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SECURITIES AND
        EXCHANGE COMMISSIONWASHINGTON, D.C.FORM 10-Q
        QUARTERLY REPORTUnder Section 13 or 15
        (d) of the Securities Exchange Act of 1934FOR THREE MONTHS ENDEDMarch 31, 2001Commission File:
        0-1999KENTUCKY 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) 223-2361Securities 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 March 31, 2001 - 1,145,099.72Indicate 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 ____




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PART I - CONSOLIDATED
        FINANCIAL STATEMENTSITEM 1. The following consolidated
        financial statements have been prepared by management in
        accordance with accounting principles generally accepted
        in the United States ("GAAP"). In management's
        opinion, all adjustments and certain reclassifications
        necessary for a fair statement of financial position at
        March 31, 2001 and December 31, 2000 and the results of
        operations for the three months ended March 31, 2001 and
        2000 have been made.




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KENTUCKY
        INVESTORS, INC.Condensed
        Consolidated Balance Sheets(Unaudited)March 31,
        2001
        
        December 31,
        2000AssetsInvestmentsFixed
        maturities available-for-sale atfair
        value (amortized cost:2001-$221,072,382;
        2000-$199,874,770)
        $229,517,288
        
        $220,446,702Mortgage
        loans on real estate
        23,381,428
        
        23,864,291Other
        investments
        10,817,533
        
        11,446,046Total
        investments
        $263,716,249
        
        $255,757,039Cash and cash
        equivalents
        4,791,394
        
        3,324,447Due and deferred
        premiums
        4,428,842
        
        4,601,062Deferred
        acquisition costs
        24,095,069
        
        23,962,641Present value of
        future profits
        570,304
        
        586,298Other assets
        8,080,646
        
        8,301,041Amounts
        recoverable from reinsurers
        69,273,520
        
        69,403,217$374,956,024
        
        $365,935,745Liabilities and
        Stockholders' EquityLiabilitiesPolicy
        liabilitiesBenefit
        reserves
        $294,140,209
        
        $290,096,285Unearned
        premium reserves
        23,384,368
        
        23,816,171Other
        policyholders' funds
        4,466,486
        
        4,456,286Total
        policy liabilities
        $321,991,063
        
        $318,368,742Federal
        income taxes
        5,874,841
        
        3,810,143Notes
        payable
        2,053,807
        
        2,000,000Other
        liabilities
        5,187,995
        
        4,502,542Total
        liabilities
        $335,107,706
        
        $328,681,427Stockholders' EquityCommon stock
        (shares issued:2001-1,145,099;
        2000-1,151,323)
        $    1,145,099
        
        $    1,151,323Paid-in surplus
        8,399,134
        
        8,399,106Accumulated
        other comprehensive income
        5,501,755
        
        3,001,407Retained
        earnings
        24,802,330
        
        24,702,482Total
        stockholders' equity
        $39,848,318
        
        $37,254,318$374,956,024
        
        $365,935,745See
        accompanying notes.




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KENTUCKY
        INVESTORS, INC.Condensed
        Consolidated Income Statements (Unaudited)Three Months Ended March
        312001
        
        2000REVENUESPremiums and other
        considerations
        $12,320,718
        
        $12,072,877Investment income, net of
        expenses
        4,511,743
        
        4,094,961Realized gain on
        investments, net
        98,595
        
        103,816Other income
        249,459
        
        219,779Total revenues
        $17,180,515
        
        $16,491,433BENEFITS AND EXPENSESDeath and other policyholderbenefits
        $  7,750,829
        
        $  7,585,810Guaranteed annual endowments
        181,896
        
        189,953Dividends to policyholders
        173,899
        
        172,212Increase in benefit reserves
        andunearned
        premiums
        4,529,137
        
        4,111,432Amortization of deferredacquisition
        costs, net
        (489,825)
        
        (341,774)Commissions
        1,525,591
        
        1,566,929Other insurance expenses
        2,440,058
        
        2,296,209Total benefits and expenses
        $16,111,585
        
        $15,580,771Income from operations
        before Federalincome tax and
        minority interestin net income of
        subsidiary
        $1,068,930
        
        $910,662Provision for income taxes:Current
        $       43,754
        
        $       86,970Deferred
        333,000
        
        222,696$376,754
        
        $309,666Income from operations
        $     692,176
        
        $     600,996Net Income
        $692,176
        
        $600,996Earnings per share
        $0.60
        
        $0.52Dividends per share
        $          0.38
        
        $          0.38See
        accompanying notes.




