UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549








FORM 10-Q






QUARTERLY
REPORT

Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934



For the
quarterly period ended June 30, 2008








0-1999

(Commission file number)



KENTUCKY INVESTORS, INC.

(Exact Name of Registrant as Specified in its Charter)



KENTUCKY
			
			61-6030333(State or other jurisdiction of incorporation or
			organization)
			
			(I.R.S. Employer Identification Number)


200 Capital
Avenue, P.O. Box 717

Frankfort,
Kentucky 40602

(Address of principal executive offices)



(502) 223-2361

(Registrant's telephone number, including area code)








Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.



Yes [X]     No [  ]



Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of "large accelerated
filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the
Exchange Act.



Large accelerated filer  [  ]
			Accelerated filer   [  ]Non-accelerated filer  [  ] (Do
			not check if a smaller reporting company)
			Smaller reporting company  [X]




Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



Yes [X]     No [  ]



Securities registered pursuant to Section 13(g) of the Act:



Common Capital Stock par value $1.00 per share

(Title of Class)



Number of outstanding shares as of August 8, 2008 -- 1,117,316.160



---



PART I -- FINANCIAL INFORMATIONPageITEM 1
			Condensed Consolidated
			Financial Statements
			3ITEM 2
			Management's Discussion and
			Analysis of Financial Condition and Results of Operations
			15ITEM 4T
			Controls and Procedures
			21PART II -- OTHER INFORMATIONITEM 1
			Legal Proceedings
			22ITEM 2
			Unregistered Sales of Equity Securities and Use of
			Proceeds
			22ITEM 3
			Defaults Upon Senior Securities
			22ITEM 4.
			Submission of Matters to a Vote of Security Holders
			22ITEM 5.
			Other Information
			23ITEM 6.
			Exhibits
			23SIGNATURES
			
			23EXHIBIT 31.1
			
			24EXHIBIT 31.2
			
			26EXHIBIT 32
			
			28




---



PART I -- FINANCIAL INFORMATION




ITEM 1.  Condensed Consolidated Financial Statements



KENTUCKY INVESTORS, INC.Condensed Consolidated Balance Sheets (Unaudited)June 30,
			
			December 31,ASSETS
			
			2008
			
			2007Investments:Securities available-for-sale, at fair value:Fixed maturities (amortized cost: $282,563,369 and
			$283,670,281)
			$
			284,446,530
			$
			289,516,851Equity securities (cost: $4,862,236 and $3,850,263)
			
			4,852,550
			
			4,335,063Mortgage loans on real estate
			
			23,787,449
			
			24,812,445Policy loans
			
			7,021,412
			
			6,968,157Other long-term investments
			
			1,046,396
			
			878,036Short-term investments
			
			340,000
			
			365,000Total investments
			$
			321,494,337
			$
			326,875,552Cash and cash equivalents
			
			1,941,188
			
			1,238,194Accrued investment income
			
			4,572,971
			
			4,668,922Due premiums
			
			3,566,912
			
			3,726,202Deferred acquisition costs
			
			20,390,967
			
			20,379,631Present value of future profits
			
			70,593
			
			116,385Leased property under capital leases
			
			333,399
			
			372,928Property and equipment
			
			1,746,737
			
			1,678,094Collateral on securities loaned
			
			10,917,528
			
			2,186,372Cash value of company-owned life insurance
			
			6,976,963
			
			6,845,039Other assets
			
			317,548
			
			285,532Amounts recoverable from reinsurers
			
			50,535,615
			
			51,375,027$
			422,864,758
			$
			419,747,878LIABILITIES AND STOCKHOLDERS' EQUITYLIABILITIESPolicy liabilities:Benefit reserves
			$
			340,830,115
			$
			341,268,264Unearned premium reserves
			
			12,511,996
			
			12,990,293Policy claims
			
			1,470,478
			
			1,476,669Liability for deposit-type contracts
			
			2,696,990
			
			2,663,641Reserves for dividends and endowments and other
			
			584,704
			
			547,262Total policy liabilities
			$
			358,094,283
			$
			358,946,129Deferred federal income tax liability
			
			3,804,575
			
			5,211,301Obligations under capital leases
			
			329,781
			
			371,736Notes payable
			
			4,144,997
			
			4,261,948Obligations to return collateral under securities loan
			agreement
			
			10,917,528
			
			2,186,372Accrued pension liability
			
			1,896,092
			
			2,159,914Other liabilities
			
			2,026,873
			
			2,053,378Total liabilities
			$
			381,214,129
			$
			375,190,778STOCKHOLDERS' EQUITYCommon stock (shares issued:  1,116,211 and 1,117,851)
			$
			1,116,211
			$
			1,117,851Paid-in surplus
			
			8,679,232
			
			8,650,907Accumulated other comprehensive income (loss)
			
			(746,537)
			
			1,902,238Retained earnings
			
			32,601,723
			
			32,886,104Total stockholders' equity
			$
			41,650,629
			$
			44,557,100$
			422,864,758
			$
			419,747,878See notes to consolidated financial statements.




3



---



KENTUCKY INVESTORS, INC.Condensed Consolidated Income Statements (Unaudited)Three Months Ended June 30,2008
			
			
			2007REVENUEPremiums and other considerations
			
			$
			11,701,374
			
			$
			11,694,675Premiums ceded
			
			
			(3,489,408)
			
			
			(3,598,513)Net premiums earned
			
			
			8,211,966
			
			
			8,096,162Investment income, net of expenses
			
			
			4,512,816
			
			
			4,462,353Realized gains on investments, net
			
			
			1,089
			
			
			1,142Other income
			
			
			279,143
			
			
			351,585Total revenue
			
			$
			13,005,014
			
			$
			12,911,242BENEFITS AND EXPENSESDeath and other benefits
			
			$
			7,864,875
			
			$
			7,873,173Guaranteed annual endowments
			
			
			155,650
			
			
			163,694Dividends to policyholders
			
			
			172,291
			
			
			150,409Increase in benefit reserves and unearned premiums
			
			
			1,450,082
			
			
			1,065,432Acquisition costs deferred
			
			
			(1,206,231)
			
			
			(1,213,162)Amortization of deferred acquisition costs
			
			
			1,380,036
			
			
			1,421,547Commissions
			
			
			542,969
			
			
			510,112Other insurance expenses
			
			
			2,394,856
			
			
			2,552,175Total benefits and expenses
			
			$
			12,754,528
			
			$
			12,523,380INCOME BEFORE FEDERAL INCOME TAXES
			
			$
			250,486
			
			$
			387,862PROVISION (BENEFIT) FOR FEDERAL INCOME TAXESCurrent
			
			$
			87,140
			
			$
			46,206Deferred
			
			
			(27,686)
			
			
			22,492$
			59,454
			
			$
			68,698NET INCOME
			
			$
			191,032
			
			$
			319,164BASIC AND DILUTED NET EARNINGS PER SHARE
			
			$
			0.17
			
			$
			0.29DIVIDENDS PER SHARE
			
			$
			-
			
			$
			-See notes to consolidated financial statements.




