| SECURITIES ANDEXCHANGE COMMISSION                                                                                                                                                                                                                                                                                                                                                                                 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| WASHINGTON,DC                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                        |
| **FORM10-Q**                                                                                                                                                                                                                                                                                                                                                                                                      |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                        |
| QUARTERLYREPORT                                                                                                                                                                                                                                                                                                                                                                                                   |
| Under Section 13or 15(d) of the Securities Exchange Act of 1934                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                              |
| **FOR THREEMONTHS ENDED**                                                                                                                                                                                                                                                                                                                                                                                         |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                        |
| MARCH 31,2004                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                              |
| **CommissionFile: 0-1999**                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                              |
| **KENTUCKYINVESTORS, INC.**                                                                                                                                                                                                                                                                                                                                                                                       |
| (Exact Name ofregistrant as specified in Charter)                                                                                                                                                                                                                                                                                                                                                                 |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                        |
| **KENTUCKY **                                                                                                                                                                                                                                                                                                                                                                                                |
| (State of OtherJurisdiction of Incorporation or Organization)                                                                                                                                                                                                                                                                                                                                                     |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                        |
| **61-6030333**                                                                                                                                                                                                                                                                                                                                                                                                    |
| (IRS EmployerIdentification Number)                                                                                                                                                                                                                                                                                                                                                                               |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                        |
| **200 CapitalAvenue, P. O. Box 717**                                                                                                                                                                                                                                                                                                                                                                              |
| **Frankfort,Kentucky 40602**                                                                                                                                                                                                                                                                                                                                                                                      |
| (Address ofPrincipal Executive Offices)                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                              |
| **Registrant’s Telephone Number - (502)223-2361**                                                                                                                                                                                                                                                                                                                                                           |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                        |
| Securitiesregistered pursuant to Section 13(g) of the Act:                                                                                                                                                                                                                                                                                                                                                        |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                        |
| **CommonCapital Stock par value $1.00 per share**                                                                                                                                                                                                                                                                                                                                                                 |
| (Title ofClass)                                                                                                                                                                                                                                                                                                                                                                                                   |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                        |
| **Number ofoutstanding shares as of March 31, 2004 –1,129,924.72**                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                              |
| Indicate by check mark whetherthe registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days. Yes  X   No      |
|                                                                                                                                                                                                                                                                                                                                                                                                              |
| Indicate by check mark whetherthe registrant is an accelerated filer (as defined in Rule 12b-2 ofthe Exchange Act). Yes       No  X                                                                                                                                                                                                                                  |

----

****

****

# **CONTENTS**

****

****

# **PART I – FINANCIALINFORMATION**

|         |                                                                                           | Page |
|---------|-------------------------------------------------------------------------------------------|------|
| ITEM 1. | Consolidated FinancialStatements                                                          | 3    |
| ITEM 2. | Management’s Discussionand Analysis of Financial Condition and Results ofOperations | 10   |
| ITEM 3. | Quantitative and QualitativeDisclosures about Market Risk                                 | 18   |
| ITEM 4. | Controls andProcedures                                                                    | 19   |

# ****

# ****

# **PART II – OTHERINFORMATION**

| ITEM 1.      | Legal Proceedings                                             | 19 |
|--------------|---------------------------------------------------------------|----|
| ITEM 2.      | Changes in Securities and Useof Proceeds and Issuer Purchases | 19 |
| ITEM 3.      | Defaults Upon SeniorSecurities                                | 20 |
| ITEM 4.      | Submission of Matters to a Voteof Security Holders            | 20 |
| ITEM 5.      | Other Information                                             | 20 |
| ITEM 6.      | Exhibits and Reports on Form8-K                               | 20 |
|         |                                                               |    |   |
| SIGNATURES   |                                                               | 20 |   |
|         |                                                               |    |   |
| EXHIBIT 31.1 |                                                               | 22 |   |
| EXHIBIT 31.2 |                                                               | 23 |   |
| EXHIBIT 32   |                                                               | 25 |   |

----

| ** **

**PART I – FINANCIALINFORMATION** |
|-----------------------------------------------------|
| ** **                                          |
| **ITEM 1**.**Consolidated Financial Statements**    |

----

|  | ** **                               |  |
|--|------------------------------------------|--|
|  | **KENTUCKYINVESTORS, INC.**              |  |
|  | ** **                               |  |
|  | **CondensedConsolidated Balance Sheets** |  |

