UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q


           (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                 For the quarterly period ended March 31, 1999
--------------------------------------------------------------------------------



Commission file number                                             001-14067

                          LINCOLN HERITAGE CORPORATION
             (Exact name of registrant as specified in its charter)

            Texas                                        36-3427454
(State or other jurisdiction                (I.R.S. Employer Identification No.)
     of incorporation or
        organization)

                   1250 Capital of TX Hwy, Bldg. 3, Suite 100
                                Austin, TX 78746
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (512) 328-0075
              (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 |X| Yes |_| No


                                                     Number of shares
           Title of class                   outstanding as of April 19, 1999
-----------------------------------   ------------------------------------------
    Common stock, $0.01 par value                      4,520,200


<PAGE>
<TABLE>


PART I.  FINANCIAL INFORMATION


Item 1.  Consolidated Condensed Financial Statements

                          LINCOLN HERITAGE CORPORATION

                          CONSOLIDATED BALANCE SHEETS

<CAPTION>

                                               (Unaudited)              
                                                March 31,       December 31,
                                                  1999              1998
                                             ---------------   ---------------

                                     ASSETS
<S>                                              <C>             <C>    

Fixed maturities available-for-sale at
     fair value(amortized cost $72,673,393
     and $68,201,939, respectively)           $  76,748,949    $   65,628,083
Equity securities at fair value
     (cost $5,360,657 and $7,939,451
     respectively)                                4,492,931         7,121,000
Policyholder loans                               18,509,957        17,257,122
Deposits to support hedging transactions            627,270                 -
Cash and cash equivalents                        30,253,667        43,824,537
                                             --------------    --------------
       Total cash and investments               130,632,774       133,830,742



Accrued investment income                           735,377           463,616
Accounts receivable                               2,500,000                 -
Accounts receivable from related party            1,979,577         1,535,926
Funds withheld by ceding company                    526,434           526,434
Deferred policy acquisition costs, net           16,634,568        16,881,478
Fixed assets, net                                 1,258,435         1,218,352
Cost of policies acquired, net                    3,485,757         3,833,659
Goodwill, net                                     1,400,726         1,413,550
Deferred tax assets, net                          2,803,545         3,364,638
Other assets                                      1,136,005         1,004,118
                                             --------------    --------------
       Total                                 $  163,093,198    $  164,072,513
                                             ==============    ==============









<CAPTION>


                 The accompanying notes are an integral part of
                     these consolidated condensed financial
                                   statements.
<PAGE>

                          LINCOLN HERITAGE CORPORATION

                           CONSOLIDATED BALANCE SHEETS
                                   (CONTINUED)


                                           (Unaudited)
                                            March 31,               December 31,
                                              1999                      1998
                                         ----------------        ---------------

                      LIABILITIES AND SHAREHOLDERS' EQUITY
<S>                                          <C>                    <C>

Policy liabilities:                          
    Future policy benefits                    $  105,582,407   $  104,201,323
    Policyholder deposits                         43,262,991       47,163,465
    Claims and benefits payable                    1,773,135          650,000
    Premiums received in advance                     565,475          409,937
                                              --------------   --------------
       Total policy liabilities                  151,184,008      152,424,725

Income tax payable                                    49,800           49,800
Accounts payable and accrued expenses                278,869          656,089
Accounts payable to related party                    123,257          163,292
Other liabilities                                  1,641,198        1,964,045
                                              --------------   --------------
       Total liabilities                         153,277,132      155,257,951

Shareholders' equity:

Preferred stock  ($.01 par value; 
     1,000,000 shares authorized, none issued)      -                       -
Common stock  ($.01 par value; 10,000,000 
     shares authorized, 4,520,000 shares 
     issued and outstanding)                          45,200           45,200
Additional paid-in capital                         4,734,350        4,734,350
Retained earnings                                  4,864,178        6,273,924
Accumulated other comprehensive income (loss)        172,338       (2,238,912)
                                              --------------   ---------------
       Total shareholders' equity                  9,816,066        8,814,562
                                              --------------   --------------

       Total                                  $  163,093,198   $  164,072,513
                                              ==============   ==============













<CAPTION>

              The accompanying notes are an integral part of these
                   consolidated condensed financial statements.
</TABLE>

<PAGE>
<TABLE>

                          LINCOLN HERITAGE CORPORATION

                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

<CAPTION>

                                                       Three Months Ended
                                                            March 31,
                                                       1999            1998
<S>                                                  <C>              <C>