4





---



KENTUCKY INVESTORS, INC.Condensed Consolidated Income Statements (Unaudited)Six Months Ended June 30,2008
			
			
			2007REVENUEPremiums and other considerations
			
			$
			22,477,264
			
			$
			22,686,747Premiums ceded
			
			
			(6,226,941)
			
			
			(6,348,622)Net premiums earned
			
			
			16,250,323
			
			
			16,338,125Investment income, net of expenses
			
			
			8,953,255
			
			
			8,989,752Realized gains (losses) on investments, net
			
			
			(382)
			
			
			601Other income
			
			
			551,921
			
			
			639,662Total revenue
			
			$
			25,755,117
			
			$
			25,968,140BENEFITS AND EXPENSESDeath and other benefits
			
			$
			16,621,343
			
			$
			16,751,434Guaranteed annual endowments
			
			
			295,326
			
			
			310,300Dividends to policyholders
			
			
			302,293
			
			
			283,768Increase in benefit reserves and unearned premiums
			
			
			1,883,642
			
			
			1,372,363Acquisition costs deferred
			
			
			(2,356,107)
			
			
			(2,465,086)Amortization of deferred acquisition costs
			
			
			2,688,507
			
			
			2,843,210Commissions
			
			
			1,068,551
			
			
			1,035,900Other insurance expenses
			
			
			4,974,598
			
			
			5,030,470Total benefits and expenses
			
			$
			25,478,153
			
			$
			25,162,359INCOME BEFORE FEDERAL INCOME TAXES
			
			$
			276,964
			
			$
			805,781PROVISION (BENEFIT) FOR FEDERAL INCOME TAXESCurrent
			
			$
			133,975
			
			$
			53,112Deferred
			
			
			(68,237)
			
			
			89,607$
			65,738
			
			$
			142,719NET INCOME
			
			$
			211,226
			
			$
			663,062BASIC AND DILUTED NET EARNINGS PER SHARE
			
			$
			0.19
			
			$
			0.60DIVIDENDS PER SHARE
			
			$
			0.38
			
			$
			0.38See notes to consolidated financial statements.




5



---



KENTUCKY INVESTORS, INC.Condensed Consolidated Statements of Stockholders' Equity (Unaudited)AccumulatedOther
			
			
			
			TotalCommon
			
			Paid-in
			
			Comprehensive
			
			Retained
			
			Stockholders'Stock
			
			Surplus
			
			Income (Loss)
			
			Earnings
			
			EquityBALANCE, JANUARY 1, 2007
			$
			1,113,104
			$
			8,603,902
			$
			(114,520)
			$
			31,567,907
			$
			41,170,393Comprehensive income:Net income
			
			-
			
			-
			
			-
			
			663,062
			
			663,062Change in net unrealized appreciationon available-for-sale securities
			
			-
			
			-
			
			(3,234,209)
			
			-
			
			(3,234,209)Change in unrealized pension benefits
			
			-
			
			-
			
			59,072
			
			-
			
			59,072Change in fair value of hedging instrument
			-
			
			-
			
			5,321
			
			-
			
			5,321Total comprehensive loss
			
			
			
			
			
			
			
			
			
			(2,506,754)Cash dividends
			
			-
			
			-
			
			-
			
			(423,062)
			
			(423,062)Issuances of common stock, net
			
			299
			
			2,215
			
			-
			
			5,502
			
			8,016BALANCE, JUNE 30, 2007
			$
			1,113,403
			$
			8,606,117
			$
			(3,284,336)
			$
			31,813,409
			$
			38,248,593BALANCE, JANUARY 1, 2008
			$
			1,117,851
			$
			8,650,907
			$
			1,902,238
			$
			32,886,104
			$
			44,557,100Comprehensive income:Net income
			
			-
			
			-
			
			-
			
			211,226
			
			211,226Change in net unrealized appreciationon available-for-sale securities
			
			-
			
			-
			
			(2,733,715)
			
			-
			
			(2,733,715)Change in unrealized pension benefits
			
			-
			
			-
			
			81,445
			
			-
			
			81,445Change in fair value of hedging instrument
			-
			
			-
			
			3,495
			
			-
			
			3,495Total comprehensive loss
			
			
			
			
			
			
			
			
			
			(2,437,549)Cash dividends
			
			-
			
			-
			
			-
			
			(422,959)
			
			(422,959)Repurchases of common stock, net
			
			(1,640)
			
			28,325
			
			-
			
			(72,648)
			
			(45,963)BALANCE, JUNE 30, 2008
			$
			1,116,211
			$
			8,679,232
			$
			(746,537)
			$
			32,601,723
			$
			41,650,629See notes to consolidated financial statements.




6



---



KENTUCKY INVESTORS, INC.Condensed Consolidated Statements of Cash Flows (Unaudited)Six Months Ended June 30,2008
			
			
			2007NET CASH PROVIDED BY OPERATING ACTIVITIES
			
			$
			1,688,801
			
			$
			1,896,361INVESTING ACTIVITIESSecurities available-for-sale:Purchases
			
			$
			(11,207,911)
			
			$
			(7,543,619)Sales and maturities
			
			
			11,107,683
			
			
			7,806,852Other investments:Cost of acquisitions
			
			
			(976,672)
			
			
			(2,964,057)Sales and maturities
			
			
			1,805,053
			
			
			2,580,623Net additions to property and equipment
			
			
			(213,539)
			
			
			(153,348)NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
			
			$
			514,614
			
			$
			(273,549)FINANCING ACTIVITIESReceipts from universal life policies credited topolicyholder account balances
			
			$
			3,705,763
			
			$
			4,912,364Return of policyholder account balances on universal life policies
			
			
			(4,620,311)
			
			
			(5,738,066)Payments on notes payable
			
			
			(1,645,936)
			
			
			(2,946,659)Proceeds from notes payable
			
			
			1,528,985
			
			
			2,185,333Dividends paid
			
			
			(422,959)
			
			
			(423,062)Issuances (repurchases) of common stock
			
			
			(45,963)
			
			
			8,016NET CASH USED IN FINANCING ACTIVITIES
			
			$
			(1,500,421)
			
			$
			(2,002,074)INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
			
			$
			702,994
			
			$
			(379,262)Cash and cash equivalents at beginning of period
			
			
			1,238,194
			
			
			1,776,491CASH AND CASH EQUIVALENTS AT END OF PERIOD
			
			$
			1,941,188
			
			$
			1,397,229See notes to consolidated financial statements.