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KENTUCKY
        INVESTORS, INC.Condensed
        Consolidated Statements of Cash Flow (Unaudited)Three Months Ended March
        312001
        
        2000Net cash provided by
        operating activities
        $6,298,657
        
        $5,424,644Investing activitiesSecurities
        available-for-sale:Purchases
        $(10,063,780)
        
        $
        (4,964,008)Sales
        and maturities
        5,074,636
        
        4,016,347Other
        investments:Cost
        of acquisition
        (1,082,720)
        
        (3,012,734)Sales
        and maturities
        2,358,037
        
        873,121Other investing
        activities
        13,559
        
        (52,994)Net cash used by investing
        activities
        $(3,700,268)
        
        $(3,140,268)Financing ActivitiesReceipts from
        universal life policiescredited
        to policyholderaccount
        balances
        $   1,443,536
        
        $   1,182,192Return of
        policyholder accountbalances
        on universallife
        policies
        (2,030,273)
        
        (2,129,839)Other financing
        activities
        (544,705)
        
        (597,520)Net cash used by financing
        activities
        $(1,131,442)
        
        $(1,545,167)Increase in cash and cash
        equivalents
        $    1,466,947
        
        $       739,209Cash and cash equivalents at
        beginningof period
        3,324,447
        
        2,428,652Cash and cash equivalents at
        end of period
        $4,791,394
        
        $3,167,861See
        accompanying notes.




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KENTUCKY INVESTORS,
        INC.NOTES TO CONDENSED
        CONSOLIDATED FINANCIAL STATEMENTS
        March 31, 2001
        (Unaudited)NOTE A - Nature of Operations:Kentucky
        Investors, Inc. (Kentucky Investors) is the holding
        company of Investors Heritage Life Insurance Company
        (Investors Heritage), Investors Heritage Printing, Inc.,
        a printing company and Investors Heritage Financial
        Services Group, Inc., an insurance marketing company.
        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. The operations of the
        non-insurance subsidiaries of Kentucky Investors accounts
        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 with 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 three months ended March 31, 2001, are not
        necessarily indicative of the results that may be
        expected for the year ending December 31, 2001. For
        further information, refer to the consolidated financial
        statements and footnotes thereto for the year ended
        December 31, 2000, 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
        presentations.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. The number of shares used in this
        computation for the Company is 1,146,611 and 1,147,139
        for March 31, 2001 and 2000, respectively.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. and Investors Heritage
        Financial Services Group, after elimination of
        intercompany amounts, are presented.




Three Months EndedMarch 31,2001
        
        March 31,2000Revenues:Preneed &
        Burial Products
        $13,266,524
        
        $12,405,238Traditional
        & Universal Life Products
        3,180,420
        
        3,348,604Credit Insurance
        Products &Administrative
        Services
        121,137
        
        169,890Corporate &
        Other
        612,434
        
        567,701$17,180,515
        
        $16,491,433Pre-Tax Income from
        Operations:Preneed &
        Burial Products
        $     453,310
        
        $     378,325Traditional
        & Universal Life Products
        380,617
        
        154,436Credit Insurance
        Products &Administrative
        Services
        45,939
        
        85,352Corporate &
        Other
        189,064
        
        292,549$1,068,930
        
        $910,662


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 (loss), net of related
        tax, are as follows:




Three Months EndedMarch 31,2001
        
        March 31,2000Net income
        $   692,176
        
        $    600,996Net unrealized
        gains on available-for-sale Securities
        2,500,348
        