|                                                                                |                                    |
|-------------------------------------------------------------------------------------|-----------------------------------------|
|                                                                                | (Unaudited)                             |  |
|                                                                                     | March 31,2004                           | December 31,2003 |
| Assets                                                                              |                                         |  |
|    Investments                                                       |                                         |  |
|      Securities available forsale, at fair value:          |                                         |  |
|        Fixedmaturities (amortized cost           |                                         |  |
|          2004-$270,598,671;2003 -      |                                         |  |
|          $265,097,987)                 | $295,734,604                            | $284,531,244 |
|        Equitysecurities (cost: 2004 -            |                                         |  |
|          $4,997,915;2003 - $4,997,915) | 5,967,293                               | 5,872,424 |
|    Mortgageloans on real estate                                      | 25,269,847                              | 25,749,708 |
|    Other longterm investments                                        | 697,269                                 | 557,461 |
|    Short terminvestments                                             | 813,000                                 | 813,000 |
|    Otherinvestments                                                  |      7,995,167 |      7,918,258 |
|                                                                                     |                                         |  |
|        Totalinvestments                          | 336,477,180                             | 325,442,095 |
|                                                                                     |                                         |  |
|    Cash and cashequivalents                                          | 1,759,579                               | 5,844,281 |
|    Due anddeferred premiums                                          | 4,332,204                               | 4,441,828 |
|    Deferredacquisition costs                                         | 22,835,799                              | 23,298,369 |
|    Present valueof future profits                                    | 459,825                                 | 482,721 |
|    Leasedproperty under capital leases                               | 181,712                                 | 227,822 |
|    Otherassets                                                       | 8,503,841                               | 9,272,869 |
|    Amountsrecoverable from reinsurers                                |     61,880,173      |     60,465,147 |
| Total assets                                                                        | $436,430,313                            | $429,475,132 |
|                                                                                     |                                         |  |
|                                                                                     |                                         |  |
| Liabilities andStockholders’ Equity                                           |                                         |  |
|    Liabilities                                                       |                                         |  |
|      Policyliabilities                                     |                                         |  |
|        Benefitreserves                           | $337,535,534                            | $335,604,439 |
|        Unearnedpremium reserves                  | 16,259,844                              | 17,014,697 |
|        Otherpolicyholders’ funds           |      3,739,972 |      3,728,729 |
|          Totalpolicy liabilities       | 357,535,350                             | 356,347,865 |
|        Federalincome taxes                       | 11,542,017                              | 9,673,564 |
|        Obligationsunder capital leases           | 177,565                                 | 224,628 |
|        Notespayable                              | 9,098,838                               | 9,033,355 |
|        Otherliabilities                          |      4,939,199 |       4,041,199 |
|                                                                                     |                                         |  |
|        Totalliabilities                          | 383,292,969                             | 379,320,611 |
|                                                                                     |                                         |  |
| Stockholders’Equity                                                           |                                         |  |
|    Common Stock(shares issued:                                       |                                         |  |
|      2004 – 1,129,925,2003 -                         |                                         |  |
|     1,136,361)                                                  |     1,129,925       |     1,136,361 |
|    Paid-insurplus                                                    | 8,549,970                               | 8,549,970 |
|    Accumulatedother comprehensive                                    |                                         |  |
|      income                                                | 15,895,771                              | 12,139,714 |
|    Retainedearnings                                                  |     27,561,678      |     28,328,476 |
|                                                                                     |                                         |  |
|        Totalstockholders’ equity           | $  53,137,344                 | $  50,154,521 |
|                                                                                     |                                         |  |
| Total liabilities andstockholders’                                            |                                         |  |
|      equity                                                | $436,430,313                            | $429,475,132 |
|                                                                                     |                                         |  |
| See accompanyingnotes.                                                              |                                    |

|  |
|--|
|  | ****

**KENTUCKYINVESTORS, INC.** |  |
|  |   |  |
|  | **CondensedConsolidated Income Statements (Unaudited)** |  |

|                                                                |                                                                               |
|----------------------------------------------------------------|-------------------------------------------------------------------------------|
|                                                                | Three MonthsEnded March 31                                                    |
|                                                                |            2004        |             2003 |
| REVENUES                                                       |                                                                               |  |
|                                                                |                                                                               |  |
|    Premiums andother considerations             | $  9,840,414                                                   | $10,475,024 |
|    Investmentincome, net of expenses            | 4,424,003                                                                | 4,640,260 |
|    Realized gainon investments, net             | 22,878                                                                   | 129,673 |
|    Otherincome                                  |       193,323                              |       231,994 |
|                                                                |                                                                               |  |
|       Totalrevenues              |  14,480,618                                                         |  15,476,951 |
|                                                                |                                                                               |  |
| BENEFITS ANDEXPENSES                                           |                                                                               |  |
|                                                                |                                                                               |  |
|    Death andother policyholder benefits         | 11,227,657                                                               |   9,194,753 |
|    Guaranteedannual endowments                  | 167,151                                                                  | 169,078 |
|    Dividends topolicyholders                    | 171,032                                                                  | 169,395 |
|    Increase(decrease) in benefit reserves       |                                                                               |  |
|      and unearnedpremiums             | (302,797)                                                                     | 1,645,215 |
|    Amortizationof deferred acquisition          |                                                                               |  |
|      costs, net                       | 356,023                                                                  | 158,479 |
|    Commissions                                  | 682,372                                                                  | 959,214 |
|    Otherinsurance expenses                      |     2,345,662                                        |     2,735,190 |
|                                                                |                                                                               |  |
|       Total benefits andexpenses | $14,647,100                                                              | $15,031,324 |
|                                                                |                                                                               |  |
| Income (loss) from operationsbefore                            |                                                                               |  |
|      federal income tax               | $   (166,482)                                                  | $     445,627 |
|                                                 |                                                                               |  |
|                                                 |                                                                               |  |
| Provision (benefit) for incometaxes:                           |                                                                               |  |
|    Current                                      | $       13,714                        | $      77,149 |
|    Deferred                                     |       (43,000)                                  |        30,000 |
|                                                                |                                                                               |  |
|                                                                | $     (29,286)                                       | $    107,149 |
|                                                                |                                                                               |  |
| Net income (loss)                                              | $   (137,196)                                                  | $    338,478 |
| Earnings per share, basic anddiluted                           | $         (0.12)                 | $          0.30 |
|                                                                |                                                                               |  |
| Dividends per share                                            | $           0.38  | $          0.38 |
|                                                                |
| See accompanyingnotes.                                         |
|                                                                |