7



---



KENTUCKY INVESTORS, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008

(Unaudited)



NOTE A - Nature of Operations

Kentucky Investors, Inc. is the holding
company of Investors Heritage Life Insurance Company; Investors Heritage
Printing, Inc., a printing company; Investors Heritage Financial Services Group,
Inc., an insurance marketing company; is the sole member of At Need Funding,
LLC, a limited liability company that provides advance funding of funerals in
exchange for the irrevocable assignment of life insurance policies from other
nonaffiliated companies; and is the sole member of Heritage Funding, LLC, a
limited liability company that invests in various business ventures. These
entities are collectively hereinafter referred to as the "Company".
Approximately 99% of Kentucky Investors' consolidated revenue is generated by
Investors Heritage Life.



Our operations involve the sale and
administration of various insurance and annuity products, including, but not
limited to, participating and non-participating whole life, limited pay life,
universal life, annuity contracts, credit life, credit accident and health and
group insurance policies. The principal markets for the Company's products are
in the Commonwealths of Kentucky and Virginia, and the States of North Carolina,
South Carolina, Ohio, Indiana, Florida, Tennessee, Georgia, and Michigan.



NOTE B - Basis of Presentation

The accompanying unaudited condensed
consolidated financial statements have been prepared in accordance with U.S.
generally accepted accounting principles for interim financial information and
the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by U.S.
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the six months ended June 30, 2008 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2008. For further information, refer to the consolidated financial statements
and footnotes thereto for the year ended December 31, 2007, as included in our
Annual Report on Form 10-K.



The preparation of financial statements
in conformity with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.



Certain reclassifications have been made
to the amounts previously reported for the prior periods shown herein to conform
to the current period presentation.



NOTE C - Earnings per Share and Stock-Based
Compensation

Earnings per share of common stock were
computed based on the weighted average number of common shares outstanding
during each period. The weighted average number of shares outstanding for the
three months ended June 30, 2008 and 2007 were 1,114,343 and 1,113,336,
respectively. The weighted average number of shares outstanding for the six
months ended June 30, 2008 and 2007 were 1,114,725 and 1,113,296, respectively.



The Company's only outstanding stock
options and stock appreciation rights were issued in 1999. We account for our
stock-based incentive program under Statement of Financial Accounting Standard
("SFAS") No. 123(R), "Share-Based Payment," which requires all share-based
payments to employees to be recognized as compensation expense in the
consolidated income statement. We adopted the provisions of SFAS No. 123(R)
using the modified prospective method in which compensation expense is
recognized based on the requirements of SFAS No. 123, "Accounting for
Stock-Based Compensation," for all awards granted to employees prior to January
1, 2006. Under this method, our stock-based compensation is reported in the
balance sheets as a liability based on the intrinsic value of the compensation,
and compensation expense is measured as the change in intrinsic value.



Under our stock option and stock
appreciation rights plan, there were 61,125 outstanding options, having an
exercise price of $23.00 per share, as of June 30, 2008 and 2007. We recognized
a decrease in compensation expense relative to the outstanding options of
$253,669 for the three month period ended June 30, 2008 compared to an increase
in compensation expense of $9,169 associated with such options for the three
month period ended June 30, 2007. We recognized a decrease in compensation
expense relative to the outstanding options of $207,825 for the six month period
ended June 30, 2008 compared to an increase in compensation expense of $97,800
associated with such options for the six month period ended June 30, 2007. These
changes in compensation expense were based on changes in the market value of the
Company's stock compared to the exercise price of the options as of those dates.



NOTE D - Segment Data

We operate in four segments as shown in
the following table. All segments include both individual and group insurance.
Identifiable revenues and expenses are assigned directly to the applicable
segment. Net investment income is generally allocated to the insurance and the
corporate segments in proportion to policy liabilities and stockholders' equity,
respectively. Results for the parent company, Investors Heritage Printing, At
Need Funding, Heritage Funding, and a portion of Investors Heritage Financial,
after elimination of intercompany amounts, are allocated to the Corporate and
Other segment.



During the third quarter 2007, we
determined that certain service fee income of Investors Heritage Financial that
is derived from external parties relative to credit administrative services
being provided should be included within the Credit Insurance Products and
Administrative Services segment.  Historically, all Investors Heritage Financial
revenue and income had been included in the Corporate and Other segment. 
Accordingly, the prior period segment data has been reclassified for comparative
purposes with the current period segment presentation.



Three Months Ended June 30,2008
			
			
			2007Revenue:Preneed and burial products
			$
			9,775,797
			
			$
			9,148,158Traditional and universal life products
			
			2,848,834
			
			
			3,316,503Credit insurance products and administrative services
			
			110,332
			
			
			169,226Corporate and other
			
			270,051
			
			
			277,355$
			13,005,014
			
			$
			12,911,242Pre-tax income (loss) from operations:Preneed and burial products
			$
			(211,397)
			
			$
			117,279Traditional and universal life products
			
			96,966
			
			
			46,500Credit insurance products and administrative services
			
			73,795
			
			
			113,177Corporate and other
			
			291,122
			
			
			110,906$
			250,486
			
			$
			387,862Six Months Ended June 30,2008
			
			
			2007Revenue:Preneed and burial products
			$
			19,350,256
			
			$
			18,910,219Traditional and universal life products
			
			5,593,257
			
			
			6,173,916Credit insurance products and administrative services
			
			203,140
			
			
			294,663Corporate and other
			
			608,464
			
			
			589,342$
			25,755,117
			
			$
			25,968,140Pre-tax income (loss) from operations:Preneed and burial products
			$
			(538,679)
			
			$
			(23,398)Traditional and universal life products
			
			160,050
			
			
			287,551Credit insurance products and administrative services
			
			144,470
			
			
			211,859Corporate and other
			
			511,123
			
			
			329,769$
			276,964
			
			$
			805,781




NOTE E - Federal Income Taxes

The provision (benefit) for federal
income taxes is based on the estimated effective annual tax rate. Deferred taxes
reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. Income before federal income taxes differs
from taxable income principally due to the dividends-received deduction, the
404(k) dividend deduction and the small life insurance company tax deduction.