REVENUES

     Life premiums                               $    9,713,272   $    7,256,760
     Net investment income                            2,798,908        2,252,156
     Realized investment gains(losses), net            (685,123)         450,914
     Other revenue                                       75,286           53,164
                                                 --------------   --------------
       Total revenues                                11,902,343       10,012,994

BENEFITS AND EXPENSES

     Death benefits                                  5,650,925         3,956,769
     Surrender benefits                                316,413            66,131
     Increase in future policy benefits              1,381,085         1,840,030
     Interest paid on policyholder deposits            359,000           527,037
     Commissions                                     4,035,384         2,956,131
     General expenses                                2,086,518         1,512,586
     General expenses reimbursed by related party    (709,446)         (555,757)
     Taxes, licenses and fees                          323,631           167,679
     Amortization of cost of policies purchased        347,902           297,854
     Change in deferred acquisition costs, net        246,910          (637,019)
                                                  ------------    --------------
       Total benefits and expenses                  14,038,322        10,131,441

Income (loss) before federal income taxes           (2,135,979)        (118,447)

Provision (benefit) for income taxes
    Current                                                  -            25,000
    Deferred                                          (726,233)         (34,292)
                                                 --------------   --------------
       Total income taxes                             (726,233)          (9,292)

Net loss                                            (1,409,746)        (109,155)
                                                 ==============  ===============

Basic loss per share                             $       (0.31)   $        (.03)
                                                 ==============   ==============

Diluted loss per share                           $       (0.31)   $        (.03)
                                                 ==============   ==============

Weighted average shares outstanding:

Basic                                                4,520,000         4,000,000
Diluted                                              4,520,000         4,000,000
<CAPTION>



              The accompanying notes are an integral part of these
                   consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>


                          LINCOLN HERITAGE CORPORATION

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                            AND COMPREHENSIVE INCOME
               FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
                                   (UNAUDITED)

<CAPTION>
                                                          Acumulated
                                              Additional   Other
                                     Common    Paid-In  Comprehensive   Retained
                          Total       Stock    Capital    Income        Earnings
<S>                           <C>        <C>    <C>       <C>             <C>

Balance,
 December 31, 1998      $8,814,562  $ 45,200  $4,734,350 $(2,238,912) $6,273,924

Comprehensive income, 
  net of tax:
 Net loss              (1,409,746)         -          -   (1,409,746)          -

 Change in unrealized
  losses on available
  -for-sale and equity
  securities, net of 
  applicable income tax
  benefit of
  $1,242,159           2,411,250           -           -   2,411,250           -
                     -----------

Total comprehensive
  income               1,001,504           -           -        -              -
                     -----------   ---------  ----------  --------   -----------
Balance,
  March 31, 1999      $9,816,066   $ 45,200   $4,734,350  $172,338    $4,864,178
                     ===========   =========  ==========  ========   ===========


Balance
 December 31, 1997   $6,882,711    $ 10,000   $2,075,576  $538,870    $4,258,265


Comprehensive loss, 
net of tax:

Net loss              (109,155)          -            -         -      (109,155)

Change in unrealized 
 losses on available
 -for-sale and equity
 securities, net of 
 applicable income tax
 benefit of 
 $859,836            (1,624,304)         -            -   (1,624,304)          -
                     -----------

Total comprehensive
 (loss)              (1,733,459)         -            -           -            -
                     ----------   --------    ---------   -----------  ---------

Balance,
 March 31, 1998     $  5,149,252   $10,000   $2,075,576  $(1,085,434) $4,149,110
                      ==========   ========  ==========  ============  =========



<CAPTION>
              The accompanying notes are an integral part of these
                   consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>







                          LINCOLN HERITAGE CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
                                   (UNAUDITED)
<CAPTION>

                                                      1999            1998
                                                --------------- ---------------
<S>                                                <C>                 <C>