        903,448Comprehensive
        income
        $3,192,524
        
        $
        1,504,444




ITEM 2. Managements Discussion and
        Analysis of Financial Condition and Results of OperationsGeneralKentucky Investors, Inc. (the
        "Company") is incorporated under the laws of
        the Commonwealth of Kentucky and wholly owns Investors
        Heritage Life Insurance Company ("Investors
        Heritage"), a life insurance company also
        incorporated under the laws of the Commonwealth of
        Kentucky, Investors Heritage Financial Services Group,
        Inc. ("FSG"), an insurance marketing company
        which was formed in 1994, and Investors Heritage
        Printing, Inc. ("IHP"), a printing company that
        provides printing to Investors Heritage and other
        unaffiliated parties.Investors Heritage 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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.Management anticipates the introduction
        of a new whole life final expense product during the
        third quarter of 2001. The new product, Heritage Final
        Expense, will replace the Legacy 2000 Final Expense
        series and will be marketed through funeral homes and
        independent agencies. The Company is also exploring
        reinsurance opportunities with regard to this new product
        to reduce initial surplus strain and level out future
        profits.The Companys operating earnings
        are derived primarily from revenues generated from the
        sale of these products by Investors Heritage, plus the
        Companys investment results, including realized
        gains (losses), less interest credited, benefits to
        policyholders and expenses.While the Company continues to expand
        the operations of FSG and IHP, less than 1% of the
        Companys total operations were generated by those
        subsidiaries. As expected, more than 10% of FSGs
        revenues during the first quarter 2001 were derived from
        the sale of the Investors Heritages credit
        insurance products. The Company anticipates a dividend to
        be paid by FSG during the second, third and fourth
        quarters in 2001. The Company anticipates a small
        dividend to be declared and paid by IHP during 2001.The Companys primary uses of cash
        are operating expenses and dividend payments, and the
        Companys principal sources of cash are the
        dividends paid to it by Investors Heritage, FSG and IHP.
        Investors Heritage'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.Investments, Liquidity and Capital
        ResourcesPremiums, which include mortality and
        expense charges, and investment income are Investors
        Heritages primary sources of cash flow used to meet
        short-term and long-term cash requirements.Investors Heritages short-term
        obligations consist primarily of policyholder benefits
        and operating expenses. Investors Heritage has
        historically been able to meet these obligations out of
        operating cash, premiums and investment income.Management is not aware of any
        commitments or unusual events that could materially
        affect capital resources. Management is not aware of any
        commitments or unusual events that could materially
        affect the Company's capital resources. During the fourth
        quarter of 2000 Kentucky Investors borrowed $2,000,000 on
        a long-term basis; however, there was no short-term
        external debt. Kentucky Investors utilized $200,000 of
        the loan amount to reduce debt to Investors Heritage and
        $1,800,000 was loaned to Investors Heritage in exchange
        for a surplus note. The note calls for Investors Heritage
        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's earned surplus,
        operating income, or paid-in and contributed surplus. The
        Company also has a $150,000 line-of-credit note with a
        bank, of which $84,000 is outstanding at March 31, 2001.
        However, the Company and Investors Heritage will continue
        to explore various opportunities including corporate
        reorganizations, acquisitions and purchasing blocks of
        business from other companies, which may dictate a need
        for either long-term or short-term debt.Investors Heritage has maintained a
        sound, conservative investment strategy. At March 31,
        2001, 86.2% of invested assets consisted of fixed income
        public bonds compared to 85.3% at December 31, 2000.
        Fixed income assets are managed by Conning Asset
        Management Company, an independent portfolio manager.Additionally, Investors Heritage also
        engages in commercial and residential mortgage lending
        with approximately 95% 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 March 31, 2001, 8.8% of invested
        assets consisted of mortgage loans compared to 9.2% at
        December 31, 2000. Management anticipates funding several
        new mortgage loan investments during the remainder of
        2001 to maintain a similar or slightly higher percentage
        of mortgage loans to total invested assets.Investors Heritage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 March 31, 2001,
        Investors Heritages fixed income investments were
        100% investment grade as rated by Standard &
        Poors, unchanged from December 31, 2000. None of
        Investors Heritages fixed income assets are in
        default and there has been no material change in the
        distribution of its fixed income portfolio.Investors Heritage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. Investors Heritage
        believes these assumptions will produce revenues
        sufficient to meet its future contractual benefit
        obligations and operating expenses, and provide an
        adequate profit margin.Results of OperationsTotal premium income (net of
        reinsurance) increased 2.1% when compared to the first
        quarter of 2000 due primarily to increases in pre-need
