a material impact upon the financial statements.

          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

          At a Special Meeting  of Shareholders held on November  12, 1996,
          shareholder of the  Company approved an amendment to the Articles
          of Incorporation,  authorizing an  increase in common  stock from
          3,304,200 shares to 10,000,000 shares and changing  the par value
          from $1.00 to $0.20.  The approval of the amendment permitted the
          Company to  proceed with  the five-for-one  split  of the  common
          stock, as previously approved by the board of directors.


          Item 6.  Exhibits and Reports on Form 8-K

               (a) Exhibits

               (i)  Amendment  to  the  Articles  of  Incorporation  of the
                    Registrant, filed November 12, 1996.

               (ii) Form  10-K Annual  Report  of Registrant  for the  year
                    ended December  31, 1995 heretofore filed by Registrant
                    with  the Securities and  Exchange Commission, which is
                    hereby incorporated by reference. 

               (b) Reports on Form 8-K:

                   None

                  FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES

                                      SIGNATURE

          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.

                                        FINANCIAL INDUSTRIES CORPORATION 



                                        /s/ James M. Grace          
                                        James M. Grace
                                        Treasurer



          Date:     November 14, 1996