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                       $   (1,409,746) $     (109,155)
Adjustments to reconcile net income to 
cash provided by (used in) operating activities:
   Realized investment gains                          685,123        (450,914)
   Accretion of discount on investments              (127,524)       (149,200)
   Depreciation and amortization                      427,778         350,641
   Deferred income taxes                             (681,067)         61,606
   Changes in operating assets and liabilities
      Accrued investment income                      (271,760)        171,181
      Accounts receivable                          (2,500,000)              -
      Accounts receivable from related party         (483,686)        (69,597)
      Deferred policy acquisition costs                246,910       (637,019)
      Other assets                                   (131,887)       (713,584)
      Future policy benefits and deposit funds     (2,519,390)     (1,825,716)
      Claims and benefits payable                    1,123,135              -
      Premiums received in advance                     155,538         35,434
      Federal income tax payable                             -     (1,950,165)
      Accounts payable and accrued expenses          (377,220)        (42,370)
      Other liabilities                              (322,847)       (139,367)
                                                 --------------- ---------------
Net cash provided (used) by operating activities    (6,186,643)     (5,468,225)
                                                 --------------- ---------------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of available for sale
     investments                                     22,722,696     55,639,406
Purchase of available for sale investments         (28,746,953)    (86,441,090)
Purchase of fixed assets                              (107,135)              -
Decrease (increase) in policyholder loans issued    (1,252,835)     (3,204,766)
Other, net                                                   -              -
                                                  -------------- --------------
Net cash provided (used) by investing activities    (7,384,227)    (34,006,450
                                                 --------------- --------------

NET INCREASE (DECREASE) IN CASH AND                
       CASH EQUIVALENTS                            (13,570,870)    (39,474,675)

CASH AND CASH EQUIVALENTS,
       BEGINNING OF PERIOD                            43,824,537     62,667,707
                                                  --------------- --------------

CASH AND CASH EQUIVALENTS,
       END OF PERIOD                               $ 30,253,667   $  23,193,032
                                                  =============== ==============

SUPPLEMENTAL CASH FLOW INFORMATION
       FEDERAL INCOME TAXES PAID                  $            -  $    1,975,165
                                                  =============== ==============


<CAPTION>

              The accompanying notes are an integral part of these
                   consolidated condensed financial statements.
</TABLE>
<PAGE>


NOTE 1 -- BASIS OF PRESENTATION

The  accompanying   consolidated  condensed  financial  statements  include  the
accounts of Lincoln  Heritage  Corporation  (the  "Company")  and its direct and
indirect wholly owned subsidiaries, Memorial Service Life Insurance Company, New
Life  Insurance  Company,  and Lincoln  Memorial Life Insurance  Company.  These
consolidated  condensed  financial  statements  have been prepared in accordance
with generally  accepted  accounting  principles  ("GAAP") for interim financial
information and the  instructions to Form 10-Q and Rule 10-01 of Regulation S-X,
which differ from  statutory  accounting  practices  prescribed  or permitted by
regulatory authorities.  Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting  principles for complete
financial  statements.  All  intercompany  accounts and  transactions  have been
eliminated in consolidation. Certain prior period amounts have been reclassified
to conform with the current period presentation.

The accompanying  consolidated  condensed financial statements and notes thereto
as of March 31, 1999 are  unaudited and should be read in  conjunction  with the
Company's audited financial statements included in the Company's Form 10-K filed
with the Securities and Exchange Commission.  The unaudited interim consolidated
condensed  financial  statements  have been  prepared  on the same  basis as the
annual  consolidated  financial  statements  and, in the opinion of  management,
reflect  all  adjustments,  which  include  only normal  recurring  adjustments,
necessary  to  present  fairly  the  Company's  financial  position,  results of
operations  and cash flows as of March 31, 1999 and for the three  months  ended
March 31, 1999 and 1998.  The results for the three  months ended March 31, 1999
are not necessarily indicative of the results to be expected for the year ending
December 31, 1999.

NOTE 2 -- STOCK SPLITS AND EARNINGS PER SHARE

On April 6, 1998, the Company effected a 3.2-for-1 stock split, in the form of a
stock  dividend,  and on August 18,  1998,  the Company  declared and paid a 25%
stock dividend.  The earnings per share of the Company for all periods presented
have been computed as if these stock splits and dividends occurred at January 1,
1998. The diluted earnings per share is computed using the treasury stock method
unless the effect is anti-dilutive.

NOTE 3 -- INVESTMENTS

In the three month period ended March 31, 1999,  the Company  recognized  losses
for  declines  in market  value  associated  with the  Company's  investment  in
Autobond  Acceptance  Corporation  ("Autobond").  Management  believes  that the
decline in market value is other than  temporary  and due to reasons  other than
market  fluctuations.  Further,  Autobond's auditors have issued a going concern
opinion. The Company has not recognized a loss sufficient to bring the Company's
investment  in  Autobond  to  current  market  value.  However,   management  is
monitoring this situation carefully and the recognition of additional losses may
be necessary during the second quarter of 1999.