We file U.S. federal income tax returns
and income tax returns in various state jurisdictions. Our 2004 through 2007
U.S. federal tax years remain subject to income tax examination by tax
authorities.  We have no known uncertain tax benefits within our provision for
income taxes. In addition, we do not believe the Company will be subject to any
penalties or interest relative to any open tax years and, therefore, have not
accrued any such amounts.  However, should such a circumstance arise, it is our
policy to classify any interest and penalties (if applicable) as income tax
expense in the financial statements.



NOTE F - Comprehensive Loss

The components of comprehensive loss, net of related
federal income taxes, are as follows:



Three Months Ended June 30,2008
			
			2007Net income
			$
			191,032
			$
			319,164Change in net unrealized appreciation on available-for-sale
			securities
			
			(4,835,584)
			
			(3,669,718)Change in unrealized pension benefits
			
			61,218
			
			29,536Change in fair value of hedging instrument
			
			3,078
			
			7,308Total comprehensive loss
			$
			(4,580,256)
			$
			(3,313,710)Six Months Ended June 30,2008
			
			2007Net income
			$
			211,226
			$
			663,062Change in net unrealized appreciation on available-for-sale
			securities
			
			(2,733,715)
			
			(3,234,209)Change in unrealized pension benefits
			
			81,445
			
			59,072Change in fair value of hedging instrument
			
			3,495
			
			5,321Total comprehensive loss
			$
			(2,437,549)
			$
			(2,506,754)




NOTE G -
Employee Benefit Plans

We sponsor a noncontributory pension plan
which covers substantially all employees. Benefits are based on years of service
and the highest consecutive 60 months average earnings within the last 120
months of credited service. Benefits are funded based on actuarially-determined
amounts.



The following table provides the components of our net
periodic benefit cost:



Three Months Ended June 30,2008
			
			2007Service cost
			$
			96,426
			$
			86,075Interest cost
			
			235,277
			
			183,238Expected return on plan assets
			
			(227,682)
			
			(212,874)Recognized net loss
			
			92,753
			
			44,752Net periodic benefit cost
			$
			196,774
			$
			101,191Six Months Ended June 30,2008
			
			2007Service cost
			$
			185,456
			$
			172,150Interest cost
			
			436,108
			
			366,476Expected return on plan assets
			
			(458,936)
			
			(425,748)Recognized net loss
			
			123,402
			
			89,504Net periodic benefit cost
			$
			286,030
			$
			202,382




We previously disclosed in our financial
statements for the year ended December 31, 2007 that we expected to contribute
$852,900 to our pension plan in 2008. As of June 30, 2008, $426,450 had been
contributed. We presently anticipate contributing an additional $426,450 to fund
our pension plan in 2008.



NOTE H - Investments

We participate in a securities lending
program, primarily for investment yield enhancement purposes, with third
parties, mostly large brokerage firms. Securities loaned are treated as
financing arrangements and the unrestricted collateral received is recorded as
an asset, with an offsetting liability recorded for our obligation to return the
collateral, both reported at fair value. We obtain collateral in an amount equal
to 102% of the fair value of domestic securities loaned, monitor the market
value of securities loaned on a daily basis and obtain additional collateral as
necessary. At June 30, 2008, there were securities on loan under this agreement
with a market value of $10,525,315, with associated collateral held of
$10,917,528.  At December 31, 2007, there were securities on loan under this
agreement with a market value of $2,124,160, with associated collateral held of
$2,186,372.  Income earned relative to this program was $4,252 and $12,668,
respectively, for the three and six month periods ended June 30, 2008. Income
earned relative to this program was $6,812 and $9,317, respectively, for the
three and six month periods ended June 30, 2007.



NOTE I - Fair Values of Financial Instruments

Effective
January 1, 2008, the Company adopted SFAS No. 157, "Fair Value Measurements" ("SFAS
No. 157").  SFAS No. 157 defines fair value, establishes a framework for
measuring fair value and enhances disclosures about fair value measurements. 
Fair value is defined under SFAS No. 157 as the price that would be received to
sell an asset or paid to transfer a liability (an exit price) in the principal
or most advantageous market for the asset or liability in an orderly transaction
between market participants on the measurement date.  The Company experienced no
material financial impact as a result of the adoption of SFAS No. 157.



The
Company holds fixed maturities and equity securities that are measured and
reported at fair market value on the balance sheet.  The Company determines the
fair market values of its financial instruments based on the fair value
hierarchy established in SFAS No. 157 that requires an entity to maximize the
use of observable inputs and minimize the use of unobservable inputs when
measuring fair value.  The standard describes three levels of inputs that may be
used to measure fair value, as follows:



Level
1 - Quoted prices in active markets for identical assets or liabilities.
Level 1 assets and liabilities include debt and equity securities that are
traded in an active exchange market, as well as certain U.S. Treasury securities
that are highly liquid and are actively traded in over-the-counter markets.



Level 2
- Observable inputs other than Level 1 prices, such as quoted prices for similar
assets or liabilities; quoted prices in markets that are not active; or other
inputs that are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities. Level 2 assets and
liabilities include debt securities with quoted prices that are traded less
frequently than exchange-traded instruments or assets and liabilities whose
value is determined using a pricing model with inputs that are observable in the
market or can be derived principally from or corroborated by observable market
data. This category generally includes U.S. Government and agency
mortgage-backed debt securities and corporate debt securities.



Level 3
- Unobservable inputs that are supported by little or no market activity and
that are significant to the fair value of the assets or liabilities. Level 3
assets and liabilities include financial instruments whose value is determined
using pricing models, discounted cash flow methodologies, or similar techniques,
as well as instruments for which the determination of fair value requires
significant management judgment or estimation. This category generally includes
certain private equity investments and asset-backed securities where independent
pricing information was not able to be obtained for a significant portion of the
underlying assets.



In accordance with SFAS No. 157, the
Company has categorized its financial instruments, based on the priority of the
inputs to the valuation technique, into the three-level fair value hierarchy.
 If the inputs used to measure the financial instruments fall within different
levels of the hierarchy, the categorization is based on the lowest level input
that is significant to the fair value measurement of the instrument.  A review
of fair value hierarchy classifications is conducted on a quarterly basis.
Changes in the valuation inputs, or their ability to be observed, may result in
a reclassification for certain financial assets or liabilities.
Reclassifications impacting Level 3 of the fair value hierarchy are reported as
transfers in/out of the Level 3 category as of the beginning of the quarter in
which the reclassifications occur.



The following table presents the Company's fair value
hierarchy for those financial instruments measured at fair value on a recurring
basis as of June 30, 2008.



