| SECURITIES AND        EXCHANGE COMMISSION                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| WASHINGTON, DC                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **FORM 10-Q**                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| QUARTERLY REPORT                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Under Section 13 or        15(d) of the Securities Exchange Act of 1934                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **FOR THREE AND SIX        MONTHS ENDED**                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| JUNE 30, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **Commission File:        0-1999**                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **KENTUCKY        INVESTORS, INC.**                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (Exact Name of        registrant as specified in Charter)                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **KENTUCKY **                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (State of Other        Jurisdiction of Incorporation or Organization)                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **61-6030333**                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (IRS Employer        Identification Number)                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **200 Capital        Avenue, P. O. Box 717**                                                                                                                                                                                                                                                                                                                                                                                                                              |
| **Frankfort,        Kentucky 40602**                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (Address of Principal        Executive Offices)                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **Registrant's        Telephone Number - (502) 223-2361**                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Securities registered        pursuant to Section 13(g) of the Act:                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **Common Capital        Stock par value $1.00 per share**                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (Title of Class)                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **Number of        outstanding shares as of June 30, 2003 - 1,150,703.72**                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 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       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Indicate by check        mark whether the registrant is an accelerated filer (as        defined in Rule 12b-2 of the Exchange Act). Yes              No   X                                                                                                                                                                                                                                                                  |

 

----

 

| **CONTENTS**                              |
|-------------------------------------------|
|                                      |
|                                      |
| **PART I - FINANCIAL        INFORMATION** |
|                                      |
|                                      |   | Page |
| ITEM 1.                                   | Consolidated        Financial Statements | 3 |
| ITEM 2.                                   | Management's        Discussion and Analysis of Financial Condition and        Results of Operations | 12 |
| ITEM 3.                                   | Quantitative and        Qualitative Disclosures about Market Risk | 19 |
| ITEM 4.                                   | Controls and        Procedures | 20 |

 

| **PART II - OTHER        INFORMATION** |
|----------------------------------------|
|                                   |
| ITEM 1.                                | Legal Proceedings | 21 |
| ITEM 2.                                | Changes in Securities        and Use of Proceeds | 21 |
| ITEM 3.                                | Defaults Upon Senior        Securities | 21 |
| ITEM 4.                                | Submission of Matters        to a Vote of Security Holders | 21 |
| ITEM 5.                                | Other Information | 22 |
| ITEM 6.                                | Exhibits and Reports        on Form 8-K | 22 |
|                                   |   |   |
| SIGNATURES                             |   | 22 |
|                                   |   |   |
| EXHIBIT 31                             |   | 23 |
| EXHIBIT 32                             |   | 25 |

 

----

 

| **PART I - FINANCIAL        INFORMATION**                |
|----------------------------------------------------------|
|                                                     |
| **ITEM 1**. **Consolidated        Financial Statements** |
|                                                     |
|                                                     |   |   |
|                                                     | **KENTUCKY        INVESTORS, INC.** |   |
|                                                     |   |   |
|                                                     | **Condensed        Consolidated Balance Sheets** |   |

|                                                                                  |
|---------------------------------------------------------------------------------------|
|                                                                                  | (Unaudited) |   |
|                                                                                  | June 30, 2003 | December 31, 2002 |
| Assets                                                                                |   |   |
|    Investments                                                         |   |   |
|      Fixed        maturities available for sale at           |   |   |
|        fair        value (amortized cost           |   |   |
|        2003-$263,845,206        - 2002 -           |   |   |
|        $254,389,964)                               | $293,010,567  | $278,944,643  |
|    Investment        in affiliate                                      | 4,000,000  | 4,000,000  |
|    Mortgage        loans on real estate                                | 24,648,014  | 24,020,718  |
|    Other        long term investments                                  | 640,371  | 769,847  |
|    Short        term investments                                       | 823,000  | 920,000  |
|    Other        investments                                            |     10,070,217  |     10,346,730  |
|                                                                                  |   |   |
|        Total        investments                    | $333,192,169  | $319,001,938  |
|                                                                                  |   |   |
|    Cash        and cash equivalents                                    | 3,630,011  | 7,773,597  |
|    Due        and deferred premiums                                    | 4,514,992  | 4,753,111  |
|    Deferred        acquisition costs                                   | 23,551,577  | 24,271,942  |
|    Present        value of future profits                              | 528,513  | 574,305  |
|    Leased        property under capital leases                         | 279,550  | 315,332  |
|    Other        assets                                                 | 7,482,859  | 7,340,333  |
|    Amounts        recoverable from reinsurers                          |     61,260,302  |     63,010,331  |
|                                                                                  | $434,439,973  | $427,040,889  |
|                                                                                  |   |   |
|                                                                                  |   |   |
| Liabilities and        Stockholders' Equity                                           |   |   |
|    Liabilities                                                         |   |   |
|      Policy        liabilities                               |   |   |
|        Benefit        reserves                     | $330,239,801  | $325,336,298  |
|        Unearned        premium reserves            | 17,875,603  | 18,968,936  |
|        Other        policyholders' funds           |       3,795,716  |       4,007,740  |
|          Total        policy liabilities | $351,911,120  | $348,312,974  |
|        Federal        income taxes                 | 12,871,633  | 11,356,823  |
|        Obligations        under capital leases     | 278,710  | 315,346  |
|        Notes        payable                        | 6,112,455  | 6,386,638  |
|        Other        liabilities                    |       6,619,077  |       7,041,358  |
|                                                                                  |   |   |
|        Total        liabilities                    | $377,792,995  | $373,413,139  |
|                                                                                  |   |   |
| Stockholders' Equity                                                                  |   |   |
|    Common        Stock (shares issued:                                 |   |   |
|      2003        - 1,150,704, 2002 - 1,143,390)              | $    1,150,704  | $    1,143,390  |
|    Paid-in        surplus                                              | 8,529,028  | 8,495,833  |
|    Accumulated        other comprehensive                              |   |   |
|      income                                                  | 18,338,477  | 15,432,098  |
|    Retained        earnings                                            |     28,628,769  |     28,556,429  |
|                                                                                  |   |   |
|        Total        stockholders' equity           | $  56,646,978  | $  53,627,750  |
|                                                                                  |   |   |
|                                                                                  | $434,439,973  | $427,040,889  |
|                                                                                  |   |   |
| See accompanying        notes.                                                        |

 