NOTE 4 -- SUBSEQUENT EVENTS

On April 30,  1999,  the Company  entered  into an agreement to purchase all the
outstanding  shares of Funeral Security Life Insurance Company ("FSLife") for $5
million.  FSLife has  approximately  $31  million  in assets and $30  million in
liabilities.  The  completion of the purchase is subject to regulatory  approval
and is expected to be accounted for using the purchase method.



Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operation

Overview

         The  Company  is a holding  company  for  operating  subsidiaries  that
consist  primarily of life insurance  companies.  The life  insurance  companies
primarily write policies sold by the Company's  affiliate,  National Prearranged
Services,  Inc.  ("NPS"),  in connection with NPS's sale of prearranged  funeral
contracts.  As a result of the  growth in the  number  of  pre-arranged  funeral
contracts  sold by NPS over the past three years,  the  Company's  revenues have
increased significantly. The Company's growth also resulted, to a lesser extent,
from the 1997 and 1998  acquisitions  of a block of life  insurance  and annuity
policies from Woodmen  Accident and Life Company (the "Woodmen Block") and World
Insurance Company (the "World Block"), respectively.

         The Company's revenues are derived primarily from premiums on insurance
policies generated by NPS. In the event of a decline in NPS's preneed sales, the
Company's  future  revenue  growth  could be impacted  if the Company  could not
replace the NPS sales  force with its own or another  marketing  entity's  sales
force on a cost-effective  or timely basis.  Net investment  income and realized
investment  gains also have  contributed  significantly to total revenues as the
Company's invested assets have grown.

         The Company's expenses consist principally of benefits paid or accrued,
commissions  on the  sale of  policies  and  general  and  administrative  costs
associated with life insurance company operations.  The Company anticipates that
benefit costs and commissions  will continue to increase as the Company executes
its growth plans.  Although general and  administrative  costs have increased in
accordance with the growth in the Company's  business,  the Company believes its
infrastructure will support increasing levels of internal revenue growth without
the need for general and administrative expenses to increase at a similar rate.

         The Company's  insurance  subsidiaries  are subject to a high degree of
regulation from various state insurance administrators.  Such regulation governs
(among  other  things):  investment  policies;   financial  reporting;   capital
adequacy;  terms of policies;  and the ability of the Company's  subsidiaries to
pay dividends and management fees to the Company. In addition,  NPS's activities
in selling  prearranged  funeral contracts are highly regulated in the states in
which NPS does business.  These  regulatory  aspects and future changes  therein
could  materially  affect  the  Company's  financial  condition  and  results of
operations.

         The Company's strategy is to increase  shareholder value by growing its
insurance  business  through:  (i)  selected   acquisitions  of  life  insurance
companies and in-force life insurance policies and annuities; and (ii) increases
in life insurance policies arising out of prearranged  funeral contracts sold by
NPS. The  Company's  ability to acquire  such  companies  and  policies  will be
dependent  upon (among  other  things) its ability to  identify,  negotiate  and
complete  transactions  of favorable  values,  arrange  necessary  financing and
integrate and manage the acquisitions  after  completion,  including  preserving
customer  relationships.  There  can  be no  assurance  that  the  Company  will
successfully execute its strategy.


Results of Operations

         Premium income  increased  approximately  $2.5 million,  or 34%, in the
three-month  period  ended March 31, 1999 as compared to the three  months ended
December 31, 1998. The increase was  attributable  to higher sales volumes.  New
policies  issued  increased  significantly  for both  limited pay and single pay
policies.

         Net investment income increased  approximately $547,000, or 24%, in the
three-month  period  ended March 31, 1999 as compared to the three  months ended
December 31, 1998. This increase was  attributable to a higher level of invested
assets.

         Net  realized  losses were  approximately  $685,000 in the  three-month
period  ended March 31, 1999 as compared to realized  gains of $425,000  for the
three months ended December 31, 1998. The most  significant  loss was attributed
to  management's  recognition of a decline in market value  associated  with the
Company's investment in Autobond Acceptance Corporation ("Autobond"). Management
believes  that the decline in market  value is other than  temporary  and due to
reasons other than market fluctuations. Further, Autobond's auditors have issued
a going concern  opinion.  The Company has not  recognized a loss  sufficient to
bring the  Company's  investment in Autobond to current  market value.  However,
management  is  monitoring  this  situation  carefully  and the  recognition  of
additional losses may be necessary during the second quarter of 1999.