Level 1
			
			Level 2
			
			Level 3
			
			TotalAssets:Fixed maturities
			$
			-
			$
			276,784,266
			$
			7,662,264
			$
			284,446,530Equity securities
			
			4,532,550
			
			-
			
			320,000
			
			4,852,550




Level 3 financial instruments consist of
six corporate asset-backed securities as well as one preferred stock and one
common stock, where trading has been limited.  The fair values for these
securities were primarily determined through the use of non-binding broker
quotes and internal models using unobservable assumptions about market
participants.  The following table provides a summary of changes in fair value
of our Level 3 financial instruments for the three and six month periods ended
June 30, 2008.



Three Months Ended June 30, 2008Realized
			
			UnrealizedApril 1, 2008
			
			Gains
			
			Gains
			
			Purchases
			
			Transfers
			
			EndingBalance
			
			(Losses)
			
			(Losses)
			
			(Sales)
			
			In (Out)
			
			BalanceAssets:Fixed maturities
			$
			6,822,872
			$
			-
			$
			(155,779)
			$
			-
			$
			995,171
			$
			7,662,264Equity securities
			
			320,000
			
			-
			
			-
			
			-
			
			-
			
			320,000Six Months Ended June 30, 2008Realized
			
			UnrealizedJanuary 1, 2008
			
			Gains
			
			Gains
			
			Purchases
			
			Transfers
			
			EndingBalance
			
			(Losses)
			
			(Losses)
			
			(Sales)
			
			In (Out)
			
			BalanceAssets:Fixed maturities
			$
			6,940,640
			$
			-
			$
			(273,547)
			$
			-
			$
			995,171
			$
			7,662,264Equity securities
			
			320,000
			
			-
			
			-
			
			-
			
			-
			
			320,000




The
unrealized losses on level 3 investments are recorded as a component of
accumulated other comprehensive income, net of tax, in accordance with required
accounting for our available-for-sale portfolio.



NOTE J - Notes Payable

During the second quarter of 2008, the
Company repaid the remaining principal balance on its outstanding promissory
note and Chrysler auto loan.  Additionally, the Company renewed the Kentucky
Investors Line of Credit and the At Need Funding Line of Credit.  The Kentucky
Investors Line of Credit remains for $150,000, with interest paid at the prime
rate.  The At Need Funding Line of Credit is now for $2,000,000, with interest
paid at the prime rate. The Kentucky Investors Line of Credit and At Need
Funding Line of Credit both mature June 30, 2009.



---



ITEM 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations





GENERAL



Kentucky Investors is incorporated under
the laws of the Commonwealth of Kentucky and wholly owns Investors Heritage Life
Insurance Company, a life insurance company also incorporated under the laws of
the Commonwealth of Kentucky. Kentucky Investors also wholly owns Investors
Heritage Financial Services Group, Inc., a Kentucky insurance marketing company;
Investors Heritage Printing, Inc., a Kentucky printing company that provides
printing to Investors Heritage Life and other unaffiliated parties; is the sole
member of At Need Funding, LLC, a Kentucky limited liability company that
provides advance funding of funerals in exchange for the irrevocable assignment
of life insurance policies from other nonaffiliated companies; and is the sole
member of Heritage Funding, LLC, a limited liability company that invests in
various business ventures.



Investors Heritage Life offers a full
line of life insurance products including, but not limited to, whole life, term
life, single premium life, multi-pay life and annuities. Investors Heritage
Life's primary lines of business are insurance policies and annuities utilized
to fund preneed funeral contracts, credit life and credit disability insurance,
and term life and reducing term life sold through financial institutions.



In late 2007, we introduced the
Legacy Gold product series, a new generation of life insurance and annuity
products marketed in conjunction with prearranged funerals.  As a part of the
process, we performed detailed analysis of the preneed market and of the
characteristics of our particular block of business.  We believe that the result
of these efforts is a very marketable product that balances profitability with
competitive commissions and death benefit growth to provide adequate proceeds to
cover funeral expenses and personal needs.  Underwritten and guaranteed issue
options are available.  This product series will fully replace the previous
Legacy Protector and Legacy Preferred life insurance and annuity products during
2008.



The Heritage Final Expense product is sold in the final
expense markets. It is reinsured on an 80% quota share basis. This reinsurance
arrangement has helped to reduce first year statutory surplus strain associated
with new sales and should provide a stable profit stream for the future.



Investors Heritage Life also provides
term insurance products, both on a decreasing and a level basis. The Term to 95
product provides level coverage. Our decreasing term policy is primarily sold
through financial institutions.



Investors Heritage Life continues to
market its third-party administrative ("TPA") services as an additional revenue
source.  We currently have four TPA clients for which we provide tailored
services to meet each client's individual business needs. We have been able to
perform services for these clients using our existing in-house resources.



Our primary uses of cash are ongoing
operating expenses, debt service and dividend payments. Our principal sources of
cash are the dividends paid to us by Investors Heritage Life and Investors
Heritage Financial. Investors Heritage Life's principal sources of cash are
proceeds received from the sale of life insurance policies, administrative
service fees and investment income, including realized gains (losses), less
interest credited and benefits to policyholders and expenses.



CRITICAL ACCOUNTING POLICIES AND ESTIMATES



The discussion and analysis of our
financial condition and results of operations are based on our consolidated
financial statements, which have been prepared in accordance with U.S. generally
accepted accounting principles. Preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses. We evaluate our estimates
continually, including those related to investments, deferred acquisition costs,
present value of future profits, policy liabilities, income taxes, accrued
pension expense, regulatory requirements, contingencies and litigation. We base
such estimates on historical experience and other assumptions believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. We believe the following
accounting policies, judgments and estimates are the most critical to the
preparation of our consolidated financial statements.



Investments in Fixed Maturities, Equity Securities
and Mortgage Loans

We hold fixed maturities and
equity interests in a variety of companies.  Additionally, we originate,
underwrite and manage mortgage loans.  We continuously evaluate all of our
investments based on current economic conditions, credit loss experience and
other developments.  We evaluate the difference between the cost/amortized cost
and estimated fair value of our investments to determine whether any decline in
value is other-than-temporary in nature.  This determination involves a degree
of uncertainty.  If a decline in the fair value of a security is determined to
be temporary, the decline is recorded as an unrealized loss in stockholders'
equity. If a decline in a security's fair value is considered to be
other-than-temporary, the security is written down to the estimated fair value
with a corresponding realized loss recognized in the consolidated statement of
income.