----

| **KENTUCKYINVESTORS, INC.**                                   |
|---------------------------------------------------------------|
|                                                          |
| **CondensedConsolidated Statements of Cash Flow (Unaudited)** |
|                                                          |  |
|                                                               | Three MonthsEnded March 31 |
|                                                               | 2004 | 2003 |
|                                                          |  |  |
| Net cash provided by operatingactivities                      | $    1,765,770  | $   2,179,274  |
|                                                               |  |  |
| Investing activities                                          |  |  |
|    Securitiesavailable-for-sale:               |  |  |
|      Purchases                       | (10,196,653) | (13,198,718) |
|      Sales andmaturities             | 4,610,335  | 8,957,411  |
|    Otherinvestments:                           |  |  |
|      Cost ofacquisition              | (214,246) | (2,100,529) |
|      Sales andmaturities             | 477,390  | 1,290,473  |
|    Otherinvesting activities                   |         29,703  |       (32,258) |
|                                                               |  |  |
| Net cash used by investingactivities                          |  (5,293,471) |  (5,083,621) |
|                                                               |  |  |
| Financing activities                                          |  |  |
|    Receipts fromuniversal life policies        |  |  |
|      credited to policyholderaccount |  |  |
|      balances                        |     2,208,388  |   1,857,150  |
|    Return ofpolicyholder account balances      |  |  |
|      on universal lifepolicies       | (2,194,833) | (1,718,137) |
|    Payment onnotes payable                     | (138,517) | (263,417) |
|    Proceeds fromnotes payable                  | 204,000  | 15,000 |
|    Otherfinancing activities                   |      (636,039) |      (411,823) |
|                                                               |  |  |
| Net cash used by financingactivities                          |      (557,001) |      (521,227) |
|                                                               |  |  |
| Decrease in cash andcash                                      |  |  |
|      equivalents                     |   (4,084,702) | (3,425,574) |
|                                                               |  |  |
| Cash and cash equivalents atbeginning                         |  |  |
|     ofperiod                              |      5,844,281 |     7,773,597  |
|                                                               |  |  |
| Cash and cash equivalents atend of period                     | $   1,759,579 | $  4,348,023  |
|                                                               |
| See accompanyingnotes.                                        |
|                                                               |

----

****

| **KENTUCKYINVESTORS, INC.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| **March 31,2004**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **(Unaudited)**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **NOTE A - Natureof Operations:**KentuckyInvestors, Inc. is the holding company of Investors Heritage LifeInsurance Company, Investors Heritage Printing, Inc., a printingcompany, Investors Heritage Financial Services Group, Inc., aninsurance marketing company, and is the sole member of FamilyAssignment Services, LLC, a limited liability company that providesadvance funding of funerals in exchange for the irrevocableassignment of life insurance policies from other nonaffiliatedcompanies. These entities are collectively hereinafter referred toas the “Company”. The operations of Kentucky Investorsare principally that of its life insurance company, InvestorsHeritage Life. The operations of the non-insurance subsidiaries ofKentucky Investors account for less than 2% of the Company’stotal operations.                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| TheCompany’s operations involve the sale and administration ofvarious insurance and annuity products, including, but not limitedto, participating, non-participating, whole life, limited pay,universal life, annuity contracts, credit life, credit accident andhealth and group insurance policies. The principal markets for theCompany’s products are in the Commonwealths of Kentucky andVirginia, and the states of North Carolina, South Carolina, Ohio,Indiana, Florida, Tennessee, Illinois, Georgia, West Virginia,Michigan, Mississippi, Alabama and Maryland.                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **NOTE B - Basisof Presentation:**Theaccompanying unaudited condensed consolidated financial statementsof the Company have been prepared in accordance with accountingprinciples generally accepted in the United States for interimfinancial information and the instructions to Form 10-Q and Article10 of Regulation S-X. Accordingly, they do not include all of theinformation and footnotes required by accounting principlesgenerally accepted in the United States for complete financialstatements. In the opinion of management, all adjustments(consisting of normal recurring accruals) considered necessary fora fair presentation have been included. Operating results for thethree months ended March 31, 2004, are not necessarily indicativeof the results that may be expected for the year ending December31, 2004. For further information, refer to the consolidatedfinancial statements and footnotes thereto for the year endedDecember 31, 2003, included in the Company’s Annual Report onForm 10-K. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| The preparation offinancial statements in conformity with accounting principlesgenerally accepted in the United States requires management to makeestimates and assumptions that affect the amounts reported in thefinancial statements and accompanying notes. Actual results coulddiffer from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **NOTE C -Earnings per Share:**Earnings per share of common stock were computed basedon the weighted average number of common shares outstanding duringeach period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | **Income** | **Shares** | **PerShare** |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  | **Amount** |
| **Three monthsended March 31, 2004**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |
| *BasicEPS*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |
| Netloss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | $ (137,196) | 1,135,795  | $    (0.12) |
| Dilutive effect ofcommon equivalent shares of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |
|    stock options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                  - |                 - |               - |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |
| *DilutedEP*S                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |  |  |
| Net income(loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | $ (137,196) | 1,135,795  | $    (0.12) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |
| **Three monthsended March 31, 2003**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |
| *BasicE*PS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |
| Netincome                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | $   338,478  | 1,144,208  | $      0.30  |
| Dilutive effect ofcommon equivalent shares of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |
|    stock options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                   - |         1,541  |               - |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |
| *DilutedEPS*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |  |  |