----

 

|   |
|--------|
|   | **KENTUCKY        INVESTORS, INC.** |   |
|   |   |   |
|   | **Condensed        Consolidated Income Statements (Unaudited)** |   |

|                                                                   |                                                                          |
|------------------------------------------------------------------------|-------------------------------------------------------------------------------|
|                                                                   | Three        Months Ended June 30                                             |
|                                                                   |       2003                                      |     2002 |
| REVENUES                                                               |                                                                          |   |
|                                                                   |                                                                          |   |
|    Premiums        and other considerations             | $10,757,814                                                              | $13,660,126  |
|    Investment        income, net of expenses            | 4,590,787                                                                | 4,510,271  |
|    Realized        gain on investments, net             | 395,407                                                                  | 359,534  |
|    Other        income                                  |        326,727                        |        334,113  |
|                                                                   |                                                                          |   |
|       Total        revenues              | $16,070,735                                                              | $18,864,044  |
|                                                                   |                                                                          |   |
| BENEFITS AND EXPENSES                                                  |                                                                          |   |
|                                                                   |                                                                          |   |
|    Death        and other policyholder benefits         | $  7,684,498                                                   | $  7,745,221  |
|    Guaranteed        annual endowments                  | 196,070                                                                  | 202,884  |
|    Dividends        to policyholders                    | 195,979                                                                  | 196,033  |
|    Increase        in benefit reserves and unearned     |                                                                          |   |
|      premiums                                 | 3,685,571                                                                | 5,640,713  |
|    Amortization        (deferral) of deferred           |                                                                          |   |
|      acquisition        costs, net            | 239,112                                                                  | (69,634) |
|    Commissions                                          | 875,513                                                                  | 1,423,727  |
|    Other        insurance expenses                      |     3,005,669                                        |     2,862,476  |
|                                                                   |                                                                          |   |
|       Total        benefits and expenses | $15,882,412                                                              | $18,001,420  |
|                                                                   |                                                                          |   |
| Income before federal        income tax                                | $     188,323                                   | $     862,624  |
|                                                         |                                                                          |   |
|                                                         |                                                                          |   |
| Provision (benefit)        for federal                                 |                                                                          |   |
|    income        taxes:                                 |                                                                          |   |
|    Current                                              | $     145,009                                   | $       (9,460) |
|    Deferred                                             |        (91,000)                            |        340,972  |
|                                                                   |                                                                          |   |
|                                                                   | $       54,009                        | $     331,512  |
|                                                                   |                                                                          |   |
| Net income                                                             | $     134,314                                   | $     531,112  |
|                                                                   |                                                                          |   |
| Diluted earnings per        share                                      | $           0.12  | $           0.47  |
|                                                                   |                                                                          |   |
| Dividends per share                                                    | $           0.38  | $           0.38  |
|                                                                   |
| See accompanying        notes.                                         |
|                                                                   |

 

----

 

| **KENTUCKY        INVESTORS, INC.**                                    |
|------------------------------------------------------------------------|
|                                                                   |
| **Condensed        Consolidated Income Statements (Unaudited)**        |
|                                                                   |   |
|                                                                   | Six        Months Ended June 30 |
|                                                                   |   2003 |   2002 |
| REVENUES                                                               |   |   |
|                                                                   |   |   |
|    Premiums        and other considerations             | $21,232,838  | $27,554,894  |
|    Investment        income, net of expenses            | 9,231,047  | 8,984,484  |
|    Realized        gain on investments, net             | 525,080  | 691,262  |
|    Other        income                                  |       558,721  |       560,890  |
|                                                                   |   |   |
|       Total        revenues              | $31,547,686  | $37,791,530  |
|                                                                   |   |   |
| BENEFITS AND EXPENSES                                                  |   |   |
|                                                                   |   |   |
|    Death        and other policyholder benefits         | $ 16,879,251  | $ 16,153,921  |
|    Guaranteed        annual endowments                  | 365,148  | 377,260  |
|    Dividends        to policyholders                    | 365,374  | 368,648  |
|    Increase        in benefit reserves and unearned     |   |   |
|      premiums                                 | 5,330,786  | 11,330,121  |
|    Amortization        (deferral) of deferred           |   |   |
|      acquisition        costs, net            | 397,591  | (597,562) |
|    Commissions                                          | 1,834,727  | 2,932,296  |
|    Other        insurance expenses                      |     5,740,859  |     5,540,950  |
|                                                                   |   |   |
|       Total        benefits and expenses | $30,913,736  | $36,105,634  |
|                                                                   |   |   |
| Income before federal        income                                    |   |   |
|    tax        and cumulative effect of                  |   |   |
|    change        in accounting principle                | $     633,950  | $  1,685,896  |
|                                                         |   |   |
| Provision (benefit)        for federal                                 |   |   |
|    income        taxes:                                 |   |   |
|    Current                                              | $     222,158  | $     151,056  |
|    Deferred                                             |       (61,000) |        352,972  |
|                                                                   |   |   |
|                                                                   | $     161,158  | $     504,028  |
|                                                                   |   |   |
| Income before        cumulative effect of change                       |   |   |
|    in        accounting principle                       | $     472,792  | $  1,181,868  |
|                                                                   |   |   |
| Cumulative effect of        change in                                  |   |   |
|    accounting        principle                          | $                 -  | $   (970,862) |
|                                                                   |   |   |
| Net Income                                                             | $     472,792  | $     211,006  |
|                                                                   |   |   |
| Diluted earnings per        share:                                     |   |   |
|    Before        cumulative effect of change in         |   |   |
|       accounting        principle        | $           0.41  | $           1.04  |
|    Cumulative        effect of change in                |   |   |
|       accounting        principle        | $                 -  | $         (0.86) |
|                                                                   |   |   |
| Diluted earnings per        share                                      | $           0.41  | $           0.18  |
|                                                                   |   |   |
| Dividends per share                                                    | $           0.38  | $           0.38  |
|                                                                   |   |   |
| See accompanying        notes.                                         |

 