The assessment of whether a
decline in fair value is considered temporary or other-than-temporary includes
management's judgment as to the financial position and future prospects of the
entity issuing the security. It is not possible to accurately predict when it
may be determined that a specific security will become impaired.  Future adverse
changes in market conditions, poor operating results of underlying investments
and defaults on mortgage loan payments could result in losses or an inability to
recover the current carrying value of the investments, thereby possibly
requiring an impairment charge in the future.  Likewise, a change in our ability
or intent to hold temporarily impaired securities until maturity or recovery in
value could result in a future impairment charge.



Deferred Acquisition Costs

The recovery of deferred
acquisition costs is dependent on the future profitability of the underlying
business for which acquisition costs were incurred.  Each reporting period, we
evaluate the recoverability of the unamortized balance of deferred acquisition
costs.  We consider estimated future gross profits or future premiums, expected
mortality or morbidity, interest earned and credited rates, persistency and
expenses in determining whether the balance is recoverable.  If we determine a
portion of the unamortized balance is not recoverable, it is immediately charged
to amortization expense.  The assumptions we use to amortize and evaluate the
recoverability of the deferred acquisition costs involve significant judgment. 
A revision to these assumptions may impact future financial results.



Policy Liabilities

Estimating liabilities for our
long-duration insurance contracts requires management to make various
assumptions, including policyholder persistency, mortality rates, investment
yields, discretionary benefit increases, new business pricing, and operating
expense levels.  We evaluate historical experience for these factors when
assessing the need for changing current assumptions.  However, since many of
these factors are interdependent and subject to short-term volatility during the
long-duration contract period, substantial judgment is required.  Actual
experience may emerge differently from that originally estimated.  Any such
difference would be recognized in the current year's consolidated statement of
income.



Income Taxes

We evaluate our deferred income
tax assets, which partially offset our deferred tax liabilities, for any
necessary valuation allowances.  In doing so, we consider our ability and
potential for recovering income taxes associated with such assets, which involve
significant judgment.  Revisions to the assumptions associated with any
necessary valuation allowances would be recognized in the financial statements
in the period in which such revisions are made.



Accrued Pension Expense

We maintain a defined benefit
retirement plan on behalf of our employees.  Measurement of the future benefit
obligations associated with this plan involves significant judgment,
particularly in regard to the expected long-term rate of return on plan assets,
rate of compensation increases and the current discount rate used to calculate
the present value of future obligations.  Changes in these assumptions can
significantly impact the accrued pension liability and net periodic benefit
expense recorded in the financial statements.



The Pension Protection Act of
2006 was passed by legislators and signed by the President on August 17, 2006 to
address the funding mechanisms of pension plans. The Act alters the traditional
formula under which plan liabilities must be funded, and it may result in
significantly increased future funding costs depending on investment returns. 
Although increased contributions are not yet required under the funding formula,
we have voluntarily increased the projected contribution to our pension plan for
2008 by approximately $200,000 above our prior year contribution.



New Accounting Pronouncements

Effective
January 1, 2008, the Company adopted SFAS No. 157, "Fair Value Measurements" ("SFAS
No. 157").  SFAS No. 157 defines fair value, establishes a framework for
measuring fair value and enhances disclosures about fair value measurements. 
Fair value is defined under SFAS No. 157 as the price that would be received to
sell an asset or paid to transfer a liability (an exit price) in the principal
or most advantageous market for the asset or liability in an orderly transaction
between market participants on the measurement date.  The Company experienced no
material financial impact as a result of the adoption of SFAS No. 157.



The Company
holds fixed maturities and equity securities that are measured and reported at
fair market value on the balance sheet.  The Company determines the fair values
of its financial instruments based on the fair value hierarchy established in
SFAS No. 157 which requires an entity to maximize the use of observable inputs
and minimize the use of unobservable inputs when measuring fair value.  The
standard describes three levels of inputs that may be used to measure fair value
based on the nature of the information used to obtain the fair value.  SFAS No.
157 requires certain disclosures about the level used to measure assets and
liabilities reported at fair value as well as disclosures regarding changes in
the values of those items reported using level 3 inputs, which involve a great
deal of estimation and judgment by management.



Refer to Note I of the condensed
consolidated financial statements for more explanation of SFAS No. 157 as well
as for the required disclosures.



INVESTMENTS, LIQUIDITY AND CAPITAL RESOURCES



Investments

Investors Heritage Life maintains a
sound, conservative investment strategy. At June 30, 2008, 88.5% of invested
assets consisted of fixed income securities compared to 88.6% at December 31,
2007. At June 30, 2008 and December 31, 2007, Investors Heritage Life's fixed
income investments were 100% investment grade as rated by Standard & Poor's.
None of Investors Heritage Life's fixed income assets are in default and there
has been no material change in the distribution of its fixed income portfolio.



We recognized no other-than-temporary
impairment losses during the three and six month periods ended June 30, 2008 or
the corresponding periods in 2007. We believe that we will recover the cost
basis in the securities held with unrealized losses as we have both the intent
and ability to hold the securities until they mature or recover in value.



We continuously monitor the investment risk within our
portfolio, including the risk associated with subprime lending with our CMO
investments.  As of June 30, 2008, we have only one CMO, with a fair value of
approximately $62,000, which has any level of direct subprime exposure.  Based
on our analysis, we believe this investment is of high quality and expect no
losses as a result of the current subprime concerns.



We participate in a securities lending
program, primarily for investment yield enhancement purposes, with third
parties, mostly large brokerage firms. Securities loaned are treated as
financing arrangements and the unrestricted collateral received is recorded as
an asset, with an offsetting liability recorded for our obligation to return the
collateral.



Additionally, Investors Heritage Life
engages in commercial and residential mortgage lending, with approximately 99.9%
of these investments being in commercial properties. All mortgage loans are
originated in-house and all loans are secured by first mortgages on the real
estate.  Loan to value ratios of 80% or less and debt service coverage from
existing cash flows of 115% or higher are generally required.  We minimize
credit risk in our mortgage loan portfolio through various methods, including
stringently underwriting the loan request, maintaining small average loan
balances, reviewing larger mortgage loans on an annual basis and diversifying
the portfolio by property type.  At June 30, 2008, 7.4% of invested assets
consisted of mortgage loans compared to 7.6% at December 31, 2007. We anticipate
funding several new mortgage loan investments during the remainder of 2008 to
maintain a similar to slightly higher percentage of mortgage loans to total
invested assets. As of June 30, 2008, Investors Heritage Life had no
non-performing mortgage loans, which would include loans past due 90 days or
more, loans in process of foreclosure, restructured loans and real estate
acquired through foreclosure.



Liquidity and Capital Resources

Premiums, which include mortality and
expense charges, investment income and administrative service fees are Investors
Heritage Life's primary sources of cash flow used to meet short-term and
long-term cash requirements.