| Net incomeloss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | $   338,478  |  1,145,749  | $      0.30  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **NOTE D -Segment Data:**TheCompany 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 theapplicable segment. Net investment income is generally allocated tothe insurance and the corporate segments in proportion to policyliabilities and stockholders’ equity, respectively. Corporatesegment results for the parent company, Investors HeritagePrinting, Inc., Investors Heritage Financial Services Group, Inc.and Family Assignment Services LLC, after elimination ofintercompany amounts, are presented.                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | **Three MonthsEnded** |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | March 31,2004 | March 31,2003 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |
| Revenues:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |
|    Preneed &Burial Products                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | $  10,979,640  | $11,606,784  |
|    Traditional& Universal Life Products                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 2,881,443  | 3,106,203  |
|    CreditInsurance Products &                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |  |
|       AdministrativeServices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 36,038  | 74,263  |
|    Corporate& Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |        583,497  |        689,701  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | $  14,480,618  | $15,476,951  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |
| Pre-Tax Income (Loss) fromOperations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |  |
|    Preneed &Burial Products                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | $    (461,557) | $   (131,340) |
|    Traditional & Universal LifeProducts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 195,621  | 373,865  |
|    CreditInsurance Products &                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |  |
|       AdministrativeServices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 6,442  | 14,825  |
|    Corporate& Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |         93,012  |       188,277  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | $    (166,482) | $     445,627  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |
| **NOTE E -Federal Income Taxes:**Current taxes are provided based on estimates of theprojected effective annual tax rate. Deferred taxes reflect the nettax effects of temporary differences between the carrying amountsof assets and liabilities for financial reporting purposes and theamounts used for income tax purposes.Income before federal income taxes differs fromtaxable income principally due to the small life insurance companytax deduction and dividends-received tax deductions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **NOTE F –Comprehensive Income:**The components of comprehensive income, net of relatedtax, are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | **Three MonthsEnded** |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | March 31,2004 | March 31,2003 |
| Net income (loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | $  (137,196) | $    338,478  |
| Net unrealizedgains (losses) on                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |
|   available-for-sale securities, net oftax                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |    3,756,057  |     (375,448) |
| Comprehensiveincome (loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | $ 3,618,861  | $    (36,970) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **NOTE G – NotesPayable:** On December 15, 2003, the Company entered intoa long-term debt agreement with Fifth Third Bank in the amount of$3,000,000 at an interest rate equal to 0.5% less than the primerate established by Fifth Third, due February 1, 2005.  Thefunds were used to issue a surplus note to Investors Heritage Life,to contribute to Investors Heritage Life’s paid in capitaland for general corporate purposes.  The interest rate on thisnote was 3.5% at March 31, 2004. Interest expense and interest paidon this note was $26,833 and $22,458 respectively, in 2004.                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| On June 28, 2002, the Companyentered into a long-term debt agreement with Cherokee National LifeInsurance Company in the amount of $4,000,000, with interest to bepaid quarterly, at a rate equal to the prime rate, and due on June28, 2007. The funds were used to purchase 400,000 shares ofCherokee National common stock valued at $4,000,000. In December2002, the 400,000 shares of common stock were exchanged for 400,000shares of Series A preferred stock. The interest rate was 4.0% atMarch 31, 2004. Interest expense and interest paid on this note was$40,000 in 2004.                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| On September 30, 2002, FamilyAssignment Services, LLC entered into a long-term debt agreementwith Farmers Bank and Capital Trust Co., Frankfort, Kentucky, byestablishing a line of credit in the amount of $2,000,000 withinterest to be paid monthly at a rate equal to the prime rate,renewable annually. The purpose of this line of credit is toprovide advance funding for funerals in exchange for an irrevocableassignment of life insurance policies from other unaffiliatedinsurance companies. At March 31, 2004, $335,000 was outstanding onthis note. The interest rate was 4.0% at March 31, 2004. Interestexpense and interest paid on the note was $2,628 and $2,767respectively, in 2004. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| On December 27, 2000, theCompany entered into a long-term debt agreement with Fifth ThirdBank in the amount of $2,000,000, at an initial interest rate of8.5%, due on December 27, 2005. The funds were used to retire notespayable and to issue a surplus note to its subsidiary, InvestorsHeritage Life. On May 1, 2001, the Company borrowed an additional$400,000 on the note and the interest rate was adjusted to 1% underthe prime rate. At March 31, 2004, $1,689,909 was outstanding onthis note. The interest rate was 3.0% at March 31, 2004. Interestexpense and interest paid on the note was $13,006 and $13,187respectively, in 2004.                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| The Company also has anannually renewable line of credit agreement with Farmers Bank andCapital Trust Co., Frankfort, Kentucky in the amount of $150,000with interest to be paid quarterly at a rate equal to 1% under theprime rate.  The purpose of this line of credit is for generalcorporate purposes.  At March 31, 2004, $45,001 wasoutstanding on this line of credit.  The interest rate was3.0% at March 31, 2004.  Interest expense and interest paid onthe note was $333 and $330 respectively, in 2004.                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **NOTE H – EmployeeBenefit Plans:** The Company participates in anoncontributory retirement plan which covers substantially allemployees.  Benefits are based on years of service and thehighest consecutive 60 months average earnings within the last 120months of credited service.  Benefits are funded based onactuarially-determined amounts.                                                                                                                                                                                                                                                                                                                                        |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| The following table providesthe components of the net periodic benefit cost:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