         Benefits  increased   approximately  $1.3  million,   or  21%,  in  the
three-month  period  ended March 31, 1999 as compared to the three  months ended
December 31,  1998.  This  increase  was due to increases in death  benefits and
surrender benefits partially offset by a decline in an increase in future policy
benefits.  The most  significant  increase in benefits was due to a much greater
than anticipated increase in death claims.

         Commissions  increased  approximately  $1.1  million,  or  37%,  in the
three-month  period  ended March 31, 1999 as compared to the three  months ended
December 31, 1998. The increase was attributable to higher sales volumes.

         General  expenses,  net  of  reimbursements,   increased  approximately
$420,000,  or 44%, in the three-month period ended March 31, 1999 as compared to
the three months  ended  December 31,  1998.  The increase was  attributable  to
higher policy  administration  expenses as a result of the  increased  volume of
business from new policies written and  acquisitions of blocks of policies,  and
increased  expenses related to acquisition  activities and increased  regulatory
reporting  requirements.  Such  increases  in  expenses  over 1998  produced  an
infrastructure  that the Company  believes  will  support  increasing  levels of
internal  revenue  growth without the need for expenses to increase at a similar
rate.

         The   increase  in  the  change  in  deferred   acquisition   costs  of
approximately  $884,000 in the  three-month  ended March 31, 1999 as compared to
the three months ended  December  31,  1998,  was due to higher  levels of death
claims, policy lapses, and changes in the mix of new business issued.

Liquidity and Capital Resources

         The Company's insurance subsidiaries generally generate sufficient cash
receipts from premium collections and investment income to satisfy the Company's
obligations.  The  Company  believes  that  the  investment  portfolios  of  its
insurance  subsidiaries  provide sufficient liquidity to meet its operating cash
requirements.

         The Company's cash  requirements for 1999 and in the future will depend
upon mortality experience,  acquisitions,  timing of expansion plans and capital
expenditures.  Pursuant to its initial  public  offering in November  1998,  the
Company  issued 520,000 shares of common stock and realized net proceeds of $2.6
million.  The Company  believes  that  interest  earned on the net  proceeds and
anticipated revenue from operations should be adequate for the Company's working
capital  requirements of its existing  business over the next twelve months.  In
the event that the Company's  plans or assumptions  change,  or if its resources
available  to meet  unanticipated  changes in  business  conditions  prove to be
insufficient  to  fund  operations,  the  Company  could  be  required  to  seek
additional  financing prior to that time. On April 30, 1999, the Company entered
into an  agreement to purchase all the  outstanding  shares of Funeral  Security
Life Insurance Company ("FSLife") for $5 million. The purchase is expected to be
funded from existing working capital.

         Total cash and investments  decreased  approximately  $3.2 million from
$133.8 million at December 31, 1998 to $130.6 million at March 31, 1999. Changes
in the separate components of investment assets were due to the portfolio mix of
the  Company's  investment  assets and  changes in the fair value of balances in
actively managed fixed maturity and equity securities.

         Accounts receivable of $2.5 million at March 31, 1999  represents
amounts due on proceeds from sales of investments.

         Receivables from related parties increased  approximately $444,000 from
$1.5  million  at  December  31,  1998 to $2.0  million  at March  31,  1999 due
primarily to receivables due under the Company's cost sharing arrangement.

         Cost of policies acquired,  net, decreased  approximately  $348,000
from $3.8 million at December 31, 1998 to $3.5 million at March 31, 1999 due to
amortization of costs.

         Policyholder  deposits decreased  approximately $3.9 million from $47.2
million at December 31, 1998 to $43.3  million at March 31,  1999.  Policyholder
deposits are  comprised  primarily of annuities  acquired with the Woodmen Block
and the World Block.  The decrease was due to  cancellations of policies and the
absence of the issuance of new annuity policies.

         Unpaid  claims  increased  approximately  $1.1 million from $650,000 at
December 31, 1998 to $1.8 million at March 31, 1999 due  primarily to the timing
of cash payments.

         Accounts payable and accrued expenses and other liabilities  decreased
$700,000 from December 31, 1998 to March 31, 1999 due primarily to the timing of
cash payments.

         The increase in shareholders' equity for the first three months of 1999
reflects the  increase in net  unrealized  appreciation  on  securities  of $2.4
million  partially  offset by a net loss from operations of  approximately  $1.4
million.