Investors Heritage Life's short-term
obligations consist primarily of policyholder benefits and operating expenses.
Investors Heritage Life has historically been able to meet these obligations out
of operating cash, premiums and investment income.



Investors Heritage Life's principal
long-term obligations are fixed contractual obligations incurred in the sale of
its life insurance products. The premiums charged for these products are based
on conservative and actuarially sound assumptions as to mortality, persistency
and interest. We believe these assumptions will produce revenues sufficient to
meet our future contractual benefit obligations and operating expenses, and
provide an adequate profit margin.



Investors Heritage Life's conservative
approach in the product development area and the strength and stability of its
fixed income and mortgage loan portfolios provide adequate liquidity both in the
short-term and the long-term.



Kentucky Investors principal sources of
cash flow are rental income and dividends from its subsidiaries. Kentucky
Investors principal long-term obligations are payments on long-term debt.



We assess our compliance with prescribed
debt covenant requirements as outlined in the terms of each debt agreement at
least annually, if not otherwise required in the debt agreement.  Management has
assessed our position and as of June 30, 2008, we are in compliance with all
debt covenant requirements.



We are not aware of any commitments or
unusual events that could materially affect capital resources. We have the
option to prepay certain notes payable at our discretion prior to their maturity
dates.



We will continue to explore various
opportunities including mergers and acquisitions and purchasing blocks of
business from other companies, which may dictate a need for either long-term or
short-term debt.  There are no restrictions as to use of funds except the
restriction on Investors Heritage Life as to the payment of cash dividends to
Kentucky Investors.



RESULTS OF OPERATIONS



Overview

Premiums earned (net of reinsurance) were
$8,211,966 for the second quarter of 2008 (an increase of 1.4% compared to the
second quarter of 2007) and $16,250,323 for the six months ended June 30, 2008
(a decrease of 0.5% compared to the corresponding period in 2007). The
year-to-date decrease was primarily due to lower sales in the traditional and
universal life segment. However, sales in the preneed and burial segment
increased in the second quarter due to the favorable market reception of our new
Legacy Gold preneed series.  Net investment income was $4,512,816 for the second
quarter of 2008 (an increase of 1.1% compared to the second quarter of 2007) and
$8,953,255 for the six months ended June 30, 2008 (a decrease of 0.4% compared
to the corresponding period in 2007). The year-to-date decrease resulted from
the current depressed interest rate environment, which affects new investments
in bonds as well as interest earned on loans from At-Need Funding. 
Additionally, mortgage loans with higher yielding interest rates have paid down,
which has further lowered investment income.  This impact was mitigated in the
second quarter as rates stabilized.  Total revenue was $13,005,014 for the
second quarter of 2008 (an increase of 0.7% compared to the first quarter of
2007) and $25,755,117 for the six months ended June 30, 2008 (a decrease of 0.8%
compared to the corresponding period in 2007).



Total benefits and expenses were
$12,754,528 in the second quarter of 2008 (an increase of 1.8% compared to the
second quarter of 2007) and $25,478,153 for the six months ended June 30, 2008
(an increase of 1.3% compared to the corresponding period in 2007). The increase
in benefits and expenses is primarily due to increased reserves relative to new
business.  After providing for federal income taxes, our net income was $191,032
with earnings per share of $0.17 for the second quarter of 2008 as compared to
$319,164 and earnings per share of $0.29 for the second quarter of 2007.  Our
net income for the six months ended June 30, 2008 was $211,226 with earnings per
share of $0.19 compared to net income of $663,062 and earnings per share of
$0.60 for the six months ended June 30, 2007.



A dividend of $0.38 per share was paid on April 7, 2008,
to shareholders of record as of March 21, 2008.



Business Segments

We internally evaluate the performance of our operations
by the following four business segments:



Preneed and Burial Products include both
life and annuity products sold by funeral directors or affiliated agents to fund
prearranged funerals. Revenues for this segment were $9,775,797 for the second
quarter of 2008 (an increase of 6.9% compared to the second quarter of 2007) and
$19,350,256 for the six months ended June 30, 2008 (an increase of 2.3% compared
to the corresponding period in 2007). This increase is due primarily to
increased preneed sales from the Legacy Gold preneed product series.  Pre-tax
loss from operations was ($211,397) and ($538,679) for the three and six month
periods ended June 30, 2008, compared to pre-tax income (loss) of $117,279 and
($23,398) for the three and six month periods ended June 30, 2007.  The increase
in the pre-tax loss in the current periods is due to continued spread
compression and expense pressure in the current economic environment.



Traditional and Universal Life Products
include traditional life and group life insurance products, certain annuities
and universal life products. Revenues for this segment were $2,848,834 for the
second quarter of 2008 (a decrease of 14.1% compared to the second quarter of
2007) and $5,593,257 for the six months ended June 30, 2008 (a decrease of 9.4%
compared to the corresponding period in 2007). Revenues on this segment are
primarily derived from the sale of term insurance products through banks, for
which demand fluctuates along with economic conditions. New sales have suffered
due to the tightening of consumer credit markets.  Pre-tax income from
operations was $96,966 and $160,050 for the three and six month periods ended
June 30, 2008, compared to pre-tax income of $46,500 and $287,551 for the three
and six month periods ended June 30, 2007. The increase in current quarter
pre-tax income is due to favorable mortality experience as compared to the first
quarter of 2008, but lower sales have resulted in the year-to-date decrease in
pre-tax income.



Credit Insurance Products and
Administrative Services include the marketing and administration of credit life
and credit accident and health insurance products. We reinsure 100% of the
related underwriting risk currently produced within this segment.  Accordingly,
revenue is generated primarily from servicing and administering the credit
business for our reinsurers. Because the revenue is fee-based, segment
performance is in direct relation to new premium production coupled with fees
generated as premiums are earned. Premium production within this segment is also
significantly affected by economic conditions within our credit markets,
particularly Kentucky.  Revenues for this segment were $110,332 for the second
quarter of 2008 (a decrease of 34.8% compared to the second quarter of 2007) and
$203,140 for the six months ended June 30, 2008 (a decrease of 31.1% compared to
the corresponding period in 2007). Pre-tax income from operations was $73,795
and $144,470 for the three and six month periods ended June 30, 2008, compared
to $113,177 and $211,859 for the three and six month periods ended June 30,
2007. These decreases in revenue and pre-tax income are directly related to
lower premium production within this segment of the business due to current
economic and lending conditions.