----

 

| **KENTUCKY        INVESTORS, INC.**                                   |
|-----------------------------------------------------------------------|
|                                                                  |
| **Condensed        Consolidated Statements of Cash Flow (Unaudited)** |
|                                                                  |   |
|                                                                  | Six        Months Ended June 30 |
|                                                                  | 2003 | 2002 |
|                                                                  |   |   |
| Net cash provided by        operating activities                      | $    5,401,665  | $     9,156,308  |
|                                                                  |   |   |
| Investing activities                                                  |   |   |
|    Securities        available-for-sale:               |   |   |
|      Purchases                               | $(39,060,842) | $ (39,622,360) |
|      Sales        and maturities             | 30,591,687  | 27,767,811  |
|    Other        investments:                           |   |   |
|      Cost        of acquisition              | (2,175,453) | (906,507) |
|      Sales        and maturities             | 1,711,616  | 1,910,169  |
|    Other        investing activities                   |          (28,981) |         (311,466) |
|                                                                  |   |   |
| Net cash used by        investing activities                          | $  (8,961,973) | $ (11,162,353) |
|                                                                  |   |   |
| Financing activities                                                  |   |   |
|    Receipts        from universal life policies        |   |   |
|      credited        to policyholder account |   |   |
|      balances                                | $    3,649,932  | $     3,571,597  |
|    Return        of policyholder account balances      |   |   |
|      on        universal life policies       | (3,609,006) | (4,098,333) |
|    Net        proceeds from (payments on)              |   |   |
|      notes        payable                    | (274,183) | 3,974,360  |
|    Other        financing activities                   |        (350,021) |        (362,983) |
|                                                                  |   |   |
| Net cash provided        (used) by financing                          |   |   |
|    activities                                          | $     (583,278) | $     3,084,641  |
|                                                                  |   |   |
| Increase (decrease)        in cash and                                |   |   |
|      cash        equivalents                 | $  (4,143,586) | $     1,078,596  |
|                                                                  |   |   |
| Cash and cash        equivalents at beginning                         |   |   |
|     of        period                              |       7,773,597  |      6,432,594  |
|                                                                  |   |   |
| Cash and cash        equivalents at end of period                     | $    3,630,011  | $     7,511,190  |
|                                                                  |
| See accompanying        notes.                                        |
|                                                                  |

 

----

 

| **KENTUCKY        INVESTORS, INC.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **NOTES TO CONDENSED        CONSOLIDATED FINANCIAL STATEMENTS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **June 30, 2003**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **(Unaudited)**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **NOTE A - Nature of        Operations:**Kentucky Investors, Inc. (Kentucky        Investors) is the holding company of Investors Heritage        Life Insurance Company (Investors Heritage Life),        Investors Heritage Printing, Inc., a printing company,        Investors Heritage Financial Services Group, Inc., an        insurance marketing company, and Family Assignment        Services, LLC, a limited liability company that provides        advance funding of funerals in exchange for the        irrevocable assignment of life insurance policies from        other nonaffiliated companies. These entities are        collectively hereinafter referred to as the        "Company". The operations of Kentucky Investors        are principally that of its life insurance company,        Investors Heritage Life. The operations of the        non-insurance subsidiaries of Kentucky Investors account        for less than 1% of the Company's total operations.                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| The Company's        operations involve the sale and administration of various        insurance and annuity products, including, but not        limited to, participating, non-participating, whole life,        limited pay, universal life, annuity contracts, credit        life, credit accident and health and group insurance        policies. The principal markets for the Company's        products are in the Commonwealths of Kentucky and        Virginia, and the states of North Carolina, South        Carolina, Ohio, Indiana, Florida, Tennessee, Illinois,        Georgia, West Virginia, Arizona, Michigan, Mississippi        and Texas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **NOTE B - Basis of        Presentation:**The accompanying unaudited condensed        consolidated financial statements of the Company have        been prepared in accordance with accounting principles        generally accepted in the United States for interim        financial information and the instructions to Form 10-Q        and Article 10 of Regulation S-X. Accordingly, they do        not include all of the information and footnotes required        by accounting principles generally accepted in the United        States for complete financial statements. In the opinion        of management, all adjustments (consisting of normal        recurring accruals) considered necessary for a fair        presentation have been included. Operating results for        the six months ended June 30, 2003, are not necessarily        indicative of the results that may be expected for the        year ending December 31, 2003. For further information,        refer to the consolidated financial statements and        footnotes thereto for the year ended December 31, 2002,        included in the Company's Annual Report on Form 10-K. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| The preparation of        financial statements in conformity with accounting        principles generally accepted in the United States        requires management to make estimates and assumptions        that affect the amounts reported in the financial        statements and accompanying notes. Actual results could        differ from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Certain prior period        amounts have been reclassified to conform to the current        period presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **NOTE C - Earnings        per Share:**Earnings per share of common stock were        computed based on the weighted average number of common        shares outstanding during each period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

|                                                  | **Income**                                                                                              | **Shares**                                                                                        | **Per Share**                                                                               |
|-------------------------------------------------------|---------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|
|                                                  |                                                                                                    |                                                                                              | **Amount**                                                                                  |
| **Three months ended        June 30, 2003**           |                                                                                                    |                                                                                              |                                                                                        |
| *Basic EPS*                                           |                                                                                                    |                                                                                              |                                                                                        |
| Net income                                            | $   134,314                                                                         |   1,146,985                                                                        | $       0.12                                        |
| Dilutive effect of        common equivalent shares of |                                                                                                    |                                                                                              |                                                                                        |
|    stock        options                |                -   |          6,074                                  |               -  |
|                                                  |                                                                                                    |                                                                                              |                                                                                        |
| *Diluted EP*S                                         |                                                                                                    |                                                                                              |                                                                                        |
| Net income                                            | $   134,314                                                                         |   1,153,059                                                                        | $       0.12                                        |
|                                                  |                                                                                                    |                                                                                              |                                                                                        |
| **Three months ended        June 30, 2002**           |                                                                                                    |                                                                                              |                                                                                        |
| *Basic E*PS                                           |                                                                                                    |                                                                                              |                                                                                        |
| Net income                                            | $   531,112                                                                         |   1,134,192                                                                        | $       0.47                                        |
| Dilutive effect of        common equivalent shares of |                                                                                                    |                                                                                              |                                                                                        |
|    stock        options                |                -        |                -  |               -  |
|                                                  |                                                                                                    |                                                                                              |                                                                                        |
| *Diluted EPS*                                         |                                                                                                    |                                                                                              |                                                                                        |
| Net income                                            | $   531,112                                                                         |   1,134,192                                                                        | $       0.47                                        |
|                                                  |                                                                                                    |                                                                                              |                                                                                        |
| **Six months ended        June 30, 2003**             |                                                                                                    |                                                                                              |                                                                                        |
| *Basic EPS*                                           |                                                                                                    |                                                                                              |                                                                                        |
| Net income                                            | $   472,792                                                                         |   1,146,985                                                                        | $       0.41                                        |
| Dilutive effect of        common equivalent shares of |                                                                                                    |                                                                                              |                                                                                        |
|    stock        options                |                -        |          7,615                                  |               -  |
|                                                  |                                                                                                    |                                                                                              |                                                                                        |
| *Diluted EP*S                                         |                                                                                                    |                                                                                              |                                                                                        |
| Net income                                            | $   472,792                                                                         |   1,154,600                                                                        | $       0.41                                        |
|                                                  |                                                                                                    |                                                                                              |                                                                                        |
| **Six months ended        June 30, 2002**             |                                                                                                    |                                                                                              |                                                                                        |
| *Basic E*PS                                           |                                                                                                    |                                                                                              |                                                                                        |
| Net income                                            | $   211,006                                                                         |   1,134,192                                                                        | $       0.18                                        |
| Dilutive effect of        common equivalent shares of |                                                                                                    |                                                                                              |                                                                                        |
|    stock        options                |                -        |                -  |               -  |
|                                                  |                                                                                                    |                                                                                              |                                                                                        |
| *Diluted EPS*                                         |                                                                                                    |                                                                                              |                                                                                        |
| Net income                                            | $   211,006                                                                         |   1,134,192                                                                        | $       0.18                                        |
|                                                  |