|                                   | March 31,2004                  | March 31,2003                        |
|-----------------------------------|--------------------------------|--------------------------------------|
| Service cost                      | $  80,391       | $  92,176             |
| Interest cost                     | 160,877                   | 164,624                         |
| Expected return on planassets     | (153,075)                      | (163,955)                            |
| Amortization of prior servicecost | (5,265)                        | (8,776)                              |
| Amortization of netloss           |    41,130  |     35,261  |
| Net periodic benefitcost          | $124,058                  | $119,330                        |

| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| The Company previouslydisclosed in its financial statements for the year ended December31, 2003, that it expected to contribute $540,000 to its pensionplan in 2004.  As of March 31, 2004, $135,000 had beenmade.  The Company presently anticipates contributing anadditional $405,000 to fund its pension plan in 2004 for a total of$540,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **NOTE I – NewAccounting Pronouncements:** Effective January 1, 2004,the Company adopted Statement of Position 03-1, "Accounting andReporting by Insurance Enterprises for certain NontraditionalLong-Duration Contracts and for Separate Accounts (SOP 03-1)." Theprovisions of SOP 03-1 did not have a material impact on theCompany's financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **ITEM 2. Management’sDiscussion and Analysis of Financial Condition and Results ofOperations**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |
| **General**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Kentucky Investors isincorporated under the laws of the Commonwealth of Kentucky andwholly owns Investors Heritage Life Insurance Company, a lifeinsurance company also incorporated under the laws of theCommonwealth of Kentucky. Kentucky Investors also wholly ownsInvestors Heritage Financial Services Group, Inc., a Kentuckyinsurance marketing company which was formed in 1994, InvestorsHeritage Printing, Inc., a Kentucky printing company that providesprinting to Investors Heritage Life and other unaffiliated parties,and is the sole member of Family Assignment Services, LLC, aKentucky limited liability company that provides advance funding offunerals in exchange for the irrevocable assignment of lifeinsurance policies from other nonaffiliated companies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Investors Heritage Life offersa full line of life insurance products including, but not limitedto, whole life, term life, single premium life, multi-pay life andannuities. Investors Heritage Life’s primary lines ofbusiness are insurance policies and annuities utilized to fundpreneed funeral contracts, credit life and credit disabilityinsurance, and term life and reducing term life sold throughfinancial institutions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Investors Heritage Lifeintroduced 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 weredesigned to help combat a challenging economic environment andincreased mortality anti-selection. In general, commissions areslightly lower, guaranteed benefits have been moved further fromissue, reserves have been adjusted to better reflect experience,and an underwritten plan has been added.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Investors Heritage Life’sfinal expense product is the Heritage Final Expense, which wasintroduced during 2002 and replaced the Legacy 2000 Final Expenseseries. This product is being marketed through funeral homes andindependent agencies. It is reinsured on an 80% quota share basiswith Munich American Reassurance Company to help reduce first yearsurplus strain associated with new sales and minimize fluctuationsin future profits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Investors Heritage Life alsoprovides term insurance products, both on a decreasing and a levelbasis. The Term to 95 product provides level coverage. We willcontinue to provide our decreasing term policy that is primarilysold through financial institutions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| The Company’s operatingearnings are derived primarily from revenues generated from thesale of insurance products by Investors Heritage Life, plus theCompany’s investment results, including realized gains(losses), less interest credited to policyholders, benefits topolicyholders and expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| While the Company continues toexpand the operations of Investors Heritage Financial, InvestorsHeritage Printing and Family Assignment Services, less than 2% ofthe Company’s total operations were generated by thosesubsidiaries. As expected, more than 10% of Investors HeritageFinancial’s revenues during the first quarter 2004 werederived from the sale of Investors Heritage Life’s creditinsurance products. During the first quarter of 2004, the Companyreceived dividends from Investors Heritage Financial and InvestorsHeritage Printing in the amount of $85,500 and $3,500 respectively.The Company anticipates dividend payments from Investors HeritageFinancial and Investors Heritage Printing during the second quarterin 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| The Company’s primaryuses of cash are operating expenses, debt service and dividendpayments, and the Company’s principal sources of cash are thedividends paid to it by Investors Heritage Life, Investors HeritageFinancial and Investors Heritage Printing. Investors HeritageLife’s principal sources of cash are from the sale of lifeinsurance policies and investment income, including realized gains(losses), less benefits to policyholders and expenses. Therefore,the remainder of the discussion will deal with the financialcondition and results of operations of Investors HeritageLife.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **CRITICAL ACCOUNTINGPOLICIES AND ESTIMATES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| The Company’s discussionand analysis of its financial condition and results of operationsare based on its consolidated financial statements, which have beenprepared in accordance with accounting principles generallyaccepted in the United States. Preparation of these financialstatements requires the Company to make estimates and judgmentsthat affect the reported amounts of assets, liabilities, revenuesand expenses. On a continuing basis, the Company evaluates itsestimates, including those related to investments, deferredacquisition costs, present value of future profits, policyliabilities, income taxes, regulatory requirements, contingenciesand litigation. The Company bases such estimates on historicalexperience and other assumptions believed to be reasonable underthe circumstances, the results of which form the basis for makingjudgments about the carrying values of assets and liabilities thatare not readily apparent from other sources. Actual results maydiffer from these estimates under different assumptions orconditions. The Company believes the following accounting policies,judgments and estimates are the most critical to the preparation ofits consolidated financial statements.                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **Investment in FixedMaturities, Equity Securities and Mortgage Loans**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| The Company holds fixedmaturities and equity interests in a variety of companies.Additionally, the Company originates, underwrites and managesmortgage loans. The Company continuously evaluates all of itsinvestments based on current economic conditions, credit lossexperience and other developments. The Company evaluates thedifference between the cost/amortized cost and estimated fair valueof its investments to determine whether any decline in value istemporary or other-than-temporary in nature.  Thisdetermination involves a degree of uncertainty.  If a declinein the fair value of a security is determined to be temporary, thedecline is recorded as an unrealized loss in shareholders’equity.  If a decline in a security’s fair value isconsidered to be other-than temporary, the security is written downto the estimated fair value with a corresponding realized lossrecognized in the consolidated statements ofincome.                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| The assessment of whether adecline in fair value is considered temporary or other thantemporary includes management’s judgment as to the financialposition and future prospects of the entity issuing thesecurity.  It is not possible to accurately predict when itmay be determined that a specific security will becomeimpaired.  Future adverse changes in market conditions, pooroperating results of underlying investments and defaults onmortgage loan payments could result in losses or an inability torecover the current carrying value of the investments, therebypossibly requiring an impairment charge in the future.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **Deferred AcquisitionCosts**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| At March 31, 2004, the balanceof our deferred acquisition costs was $22,836,000 compared to$23,298,000 at December 31, 2003. The recovery of these costs isdependent on the future profitability of the related business. Eachyear, we evaluate the recoverability of the unamortized balance ofthe deferred acquisition costs. We consider estimated future grossprofits or future premiums, expected mortality or morbidity,interest earned and credited rates, persistency and expenses indetermining whether the balance is recoverable. If we determine aportion of the unamortized balance is not recoverable, it isimmediately charged to amortization expense. The assumptions we useto amortize and evaluate the recoverability of the deferredacquisition costs involve significant judgment. A significantrevision to these assumptions will impact future financialresults.