Corporate and Other consists of corporate
accounts measured primarily by stockholders' paid-in capital, contributed
surplus, earned surplus, property and equipment, and other minor business lines
which include group annuities and group and individual accident and health
products. This segment also includes fees generated from our TPA arrangements.
Revenues for this segment were $270,051 for the second quarter of 2008 (a
decrease of 2.6% compared to the second quarter of 2007) and $608,464 for the
six months ended June 30, 2008 (an increase of 3.2% compared to the
corresponding period in 2007).  Pre-tax income from operations was $291,122 and
$511,123 for the three and six month periods ended June 30, 2008, compared to
$110,906 and $329,769 for the three and six month periods ended June 30, 2007.
Revenues fluctuate slightly due to the timing of third-party administration work
as well as non-life insurance revenue production.  The significant increase in
pre-tax income, however, is primarily due to reduced compensation expense
associated with our stock option plan.



While we continue to expand the
operations of Investors Heritage Financial, Investors Heritage Printing, At Need
Funding and Heritage Funding, less than 1% of our consolidated revenues were
generated by those subsidiaries. Approximately 16% of Investors Heritage
Financial's revenue for the six month period ended June 30, 2008 was derived
from the sale of Investors Heritage Life's credit insurance products. During the
first six months of 2008, Kentucky Investors received dividends from Investors
Heritage Financial totaling $135,000 and received distributions from At Need
Funding of $42,500. We anticipate further dividend payments from Investors
Heritage Financial and distributions from At Need Funding during the remainder
of 2008.



Federal Income Taxes

The provision (benefit) for federal
income taxes is based on the estimated effective annual tax rate. Deferred taxes
reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. Income before federal income taxes differs
from taxable income principally due to the dividends-received deduction, the
404(k) dividend deduction and the small life insurance company tax deduction.
The effective tax rate was 23.7% for the three and six month periods ended June
30, 2008 compared to 17.7% for the three and six month periods ended June 30,
2007.



OFF-BALANCE SHEET ARRANGEMENTS



We have no off-balance sheet arrangements as of June 30,
2008.



FORWARD LOOKING INFORMATION



We caution readers regarding certain
forward-looking statements contained in this report and in any other statements
made by us or on our behalf, whether or not in future filings with the
Securities and Exchange Commission. Forward-looking statements are statements
not based on historical information and which relate to future operations,
strategies, financial results, or other developments. Statements using verbs
such as "expect", "anticipate", "believe" or words of similar import generally
involve forward-looking statements. Without limiting the foregoing,
forward-looking statements include statements which represent our beliefs
concerning future levels of sales and redemptions of Investors Heritage Life's
products, investment spreads and yields, or our earnings and profitability.



Forward-looking statements are
necessarily based on estimates and assumptions that are inherently subject to
significant business, economic and competitive uncertainties and contingencies,
many of which are beyond our control and many of which are subject to change.
These uncertainties and contingencies could cause actual results to differ
materially from those expressed in any forward-looking statements made by us or
on our behalf. Whether or not actual results differ materially from
forward-looking statements may depend on numerous foreseeable and unforeseeable
factors and developments. Some of these may be national in scope, such as
general economic conditions, changes in tax law and changes in interest rates.
Some may be related to the insurance industry generally, such as pricing
competition, regulatory developments, industry consolidation and the effects of
competition in the insurance business from other insurance companies and other
financial institutions operating in our market area and elsewhere. Others may
relate to us specifically, such as credit, volatility and other risks associated
with our investment portfolio. We caution that such factors are not exclusive.
We disclaim any obligation to update forward-looking information.





ITEM 4T. Controls and Procedures



As of the end of the period covered by
this Form 10-Q, we performed an evaluation, under the supervision and with the
participation of management, including our Company's Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of our
disclosure controls 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 concluded that our disclosure
controls and procedures are effective in timely alerting them to material
information relating to the Company (including its consolidated subsidiaries)
required to be included in this Quarterly Report on Form 10-Q. There have been
no significant changes in our internal controls or in other factors which could
significantly affect internal controls over financial reporting during this most
recent quarter or subsequent to the date we carried out our evaluation.



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PART II -- OTHER INFORMATION




ITEM 1. Legal Proceedings



Kentucky Investors is not involved in any legal
proceedings. From time to time Investors Heritage Life is involved in litigation
relating to claims arising out of its operations in the normal course of
business. As of August 8, 2008, Investors Heritage Life is not a party to any
legal proceedings, the adverse outcome of which, in management's opinion,
individually or in the aggregate, would have a material adverse effect on our
financial condition or results of operations.



ITEM 2. Unregistered Sales of Equity
Securities and Use of Proceeds



No share repurchases were made pursuant to a publicly
announced plan or program. All share repurchases were shares tendered by
original stockholders under our right of first refusal or by employees as part
of our 401(k) plan.



ITEM 3. Defaults Upon Senior Securities



None



ITEM 4. Submission of Matters to a Vote
of Security Holders



(a)      The annual meeting of the stockholders was held May 8, 2008 at 11:00
a.m.  The purpose of the meeting was to elect directors.



(b)    
Three (3) directors were elected to hold office for a term of three (3) years or
until their successors are duly elected and qualified.



The following individuals were
elected for a term of three (3) years and the number of votes cast were as
follows:



Harold G. Doran, Jr. -- Number
of Votes Cast FOR -- 952,899.278; WITHHELD -- 624.380; ABSTAIN -- 5,118



Helen S. Wagner -- Number of
Votes Cast FOR -- 952,628.958; WITHHELD -- 894.700; ABSTAIN -- 5,118



David W. Reed -- Number of
Votes Cast FOR -- 952,626.478; WITHHELD -- 897.180; ABSTAIN -- 5,118



The other directors whose
terms will continue after the meeting are:



Howard L. Graham, Jr.
			
			Gordon C. DukeRobert M. Hardy, Jr.
			
			Harry Lee Waterfield IIJerry F. Howell, Jr.
			
			Michael F. Dudgeon, Jr.




ITEM 5. Other Information



None



ITEM 6. Exhibits



31.1 & 
			31.2
			Certifications pursuant to
			Securities and Exchange Act Rule 13a-14(a)/15d-31.2 14(a), as
			adopted pursuant to Section 302 of the Sarbanes-Oxley Act of  2002.32.1
			Certifications Pursuant to 18
			U.S.C. Section 1350, as adopted pursuant to Section 906 of the
			Sarbanes-Oxley Act of 2002.




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SIGNATURES





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



KENTUCKY INVESTORS, INC.BY: /s/Harry Lee Waterfield IIHarry Lee Waterfield IIDATE: August 8, 2008
			PresidentBY: /s/Raymond L. CarrRaymond L. CarrDATE: August 8, 2008
			Vice President - Chief
			Financial Officer






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