| **NOTE D - Segment        Data:**The Company operates in four segments as shown        in the following table. All segments include both        individual and group insurance. Identifiable revenues and        expenses are assigned directly to the applicable segment.        Net investment income is generally allocated to the        insurance and the corporate segments in proportion to        policy liabilities and stockholders' equity,        respectively. Corporate segment results for the parent        company, Investors Heritage Printing, Inc., Investors        Heritage Financial Services Group, Inc. and Family        Assignment Services LLC, after elimination of        intercompany amounts, are presented. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | **Three Months Ended** |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | **June        30, 2003** | **June        30, 2002** |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
| Revenues:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |
|    Preneed        & Burial Products                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | $11,801,259  | $14,437,796  |
|    Traditional        & Universal Life Products                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 3,135,752  | 3,366,132  |
|    Credit        Insurance Products &                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
|       Administrative        Services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 82,606  | 59,236  |
|    Corporate        & Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |     1,051,118  |     1,000,880  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $16,070,735  | $18,864,044  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
| Pre-Tax Income (Loss)        from Operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
|    Preneed        & Burial Products                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | $   (184,518) | $       37,857  |
|    Traditional        & Universal Life Products                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 9,962  | 252,550  |
|    Credit        Insurance Products &                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
|       Administrative        Services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 1,499  | 11,181  |
|    Corporate        & Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |        361,380  |        561,036  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $     188,323  | $     862,624  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | **Six Months Ended** |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | **June        30, 2003** | **June        30, 2002** |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
| Revenues:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |
|    Preneed        & Burial Products                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | $23,408,043  | $29,266,206  |
|    Traditional        & Universal Life Products                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 6,241,955  | 6,569,748  |
|    Credit        Insurance Products &                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
|       Administrative        Services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 156,869  | 116,705  |
|    Corporate        & Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |     1,740,819  |     1,838,871  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $31,547,686  | $37,791,530  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
| Pre-Tax Income (Loss)        from Operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
|    Preneed        & Burial Products                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | $   (315,858) | $     (34,495) |
|    Traditional        & Universal Life Products                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 383,827  | 751,131  |
|    Credit        Insurance Products &                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
|       Administrative        Services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 16,324  | 6,636  |
|    Corporate        & Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       549,657  |        962,624  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $    633,950  | $  1,685,896  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
| **NOTE E - Federal        Income Taxes:**Current taxes are provided based on        estimates of the projected effective annual tax rate.        Deferred taxes reflect the net tax effects of temporary        differences between the carrying amounts of assets and        liabilities for financial reporting purposes and the        amounts used for income tax purposes.                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **NOTE F -        Comprehensive Income:**The components of comprehensive        income, net of related tax, are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | **Three Months Ended** |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | **June        30, 2003** | **June        30, 2002** |
| Net income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | $    134,314 | $      531,112 |
| Net unrealized gains        on                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |
|   available-for-sale        securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |    3,281,827 |      4,812,742 |
| Comprehensive income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $ 3,416,141 | $   5,343,854 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | **Six Months Ended** |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | **June        30, 2003** | **June        30, 2002** |
| Net income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | $    472,792 | $      211,006 |
| Net unrealized gains        on                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |
|   available-for-sale        securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |    2,906,379 |      2,405,358 |
| Comprehensive income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $ 3,379,171 | $   2,616,364 |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **NOTE G - Notes        Payable:** On June 28, 2002, the Company entered into a        long term debt agreement with Cherokee National in the        amount of $4,000,000, with interest to be paid quarterly,        at a rate equal to the prime rate, and due on June 28,        2007. The funds were used to purchase 400,000 shares of        Cherokee National common stock valued at $4,000,000. In        December 2002, the 400,000 shares of common stock were        exchanged for 400,000 shares of Series A preferred stock.        The interest rate was 4.25% at June 30, 2003. Interest        expense and interest paid on this note was $85,000 in        2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| On September 30,        2002, Family Assignment entered into a long-term debt        agreement with Farmers Bank and Capital Trust Co.,        Frankfort, Kentucky, by establishing a line of credit in        the amount of $2,000,000 with interest to be paid monthly        at a rate equal to the prime rate and due September 30,        2003. At June 30, 2003, $243,000 was outstanding on this        note. The purpose of this line of credit is to provide        advance funding for funerals in exchange for an        irrevocable assignment of life insurance policies from        other unaffiliated insurance companies. The interest rate        was 4.00% at June 30, 2003. Interest expense and interest        paid on the note was $5,419 in 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| On December 27, 2000,        the Company entered into a long-term debt agreement with        Fifth Third Bank in the amount of $2,000,000, at an        initial interest rate of 8.5%, due on December 27, 2005.        The funds were used to retire notes payable and to issue        a surplus note to its subsidiary, Investors Heritage        Life. On May 1, 2001, the Company borrowed an additional        $400,000 on the note and the interest rate was adjusted        to 1% under the prime rate. The interest rate was 3.25%        at June 30, 2003. Interest expense and interest paid on        the note was $31,817 in 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **NOTE H - New        Accounting Pronouncements:**In January 2003, the        Financial Accounting Standards Board (FASB) issued        Interpretation No. 46, Consolidation of Variable Interest        Entities an Interpretation of Accounting Research        Bulletin (ARB) No. 51 which states certain criteria for        use in consolidating another entity. The Company has        evaluated Interpretation No. 46 and does not believe it        will have a material impact on the financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| In May 2003, the        Financial Accounting Standards Board issued Statement of        Financial Accounting Standards No. 150, Accounting for        Certain Financial Instruments with Characteristics of        Both Liabilities and Equity (FAS 150), effective for        interim reporting periods beginning after June 15, 2003.        Under the new rules, certain financial instruments        classified as equity will be required to be presented as        liabilities. The Company has evaluated FAS 150 and does        not believe it will have a material impact on the        financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **ITEM 2.        Management's Discussion and Analysis of Financial        Condition and Results of Operations**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