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **PolicyLiabilities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Establishing liabilities forthe Company’s long-duration insurance contracts requiresvarious assumptions, including policyholder persistency, mortalityrates, investment yields, discretionary benefit increases, newbusiness pricing, and operating expense levels. The Companyevaluates historical experience for these factors when assessingthe need for changing current assumptions. However, since many ofthese factors are interdependent and subject to short-termvolatility during the long-duration contract period, substantialestimates and judgment are required. Accordingly, if actualexperience emerges differently from that assumed, materialfinancial statement adjustments could be required.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **Investments, Liquidity andCapital Resources**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Premiums, which includemortality and expense charges, and investment income are InvestorsHeritage Life’s primary sources of cash flow used to meetshort-term and long-term cash requirements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Investors Heritage Life’sshort-term obligations consist primarily of policyholder benefitsand operating expenses. Investors Heritage Life has historicallybeen able to meet these obligations out of operating cash, premiumsand investment income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Management is not aware of anycommitments or unusual events that could materially affect capitalresources.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| On December 15, 2003, KentuckyInvestors borrowed $3,000,000 from Fifth Third Bank.  The noteis due on February 1, 2005, with interest to be paid monthly at arate equal to 0.5% under prime.  Kentucky Investors utilized$300,000 of this borrowing to purchase treasury stock, loaned$900,000 to Investors Heritage Life in exchange for an additionalsurplus note and transferred $1,800,000 to Investors Heritage Lifeas paid in surplus.  The Company contributed the surplus toInvestors Heritage Life in order to strengthen its statutorysurplus for ratings purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Kentucky Investors previouslyborrowed $2,400,000 from Fifth Third Bank. Kentucky Investorsutilized $200,000 of the loan amount to reduce debt to InvestorsHeritage Life, loaned $1,800,000 to Investors Heritage Life inexchange for a surplus note, and used the remaining $400,000 forgeneral operating purposes. The note calls for Investors HeritageLife to pay, on or before the first day of each quarter, interest1% under the prime rate, upon prior approval by the KentuckyDepartment of Insurance. Such interest may be paid out of InvestorsHeritage Life’s earned surplus, operating income, or paid-inand contributed surplus.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| In 2002, the Company acquired400,000 shares of common stock of Cherokee National in exchange forthe Company’s promissory note in the amount of $4,000,000.Interest is paid quarterly at a rate equal to the prime rate andthe note is due June 28, 2007. The Company has another $2,000,000line-of-credit note with a financial institution relative to FamilyAssignment Services, of which $335,000wasoutstanding at March 31, 2004. The purpose of this line of creditis to provide advance funding for funerals in exchange for anassignment of life insurance policies from other unaffiliatedcompanies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| The Company and InvestorsHeritage Life will continue to explore various opportunitiesincluding corporate reorganizations, acquisitions and purchasingblocks of business from other companies, which may dictate anadditional need for either long-term or short-term debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Investors Heritage Life hasmaintained a sound, conservative investment strategy. At March 31,2004, 87.9% of invested assets consisted of fixed income publicbonds compared to 87.4% at December 31, 2003. Fixed income assetsare managed by Conning Asset Management Company, an independentportfolio manager.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Additionally, InvestorsHeritage Life also engages in commercial and residential mortgagelending with approximately 93% of these investments being incommercial properties. All mortgage loans are originated in-houseand all loans are secured by first mortgages on the real estate. AtMarch 31, 2004, 7.5% of invested assets consisted of mortgage loanscompared to 7.9% at December 31, 2003. Management anticipatesfunding several new mortgage loan investments during the remainderof 2004 to maintain a similar to slightly higher percentage ofmortgage loans to total invested assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Investors Heritage Life’sconservative approach in the product development area and thestrength and stability of its fixed income and mortgage loanportfolios provide adequate liquidity both in the short-term andthe long-term. At March 31, 2004 and December 31, 2003, InvestorsHeritage Life’s fixed income investments were 100% investmentgrade as rated by Standard & Poor’s. None of InvestorsHeritage Life’s fixed income assets are in default and therehas been no material change in the distribution of its fixed incomeportfolio.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Investors Heritage Life’sprincipal long-term obligations are fixed contractual obligationsincurred in the sale of its life insurance products. The premiumscharged for these products are based on conservative andactuarially sound assumptions as to mortality, persistency andinterest. Management believes these assumptions will producerevenues sufficient to meet its future contractual benefitobligations and operating expenses, and provide an adequate profitmargin.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| The Company continuouslyevaluates all of its investments based on current economicconditions, credit loss experience and other developments. TheCompany evaluates the difference between the cost/amortized costand estimated fair value of its investments to determine whether adecline in value is temporary or other than temporary in nature.This determination involves a degree of uncertainty. If a declinein the fair value of a security is determined to be temporary, thedecline is recorded as an unrealized loss in shareholders’equity. If a decline in a security’s fair value is consideredto be other than temporary, the security is written down to theestimated fair value with a corresponding realized loss recognizedin the consolidated statements of income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| The assessment of whether adecline in fair value is considered temporary or other thantemporary includes management’s judgment as to the financialposition and future prospects of the entity issuing the security.It is not possible to accurately predict when it may be determinedthat a specific security will become impaired. Future impairmentcharges could be material to the results of operations of theCompany. The Company recognized no impairment charges during thefirst quarters of 2004 or 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Management believes that itwill recover the cost basis in the securities held with unrealizedlosses as it has both the intent and ability to hold the securitiesuntil they mature or recover in value. Securities are sold toachieve management’s investment goals, which include thediversification of credit risk, the maintenance of adequateportfolio liquidity and the management of interest rate risk. Inorder to achieve these goals, sales of investments are based uponcurrent market conditions, liquidity needs and estimates of thefuture market value of the individual securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **Results ofOperations**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Total premium income (net ofreinsurance) for the first quarter 2004 decreased 6.1% whencompared to the first quarter of 2003. The decrease was primarilydue to lower sales in the pre-need segment. Net investment incomefor the first quarter 2004 compared to the first quarter of 2003decreased 4.7%. The decrease is primarily due to lower yield rateson new asset purchases which have impacted the rate of return onour investment portfolio. Overall revenue for the first quarter2004 decreased 6.4% when compared to the first quarter of2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Total Benefits and Expenseswere 2.6% lower in the first quarter of 2004 when compared to thesame quarter of 2003, primarily due to lower premium production inpre-need sales and the implementation of several cost containmentmeasures. After providing for federal income taxes, theCompany’s Net Loss was $137,196 with Earnings per share of$(0.12) for the first three months of 2004 as compared to Netincome of $338,478 and Earnings per share of $0.30 for the sameperiod in 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| A dividend of $0.38 per sharewas paid April 14, 2004, to shareholders of record on March 26,2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **BusinessSegments**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Management internally evaluatesthe performance of Investors Heritage Life operations by thefollowing business segments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Preneed & Burial Productsinclude both life and annuity products sold by funeral directors oraffiliated agents to fund prearranged funerals. Revenues for thissegment were 5.4% lower for the first quarter of 2004 when comparedto the same period of 2003. The decrease is due primarily toincreased competition in the marketplace and an uncertain economicenvironment. Pre-Tax Loss from Operations for the first quarter2004 was $461,557 compared to $131,340 for the same period for2003. The increased loss in 2004 compared to 2003 is due primarilyto shrinking of profit margins in previously sold preneed productsdue to a lower interest rate environment. Investors Heritage Lifeplans to continue its expansion of territory and recruitment ofagents in the Preneed and Burial insurance market.