        sales. Net investment income for the first quarter 2001
        compared to the first quarter of 2000 increased 10.2%
        primarily due to the increase in Investors
        Heritages asset base. Overall Revenue for the first
        quarter 2001 increased 4.2% when compared to the first
        quarter of 2000.Total Benefits and Expenses were 3.4%
        higher in the first quarter of 2001 when compared to the
        same quarter of 2000 primarily due to higher premium
        production in pre-need sales. After providing for federal
        income taxes, the Companys Net Income was $692,176
        with Earnings per share of $0.60 for the first three
        months of 2001 as compared to Net Income of $600,996 and
        Earnings per share of $0.52 for the same period in 2000.
        During the first quarter 2001 the Companys Board of
        Directors declared a dividend of $0.38 per share to be
        paid April 6, 2001, to shareholders of record on March
        23, 2001.Business SegmentsManagement internally evaluates the
        performance of Investors Heritage operations by the
        following business segments:Preneed & Burial Products includes
        both life and annuity products sold by funeral directors
        or affiliated agents to fund prearranged funerals.
        Revenues for this segment were 6.9% higher for the first
        quarter of 2001 when compared to the same period of 2000.
        The increase is due to a significant increase in sales
        during March from the Investors Heritage's Legacy 2000
        Series of Preneed and Burial Products used in the preneed
        funeral and final expense markets. Pre-Tax Income from
        Operations for the first quarter 2001 was 19.8% higher
        than the comparable period for 2000 due primarily to
        better mortality than the first quarter of 2000.
        Investors Heritage plans to continue its expansion of
        territory and recruitment of agents in the Preneed and
        Burial insurance market.Traditional & Universal Life
        Productsinclude traditional life and group life
        insurance products, annuities (primarily qualified) and
        universal life products. Revenues for this segment were
        5% lower for the first quarter of 2001 when compared to
        the first quarter of 2000. Pre-Tax Income from Operations
        for the first quarter 2000 was 146% higher than the
        comparable period for 2000. Revenues for the first
        quarter 2001 were slightly lower than projected. Pre-Tax
        Income from Operations for the first quarter 2000 was
        significantly higher than projected primarily due to
        higher than projected claims.Credit Insurance Products &
        Administrative Services include the marketing and
        administration of credit life and credit accident &
        health insurance products. Revenues were 28.7% lower and
        Pre-Tax Income from Operations was 46.2% lower for the
        first quarter of 2001 when compared to the first quarter
        of 2000 primarily due to the reduction in the need for
        credit insurance because of fewer consumer loans being
        made during the first quarter of 2001 when compared to
        the previous year's first quarter. With less production
        there was a related reduction in service fee income for
        this segment. All of the related underwriting risk
        currently produced is being reinsured 100% with
        highly-rated life companies.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 7.5% higher and Pre-Tax Income from Operations was
        35.4% lower for the first quarter of 2001 when compared
        to the first quarter of 2000. The increases are primarily
        due to realized gains from the sale of investments and
        policy reserves released due to the reinsuring of a
        closed block of individual accident and health business,
        both of which occurred in the first quarter of 2000.Federal Income TaxesCurrent 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 36.78% at March 31, 2001 compared to 34.0% for
        March 31, 2000. The increase in the effective tax rate is
        due primarily to the reduced benefit of the small life
        insurance company deduction resulting from an increase in
        net income.Forward Looking InformationThe 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 (the
        "SEC"). 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s products, investment spreads and yields,
        or the earnings and profitability of the Companys
        or Investors Heritages activities.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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PART II
         OTHER INFORMATIONItem 1.
        Legal
        ProceedingsThe Company is
        not involved in any legal proceedings. From time to time
        Investors Heritage is involved in litigation relating to
        claims arising out of its operations in the normal course
        of business. As of May 9, 2001, Investors Heritage 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s or the Companys financial
        condition or results of operations.Item 2.
        Changes in
        SecuritiesNoneItem 3.
        Defaults Upon
        Senior SecuritiesNoneItem 4.
        Submission of
        Matters to a Vote of Security HoldersNoneItem 5.
        Other
        InformationNoneItem 6.
        Exhibits and
        Reports on Form 8-Ka)
        Exhibits.No exhibits were filed for
        the quarter ended March 31, 2001.b)
        Reports on Form 8-KNo reports on Form 8-K were
        filed for the quarter ended March 31, 2001.




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SIGNATURESPursuant to the requirements
        of the Securities Exchange Act of 1934, the registrant
        has duly caused this report to be signed on its behalf by
        the undersigned thereunto duly authorized.KENTUCKY INVESTORS, INC./s/ Harry Lee Waterfield, IIBY: HARRY LEE WATERFIELD II,
        PRESIDENTDATE: May 11, 2001/s/ Jimmy R. McIverBY: JIMMY R. MCIVER,
        TREASURERDATE: May 11, 2001