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| **General**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Kentucky Investors is        incorporated under the laws of the Commonwealth of        Kentucky and wholly owns Investors Heritage Life        Insurance Company, a life insurance company also        incorporated under the laws of the Commonwealth of        Kentucky. Kentucky Investors also wholly owns Investors        Heritage Financial Services Group, Inc., a Kentucky        insurance marketing company which was formed in 1994,        Investors Heritage Printing, Inc., a Kentucky printing        company that provides printing to Investors Heritage Life        and other unaffiliated parties, and Family Assignment        Services, LLC, a Kentucky limited liability company that        provides advance funding of funerals in exchange for the        irrevocable assignment of life insurance policies from        other nonaffiliated companies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Investors Heritage        Life offers a full line of life insurance products        including, but not limited to, whole life, term life,        single premium life, multi-pay life and annuities.        Investors Heritage Life's primary lines of business are        insurance policies and annuities utilized to fund preneed        funeral contracts, credit life and credit disability        insurance, and term life and reducing term life sold        through financial institutions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Investors Heritage        Life introduced a new product series during the first        quarter of 2003, the Legacy Protector and Legacy        Preferred pre-need product series, which replaced the        Legacy 2000 series. These new plans were designed to help        combat a challenging economic environment and increased        mortality anti-selection. In general, commissions are        slightly lower, guaranteed benefits have been moved        further from issue, reserves have been adjusted to better        reflect experience, and an underwritten plan has been        added.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Investors Heritage        Life's final expense product is the Heritage Final        Expense, which was introduced during the third quarter of        2001 and replaced the Legacy 2000 Final Expense series.        This product is being marketed through funeral homes and        independent agencies. Investors Heritage Life entered        into a reinsurance agreement with Munich American        Reassurance Company with regard to this product to help        reduce the initial surplus strain and minimize        fluctuations in future profits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Investors Heritage        Life also provides term insurance products, both on a        decreasing and a level basis. The Term to 95 product        provides level coverage. We will continue to provide our        decreasing term policy that is primarily sold through        financial institutions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| The Company's        operating earnings are derived primarily from revenues        generated from the sale of insurance products by        Investors Heritage Life, plus the Company's investment        results, including realized gains (losses), less interest        credited to policyholders, benefits to policyholders and        expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| While the Company        continues to expand the operations of Investors Heritage        Financial, Investors Heritage Printing and Family        Assignment Services, less than 1% of the Company's total        operations were generated by those subsidiaries. As        expected, more than 10% of Investors Heritage Financial's        revenues during the second quarter 2003 were derived from        the sale of Investors Heritage Life's credit insurance        products. During the second quarter of 2003, the Company        received dividends from Investors Heritage Financial in        the amount of $36,000. Investors Heritage Printing did        not pay a dividend during the second quarter of 2003. The        Company anticipates dividend payments from Investors        Heritage Financial and Investors Heritage Printing during        the third quarter in 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| The Company's primary        uses of cash are operating expenses, debt service and        dividend payments, and the Company's principal sources of        cash are the dividends paid to it by Investors Heritage        Life, Investors Heritage Financial and Investors Heritage        Printing. Investors Heritage Life's principal sources of        cash are from the sale of life insurance policies and        investment income, including realized gains (losses),        less benefits to policyholders and expenses. Therefore,        the remainder of the discussion will deal with the        financial condition and results of operations of        Investors Heritage Life.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **CRITICAL        ACCOUNTING POLICIES AND ESTIMATES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| The Company's        discussion and analysis of its financial condition and        results of operations are based on its consolidated        financial statements, which have been prepared in        accordance with accounting principles generally accepted        in the United States. Preparation of these financial        statements requires the Company to make estimates and        judgments that affect the reported amounts of assets,        liabilities and revenues and expenses. On an on-going        basis, the Company evaluates its estimates, including        those related to investments, deferred acquisition costs,        present value of future profits, policy liabilities,        income taxes, regulatory requirements, contingencies and        litigation. The Company bases such estimates on        historical experience and other assumptions believed to        be reasonable under the circumstances, the results of        which form the basis for making judgments about the        carrying values of assets and liabilities that are not        readily apparent from other sources. Actual results may        differ from these estimates under different assumptions        or conditions. The Company believes the following        accounting policies, judgments and estimates are critical        to the preparation of its consolidated financial        statements.                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **Investment in Debt        and Equity Securities and Mortgage Loans**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| The Company holds        debt and equity interests in a variety of companies.        Additionally, the Company originates, underwrites and        manages mortgage loans. The Company records an investment        impairment charge when it believes an investment has        experienced a decline in value that is other than        temporary. Future adverse changes in market conditions,        poor operating results of underlying investments and        defaults on mortgage loan payments could result in losses        or an inability to recover the current carrying value of        the investments, thereby possibly requiring an impairment        charge in the future.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **Deferred        Acquisition Costs and Present Value of Future Profits**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| At June 30, 2003, the        combined balance of our deferred acquisition costs and        present value of future profits ("PVFP") was        $24,080,090 compared to $24,846,247 at December 31, 2002.        The recovery of these costs is dependent on the future        profitability of the related business. Each year, we        evaluate the recoverability of the unamortized balance of        the deferred acquisition costs and PVFP. We consider        estimated future gross profits or future premiums,        expected mortality or morbidity, interest earned and        credited rates, persistency and expenses in determining        whether the balance is recoverable. If we determine a        portion of the unamortized balance is not recoverable, it        is charged to amortization expense. The assumptions we        use to amortize and evaluate the recoverability of the        deferred acquisition costs and PVFP involve significant        judgment. A significant revision to these assumptions        will impact future financial results.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **Policy Liabilities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Establishing        liabilities (and related intangible assets) for the        Company's long-duration insurance contracts requires        making various assumptions, including policyholder        persistency, mortality rates, investment yields,        discretionary benefit increases, new business pricing,        and operating expense levels. The Company evaluates        historical experience for these factors when assessing        the need for changing current assumptions. However, since        many of these factors are interdependent and subject to        short-term volatility during the long-duration contract        period, substantial estimates and judgment are required.        Accordingly, if actual experience emerges differently        from that assumed, material financial statement        adjustments could be required.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **Investments,        Liquidity and Capital Resources**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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| Premiums, which        include mortality and expense charges, and investment        income are Investors Heritage Life's primary sources of        cash flow used to meet short-term and long-term cash        requirements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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| Investors Heritage        Life's short-term obligations consist primarily of        policyholder benefits and operating expenses. Investors        Heritage Life has historically been able to meet these        obligations out of operating cash, premiums and        investment income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
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| Management is not        aware of any commitments or unusual events that could        materially affect capital resources.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