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Traditional & UniversalLife Products include traditional life and group life insuranceproducts, annuities (primarily qualified) and universal lifeproducts. Revenues for this segment were 7.2% lower for the firstquarter of 2004 when compared to the first quarter of 2003.Revenues on this segment are primarily derived from the sales ofterm insurance products through banks, which has been lower due toless loan demand. Sales have also slowed recently due to newfederal banking guidelines regarding predatory lending and the saleof credit insurance in conjunction with a real estate mortgage. Inaddition, several states, including Kentucky, have enacted or areconsidering predatory lending laws that prohibit the financing ofsingle premium credit insurance as part of a real estate mortgagetransaction. Pre-Tax Income from Operations for the first threemonths of 2004 was 47.7% lower than for the first three months of2003 primarily because of general insurance expenses associatedwith the sales, issuance and administration costs of these productsas well as the investment income pressures cited above. EffectiveJanuary 1, 2004, the Company lowered its maximum retention levelfrom $100,000 to $25,000 per life.  It is anticipated thatthis new retention level will stabilize earnings fluctuations inthis segment.      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Credit Insurance Products andAdministrative Services include the marketing and administration ofcredit life and credit accident & health insurance products.Revenues for 2004 were $36,038 for the first quarter compared to$74,263 for the same period for 2003. Pre-Tax Income fromOperations was $6,442 for the first quarter of 2004 compared to$14,825 for the first quarter of 2003. The revenues and income onthe credit insurance line are directly affected by consumer loandemand. While the potential always exists for a slowdown in creditinsurance sales due to decreased loan demand, sales have slowedrecently due to new federal banking guidelines regarding predatorylending and the sale of credit insurance in conjunction with a realestate mortgage. In additional, several states, including Kentucky,have enacted or are considering predatory lending laws thatprohibit the financing of single premium credit insurance as partof a real estate mortgage transaction. All of the relatedunderwriting risk currently produced is being reinsured 100% withhighly-rated life companies.                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Corporate & Other consistsof corporate accounts measured primarily by stockholders’paid-in capital, contributed surplus, earned surplus, property andequipment, and other minor business lines which include groupannuities and group and individual accident and health products.Revenues were 15.4% lower and Pre-Tax Income from Operations was50.6% lowerfor the first quarter of 2004when compared to the first quarter 2003. The decreases for thefirst quarter in 2004 are primarily due to the decision lastquarter to assign more target surplus, through the allocation ofnet investment income and general expenses, to other lines ofbusiness because of the low interest rate environment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **Federal IncomeTaxes**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Current taxes are providedbased on estimates of the projected effective annual tax rate.Deferred taxes reflect the net tax effects of temporary differencesbetween the carrying amounts of assets and liabilities forfinancial reporting purposes and the amounts used for income taxpurposes. The effective tax rate was 17.6% at March 31, 2004compared to 24% for March 31, 2003. The decrease in the effectivetax rate is due primarily to the deferred tax calculation,specifically, the temporary differences arising from reservecalculations for financial reporting purposes as opposed to incometax reporting purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **Forward LookingInformation**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| The Company cautions readersregarding certain forward-looking statements contained in thisreport and in any other statements made by, or on behalf of, theCompany, whether or not in future filings with the Securities andExchange Commission. Forward-looking statements are statements notbased on historical information and which relate to futureoperations, strategies, financial results, or other developments.Statements using verbs such as “expect”,“anticipate”, “believe” or words of similarimport generally involve forward-looking statements. Withoutlimiting the foregoing, forward-looking statements includestatements which represent the Company’s beliefs concerningfuture levels of sales and redemptions of Investors HeritageLife’s products, investment spreads and yields, or theearnings and profitability of the Company’s or InvestorsHeritage Life’s activities.                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Forward-looking statements arenecessarily based on estimates and assumptions that are inherentlysubject to significant business, economic and competitiveuncertainties and contingencies, many of which are beyond theCompany’s control and many of which are subject to change.These uncertainties and contingencies could cause actual results todiffer materially from those expressed in any forward-lookingstatements made by, or on behalf of, the Company. Whether or notactual results differ materially from forward-looking statementsmay depend on numerous foreseeable and unforeseeable factors anddevelopments. Some of these may be national in scope, such asgeneral economic conditions, changes in tax law and changes ininterest rates. Some may be related to the insurance industrygenerally, such as pricing competition, regulatory developments,industry consolidation and the effects of competition in theinsurance business from other insurance companies and otherfinancial institutions operating in the Company’s market areaand elsewhere. Others may relate to the Company specifically, suchas credit, volatility and other risks associated with theCompany’s investment portfolio. The Company cautions thatsuch factors are not exclusive. The Company disclaims anyobligation to update forward-looking information. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **ITEM 3. Quantitative andQualitative Disclosures about Market Risk**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| There have been no significantor material changes in the Company’s market risks sinceDecember 31, 2003. Measuring market risk is a key function of ourasset/liability management process. To test financial risk andinvestment strategy, the Company performs an asset adequacyanalysis each year. Dynamic models of both assets and liabilitiesare created to project financial results under several shifts inthe current interest rate environment. Results show that theCompany’s exposure to a relative 10% increase or decrease inthe interest rates prevalent at December 31, 2003 is a net loss ofless than $500,000. This analysis is not performed on a quarterlybasis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Items taken into account on theasset side include prepayment and liquidity risks, assetdiversification and quality considerations. On the liability side,interest crediting strategies and policyholder and agent behavior(lapses, loans, withdrawals and premium flow) are dynamicallymodeled in relationship to the particular interest rate environmenttested. Although the Company is careful to ensure that theseassumptions are consistent with the best available data,interest-sensitive cash flows cannot be forecast with certainty andcan deviate significantly from the assumptions made.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Because asset and liabilitydurations are continually changing as new policyholder contractsare issued and as new investments are added to the portfolio, theCompany manages its balance sheet on an ongoing basis and its netexposure to changes in interest rates may vary over time. Althoughthe asset adequacy analysis is not performed on a quarterly basis,management believes that the Company’s asset base issufficient to cover the minimal increases or decreases that wouldbe expected to occur during any particular year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| In addition to these dynamicmodeling techniques, the Company closely monitors its own businesssegments with respect to product performance and agent behavior. Tothat end, during 2002 we implemented a new system to assist inmonitoring these areas. This new tool allows management to quicklyisolate areas of strength and weakness and to take appropriate andtimely action to exploit the strengths and improve theweaknesses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **ITEM 4. Controls andProcedures**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| As of the end of the periodcovered by this Form 10-Q, the Company performed an evaluation,under the supervision and with the participation of theCompany’s management, including the Company’s ChiefExecutive Officer and Chief Financial Officer, of the effectivenessof the design and operation of the Company’s disclosurecontrols and procedures as defined in Rules 13a-15(e) and 15d-15(e)of the Securities Exchange Act of 1934. Based upon that evaluation,the Chief Executive Officer and Chief Financial Officer concludedthat the Company’s disclosure controls and procedures areeffective in timely alerting them to material information relatingto the Company (including its consolidated subsidiaries) requiredto be included in this Quarterly Report on Form 10-Q. There havebeen no significant changes in the Company’s internalcontrols or in other factors which could significantly affectinternal controls over financial reporting during this most recentquarter or subsequent to the date the Company carried out itsevaluation.                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