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| During the fourth        quarter of 2000 Kentucky Investors borrowed $2,000,000 on        a long-term basis, and an additional $400,000 was        borrowed during the second quarter of 2001. Kentucky        Investors utilized $200,000 of the loan amount to reduce        debt to Investors Heritage Life and $1,800,000 was loaned        to Investors Heritage Life in exchange for a surplus        note. The note calls for Investors Heritage Life to pay,        on or before the first day of each quarter, interest at        an 8.5% annual rate, upon prior approval by the Kentucky        Department of Insurance. Such interest may be paid out of        Investors Heritage Life's earned surplus, operating        income, or paid-in and contributed surplus.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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| In the second quarter        of 2002 the Company acquired 400,000 shares of common        stock of Cherokee National Life Insurance Company        (Cherokee) in exchange for the Company's promissory note        in the amount of $4,000,000. Interest will be paid        quarterly at a rate equal to the prime rate and the note        is due June 28, 2007. The Company has also guaranteed        another $2,000,000 line-of-credit note with a financial        institution on behalf of Family Assignment Services, of        which $243,000was outstanding at        June 30, 2003. The purpose of this line of credit is to        provide advance funding for funerals in exchange for an        assignment of life insurance policies from other        unaffiliated companies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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| The Company and        Investors Heritage Life will continue to explore various        opportunities including corporate reorganizations,        acquisitions and purchasing blocks of business from other        companies, which may dictate an additional need for        either long-term or short-term debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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| Investors Heritage        Life has maintained a sound, conservative investment        strategy. At June 30, 2003, 87.9% of invested assets        consisted of fixed income public bonds compared to 87.4%        at December 31, 2002. Fixed income assets are managed by        Conning Asset Management Company, an independent        portfolio manager.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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| Additionally,        Investors Heritage Life also engages in commercial and        residential mortgage lending with approximately 95.6% of        these investments being in commercial properties. All        mortgage loans are originated in-house and all loans are        secured by first mortgages on the real estate. At June        30, 2003, 7.4% of invested assets consisted of mortgage        loans compared to 7.5% at December 31, 2002. Management        anticipates funding several new mortgage loan investments        during the remainder of 2003 to maintain a similar to        slightly higher percentage of mortgage loans to total        invested assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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| Investors Heritage        Life's conservative approach in the product development        area and the strength and stability of its fixed income        and mortgage loan portfolios provide adequate liquidity        both in the short-term and the long-term. At June 30,        2003 and December 31, 2002, Investors Heritage Life's        fixed income investments were 100% investment grade as        rated by Standard & Poor's. None of Investors        Heritage Life's fixed income assets are in default and        there has been no material change in the distribution of        its fixed income portfolio.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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| Investors Heritage        Life's principal long-term obligations are fixed        contractual obligations incurred in the sale of its life        insurance products. The premiums charged for these        products are based on conservative and actuarially sound        assumptions as to mortality, persistency and interest.        Management believes these assumptions will produce        revenues sufficient to meet its future contractual        benefit obligations and operating expenses, and provide        an adequate profit margin.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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| The Company        continuously evaluates all of its investments based on        current economic conditions, credit loss experience and        other developments. The Company evaluates the difference        between the cost/amortized cost and estimated fair value        of its investments to determine whether a decline in        value is temporary or other than temporary in nature.        This determination involves a degree of uncertainty. If a        decline in the fair value of a security is determined to        be temporary, the decline is recorded as an unrealized        loss in shareholders' equity. If a decline in a        security's fair value is considered to be other than        temporary, the security is written down to the estimated        fair value with a corresponding realized loss recognized        in the consolidated statements of income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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| The assessment of        whether a decline in fair value is considered temporary        or other than temporary includes management's judgment as        to the financial position and future prospects of the        entity issuing the security. It is not possible to        accurately predict when it may be determined that a        specific security will become impaired. Future impairment        charges could be material to the results of operations of        the Company. The amount of impairment charge before tax        was $300,000 in the second quarter of 2003, compared to        $-0- in the second quarter of 2002, and $300,000 and $-0-        for the first six months of 2003 and 2002, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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| Management believes        that it will recover the cost basis in the securities        held with unrealized losses as it has both the intent and        ability to hold the securities until they mature or        recover in value. Securities are sold to achieve        management's investment goals, which include the        diversification of credit risk, the maintenance of        adequate portfolio liquidity and the management of        interest rate risk. In order to achieve these goals,        sales of investments are based upon current market        conditions, liquidity needs and estimates of the future        market value of the individual securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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| **Results of        Operations**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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| Total premium income        (net of reinsurance) for the second quarter 2003        decreased 21.2% when compared to the second quarter of        2002 and decreased 22.9% for the first six months of 2003        when compared to the same period in 2002. The decrease        was due to the introduction of our new Legacy Preneed        program. Other factors contributing to the decrease        include poor weather conditions in our marketing regions,        the economic environment, and uncertainties regarding the        continuing conflict with Iraq. Net investment income for        the second quarter 2003 compared to the second quarter of        2002 increased 1.8% and increased 2.7%for the first six        months of 2003 when compared to the same period in 2002.        The increase is primarily due to a larger asset base,        however lower yield rates on new asset purchases has        impacted the rate of return on our investment portfolio.        Overall revenue for the second quarter 2003 decreased        14.8% when compared to the second quarter of 2002 and        decreased 16.5% for the first six months of 2003 when        compared to the same period in 2002.                                                                                                                                                                                                                                                                                                                                                                            |
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| Total Benefits and        Expenses were 11.8% lower in the second quarter of 2003        when compared to the same quarter of 2002 and 14.4% lower        for the first six months of 2003 when compared to the        same period of 2002, primarily due to lower premium        production in pre-need sales. After providing for federal        income taxes, the Company's Net Income (before cumulative        effect of change in accounting principle) was $472,792        with Earnings per share of $0.41 for the first six months        of 2003 as compared to Net Income of $1,181,868 and        Earnings per share of $1.04 for the same period in 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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| A dividend of $0.38        per share was paid April 7, 2003, to shareholders of        record on March 21, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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| **Business Segments**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
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| Management internally        evaluates the performance of Investors Heritage Life        operations by the following business segments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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| Preneed & Burial        Products include both life and annuity products sold by        funeral directors or affiliated agents to fund        prearranged funerals. Revenues for this segment were        18.3% lower for the second quarter of 2003 when compared        to the same period of 2002 and 20.0% lower in the first        six months of 2003 when compared to the same period of        2002. The decrease is due primarily to the introduction        of our new Legacy product series, and the phase-out of        the prior series. The poor weather conditions in our        marketing regions, the economic environment, and        uncertainties regarding the continuing conflict with Iraq        were also contributing factors to the decline in        revenues. Pre-Tax Income (Loss) from Operations for the        second quarter 2003 was ($184,518) compared to $37,857        for the same period for 2002 and ($315,858)for the first six        months of 2003 compared to ($34,495)for the same period        for 2002. The increased loss in 2003 compared to 2002 is        due primarily to the factors cited previously inasmuch as        the profit margin on this line of business is directly        related to the decrease in revenues. Investment income        pressures from the low interest rate environment causing        lower yields were also a factor this quarter on our loss.        Investors Heritage Life plans to continue its expansion        of territory and recruitment of agents in the Preneed and        Burial insurance market. |
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| Traditional &        Universal Life Products include traditional life and        group life insurance products, annuities (primarily        qualified) and universal life products. Revenues for this        segment were 6.8% lower for the second quarter of 2003        when compared to the second quarter of 2002 and 5.0%        lower for the first six months of 2003 when compared to        the same period in 2002. Revenues on this segment are        primarily derived from the sales of term insurance        products through banks. The sales are tied to loan        demand, which has been fairly flat this year and has        shown insignificant fluctuations. Pre-Tax Income from        Operations for the first six months of 2003 was 49% lower        than for the first six months of 2002 primarily because        of general insurance expenses associated with the sales,        issuance and administration costs of these products as        well as the investment income pressures cited above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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| Credit Insurance        Products and Administrative Services include the        marketing and administration of credit life and credit        accident & health insurance products. Revenues for        2003 were $82,606 for the second quarter compared to        $59,236 for the same period for 2002 and $156,869 for the        first six months of 2003 compared to $116,705 for the        same period in 2002. Pre-Tax Income from Operations was        $1,499 for the second quarter of 2003 compared to $11,181        for the second quarter of 2002 and $16,324 for the first        six months of 2003 compared to $6,636 for the same period        in 2002. The revenues and income on the credit insurance        line are directly affected by consumer loan demand.        During 2002, because of economic uncertainties, there was        a large decrease in consumer loan demand, which has        leveled off in 2003. All of the related underwriting risk        currently produced is being reinsured 100% with        highly-rated life companies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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| Corporate & Other        consists of corporate accounts measured primarily by        stockholders' paid-in capital, contributed surplus,        earned surplus, property and equipment, and other minor        business lines which include group annuities and group        and individual accident and health products. Revenues        were 5.0% higher and Pre-Tax Income from Operations was        35.6% lowerfor the second        quarter of 2003 when compared to the second quarter 2002.        Revenues were 5.3% lower for the first six months of 2003        when compared to the same period in 2002 and Pre-Tax        Income from Operations was 42.9% lower for the first six        months of 2003 when compared to the same period in 2002.        The decreases for the second quarter in 2003 are        primarily due to a smaller realized gain on investment as        compared to second quarter 2002. Another factor        contributing to the decrease in Pre-Tax Income from        Operations would be the decision this quarter to assign        more target surplus, through the allocation of net        investment income and general expenses, to other lines of        business because of the low interest rate environment.                                                                                                                                                                                                                                                                                                                                    |
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| **Federal Income        Taxes**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
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| Current taxes are        provided based on estimates of the projected effective        annual tax rate. Deferred taxes reflect the net tax        effects of temporary differences between the carrying        amounts of assets and liabilities for financial reporting        purposes and the amounts used for income tax purposes.        The effective tax rate was 25.4% at June 30, 2003        compared to 29.9% for June 30, 2002. The decrease in the        effective tax rate is due primarily to the deferred tax        calculation, specifically, the temporary differences        arising from reserve calculations for financial reporting        purposes as opposed to income tax reporting purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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| **Forward Looking        Information**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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| The Company cautions        readers regarding certain forward-looking statements        contained in this report and in any other statements made        by, or on behalf of, the Company, whether or not in        future filings with the Securities and Exchange        Commission. Forward-looking statements are statements not        based on historical information and which relate to        future operations, strategies, financial results, or        other developments. Statements using verbs such as        "expect", "anticipate",        "believe" or words of similar import generally        involve forward-looking statements. Without limiting the        foregoing, forward-looking statements include statements        which represent the Company's beliefs concerning future        levels of sales and redemptions of Investors Heritage        Life's products, investment spreads and yields, or the        earnings and profitability of the Company's or Investors        Heritage Life's activities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
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| Forward-looking        statements are necessarily based on estimates and        assumptions that are inherently subject to significant        business, economic and competitive uncertainties and        contingencies, many of which are beyond the Company's        control and many of which are subject to change. These        uncertainties and contingencies could cause actual        results to differ materially from those expressed in any        forward-looking statements made by, or on behalf of, the        Company. Whether or not actual results differ materially        from forward-looking statements may depend on numerous        foreseeable and unforeseeable factors and developments.        Some of these may be national in scope, such as general        economic conditions, changes in tax law and changes in        interest rates. Some may be related to the insurance        industry generally, such as pricing competition,        regulatory developments, industry consolidation and the        effects of competition in the insurance business from        other insurance companies and other financial        institutions operating in the Company's market area and        elsewhere. Others may relate to the Company specifically,        such as credit, volatility and other risks associated        with the Company's investment portfolio. The Company        cautions that such factors are not exclusive. The Company        disclaims any obligation to update forward-looking        information.                                             |
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| **ITEM 3.        Quantitative and Qualitative Disclosures about Market        Risk**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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| There have been no        significant or material changes in the Company's market        risks since December 31, 2002. Measuring market risk is a        key function of our asset/liability management process.        To test financial risk and investment strategy, the        Company performs an asset adequacy analysis each year.        Dynamic models of both assets and liabilities are created        to project financial results under several shifts in the        current interest rate environment. Results show that the        Company's exposure to a relative 10% increase or decrease        in the interest rates prevalent at December 31, 2002 is a        net loss of less than $500,000. This analysis is not        performed on a quarterly basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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| Items taken into        account on the asset side include prepayment and        liquidity risks, asset diversification and quality        considerations. On the liability side, interest crediting        strategies and policyholder and agent behavior (lapses,        loans, withdrawals and premium flow) are dynamically        modeled in relationship to the particular interest rate        environment tested. Although the Company is careful to        ensure that these assumptions are consistent with the        best available data, interest-sensitive cash flows cannot        be forecast with certainty and can deviate significantly        from the assumptions made.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