----

|   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | PART II –OTHER INFORMATION                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | **ITEM 1. LegalProceedings**                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |
|   |                                                                                                                                                                            | The Company is not involved inany legal proceedings. From time to time Investors Heritage Life isinvolved in litigation relating to claims arising out of itsoperations in the normal course of business. As of May 7, 2004,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 adverseeffect on Investors Heritage Life’s or the Company’sfinancial condition or results of operations.  |   |
|   |                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |
|   |                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | **ITEM 2. Changes inSecurities and Use of Proceeds and Issuer Purchases**                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |  |
|   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | TotalNumber | Maximum |
|   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | ofShares | Numberof |
|   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | Purchased | Sharesthat |
|   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | as Partof | May YetBe |
|   |                                                                                                                                                                                 | TotalNumber                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Average | Publicly | Purchased |
|   |                                                                                                                                                                                 | OfShares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | PricePaid | Announced | Underthe |
|   | Shares                                                                                                                                                                          | Purchased                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Per Share | Plans | Plan |
|   | 1/1/04--1/31/04                                                                                                                                                                 | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | $        - | - | - |
|   | 2/1/04--2/29/04                                                                                                                                                                 | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | $        - | - | - |
|   | 3/1/04--3/31/04                                                                                                                                                                 | 6,436                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | $26.55 | - | - |
|   | TOTAL                                                                                                                                                                           | 6,436                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | $26.55 | - | - |
|   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |  |
|   | (1) No share repurchases weremade pursuant to a publicly announced plan or program. All sharerepurchases were shares tendered by employees as part of theCompany's 401(k) plan. |
|   |                                                                                                                                                                                 |
|   | (2) Average price paid pershare is calculated on a settlement basis and excludescommission.                                                                                     |
|   |                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | **ITEM 3. Defaults Upon SeniorSecurities**                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | None                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | **ITEM 4. Submission ofMatters to a Vote of Security Holders**                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | None                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | **ITEM 5. OtherInformation**                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | None                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | **ITEM 6. Exhibits and Reportson Form 8-K**                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|        | a) Exhibits                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|        | No exhibits were filed for thequarter ended March 31, 2004.                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|        | b) Reports on form8-K                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|        | No reports on Form 8-K werefiled for the quarter ended March 31, 2004.                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

----

****

| **SIGNATURES**                                                                                                                                                                       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Pursuant to the requirements ofthe Securities and Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersignedthereunto duly authorized. |
|                                                                                                                                                                                      |
|                                                                                                                                                                                           | **KENTUCKY INVESTORS,INC.** |
|                                                                                                                                                                                      |  |
|                                                                                                                                                                                           | BY: /s/Harry Lee WaterfieldII |
| DATE: May 14, 2004                                                                                                                                                                        |       President |
|                                                                                                                                                                                      |  |
|                                                                                                                                                                                           | BY: /s/Raymond L.Carr |
| DATE: May 14, 2004                                                                                                                                                                        |       Vice President -Chief Financial Officer |
|                                                                                                                                                                                      |  |
|                                                                                                                                                                                           |  |