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| Because asset and        liability durations are continually changing as new        policyholder contracts are issued and as new investments        are added to the portfolio, the Company manages its        balance sheet on an ongoing basis and its net exposure to        changes in interest rates may vary over time. Although        the asset adequacy analysis is not performed on a        quarterly basis, management believes that the Company's        asset base is sufficient to cover the minimal increases        or decreases that would be expected to occur during any        particular year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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| In addition to these        dynamic modeling techniques, the Company closely monitors        its own business segments with respect to product        performance and agent behavior. To that end, during 2002        we implemented a new system to assist in monitoring these        areas. This new tool allows management to quickly isolate        areas of strength and weakness and to take appropriate        and timely action to exploit the strengths and improve        the weaknesses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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| **ITEM 4. Controls        and Procedures**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
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| Within the 45 days        prior to the filing date of this Form 10-Q, the Company        performed an evaluation, under the supervision and with        the participation of the Company's management, including        the Company's Chief Executive Officer and Chief Financial        Officer, of the effectiveness of the design and operation        of the Company's disclosure controls and procedures as        defined in Rule 13a-14 of the Securities Exchange Act of        1934. Based upon that evaluation, the Chief Executive        Officer and Chief Financial Officer concluded that the        Company's disclosure controls and procedures are        effective in timely alerting them to material information        relating to the Company (including its consolidated        subsidiaries) required to be included in this Quarterly        Report on Form 10-Q. There have been no significant        changes in the Company's internal controls or in other        factors which could significantly affect internal        controls subsequent to the date the Company carried out        its evaluation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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| **PART II - OTHER        INFORMATION**                                 |
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| **ITEM 1. Legal        Proceedings**                                   |
|                                                                   |   |
|                                                                   | The Company is not        involved in any legal proceedings. From time to time        Investors Heritage Life is involved in litigation        relating to claims arising out of its operations in the        normal course of business. As of August 13, 2003,        Investors Heritage Life is not a party to any legal        proceedings, the adverse outcome of which, in        management's opinion, individually or in the aggregate,        would have a material adverse effect on Investors        Heritage Life's or the Company's financial condition or        results of operations.  |
|                                                                   |   |
| **ITEM 2. Changes in        Securities and Use of Proceeds**           |
|                                                                   |   |
|                                                                   | None |
|                                                                   |   |
| **ITEM 3. Defaults        Upon Senior Securities**                     |
|                                                                   |   |
|                                                                   | None |
|                                                                   |   |
| **ITEM 4. Submission        of Matters to a Vote of Security Holders** |
|                                                                   |   |
|                                                                   | (a) The annual        meeting of the stockholders was held May 8, 2003 at 11:00        a.m. The purpose of the meeting was to elect directors. |
|                                                                   |   |
|                                                                   | (b) Three (3)        directors were elected to hold office for a term of three        (3) years or until their successors are duly elected and        qualified. |
|                                                                   |   |
|                                                                   | The following        individuals were elected for a term of three (3) years        and the number of votes cast were as follows: |
|                                                                   |   |
|                                                                   | Howard Lee Graham -        Number of Votes Cast FOR - 929,702.237; WITHHELD -        1,189.84 |
|                                                                   | Robert M. Hardy, Jr.        - Number of Votes Cast FOR - 929,627,837; WITHHELD -        1,264.24 |
|                                                                   | Dr. Jerry F. Howell,        Jr. - Number of Votes Cast FOR - 929,720.677; WITHHELD -        1,171.4 |
|                                                                   |   |
|                                                                   | The other directors        whose terms will continue after the meeting are: |
|                                                                   |   |
|                                                                   | Gordon Duke |
|                                                                   | Helen S. Wagner |
|                                                                   | David W. Reed |
|                                                                   | Harry Lee Waterfield        II |
|                                                                   | Harold G. Doran |
|                                                                   |   |
| **ITEM 5. Other        Information**                                   |
|                                                                   |   |
|                                                                   | None |
|                                                                   |   |
| **ITEM 6. Exhibits        and Reports on Form 8-K**                    |
|                                                                   |   |
|                                                                   | a) Exhibits |
|                                                                   |   |
|                                                                   | No exhibits were        filed for the quarter ended June 30, 2003. |
|                                                                   |   |
|                                                                   | b) Reports on form        8-K |
|                                                                   |   |
|                                                                   | No reports on Form        8-K were filed for the quarter ended June 30, 2003. |
|                                                                   |   |

 

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| **SIGNATURES**                                                                                                                                                                                                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                     |
| Pursuant to the        requirements of the Securities and Exchange Act of 1934,        the registrant has duly caused this report to be signed        on its behalf by the undersigned thereunto duly        authorized. |
|                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                     | **KENTUCKY        INVESTORS, INC.** |
|                                                                                                                                                                                                                     |   |
|                                                                                                                                                                                                                     | BY: /s/ Harry Lee        Waterfield II |
| DATE: August 13, 2003                                                                                                                                                                                                    |       President |
|                                                                                                                                                                                                                     |   |
|                                                                                                                                                                                                                     | BY: /s/ Raymond L.        Carr |
| DATE: August 13, 2003                                                                                                                                                                                                    |       Vice        President - Chief Financial Officer |
|                                                                                                                                                                                                                     |   |
|                                                                                                                                                                                                                     |   |

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