Factors Affecting the Company's Business and Prospects

Seasonality

         Historically,  the Company's revenues and operating results have varied
from quarter to quarter and are expected to continue to fluctuate in the future.
These  fluctuations  have been due to a number of  factors,  including  a higher
mortality rate of the Company's insureds during the winter months.

Year 2000 Issues

         Many current installed computer systems and software products are coded
to accept  only  two-digit  entries in the date code  field and cannot  reliably
distinguish  dates  beginning  on January  1, 2000 from dates  prior to the year
2000. Many companies'  software and computer  systems may need to be upgraded or
replaced in order to correctly process dates beginning in 2000.

         Company Readiness

         The Company's  information  technology  personnel recently assessed the
Company's  readiness to manage Year 2000 issues.  This  included a review of all
current  computer  systems in use, as well as  communications  with  significant
vendors and other third  parties to determine  the extent to which the Company's
operations are  vulnerable to third  parties'  failure to correct their own Year
2000  issues.  Based  on the  overall  assessment  performed,  the  Company  has
determined that it will not need to  significantly  modify or replace any of its
current  systems in order to comply with Year 2000 issues.  In  addition,  based
upon  communications  with  significant  vendors  and other third  parties,  the
Company is not aware of any  material  impact on their  systems  relating to the
transition to the Year 2000. However,  the Company has no means of ensuring that
these  entities  will be Year 2000  ready.  The  inability  of third  parties to
complete their Year 2000 programs in a timely manner could materially impact the
Company. The effect of non-compliant third parties is not determinable.

         Year 2000 Costs

         The  Company's  total  costs of Year 2000  efforts  to date and  future
anticipated costs have not been and are not expected to be material.

         Risks Associated with the Company's Year 2000 Issues

         The Company expects its internal  systems to be Year 2000 compliant and
believes that the worst case  scenario  would result from vendors or other third
parties failing to achieve Year 2000 compliance.  Due to the general uncertainty
inherent  in the Year 2000  problem,  the  Company  cannot  predict  whether the
consequence  of Year 2000  failures will have a material  adverse  effect on the
Company's business, financial condition or results of operations. However, based
on  the  Company's  assessment  of its  internal  systems,  communications  with
significant  vendors and other third  parties,  the Company does not expect Year
2000 problems to result in a material adverse effect on the Company's  financial
position,  results of operations or cash flows. In the event significant vendors
are not Year 2000  compliant,  the  Company  will have backup  power  supply and
internal resources on standby to address Year 2000 problems.

Forward-Looking Statements

         This report contains  forward-looking  statements within the meaning of
the "safe harbor" provisions of the Private Securities  Litigation Reform Act of
1995. Such forward-looking  statements are based on the beliefs of the Company's
management as well as on assumptions made by and information currently available
to the Company at the time such  statements  were made.  The Company can give no
assurance that the  expectations  indicated by such  forward-looking  statements
will be realized. If any of management's  assumptions should prove incorrect, or
if any of the  risks  and  uncertainties  underlying  such  expectations  should
materialize,  the  Company's  actual  results may differ  materially  from those
indicated by the forward-looking statements.

         The  following  factors that are not within the  Company's  control and
that may have a direct bearing on operating results include, but are not limited
to: (i) general  economic  conditions  and other factors,  including  prevailing
interest rate levels and stock market performance,  which may affect the ability
of the  Company  to  sell  its  products,  the  market  value  of the  Company's
investments and the lapse rate and profitability of the Company's policies; (ii)
the Company's ability to achieve anticipated levels of operational  efficiencies
at  recently   acquired   companies,   as  well  as  through  other  cost-saving
initiatives; (iii) mortality,  morbidity, and other factors which may affect the
profitability of the Company's insurance  products;  (iv) changes in the federal
income tax laws and  regulations  which may affect the cost of or demand for the
Company's  products;  (v)  increasing  competition  in the sale of the Company's
products;  (vi)  regulatory  changes or  actions,  including  those  relating to
regulation of financial  services  affecting (among other things) bank sales and
underwriting of insurance  products,  regulation of the sale,  underwriting  and
pricing  of  insurance  products;  (vii)  the  availability  and terms of future
acquisitions;  (viii)  unanticipated events associated with Year 2000 compliance
relating to work on  development  or  modification  to  computer  systems and to
software,  including work  performed by suppliers or vendors;  and (ix) the risk
factors  or  uncertainties  listed  in the  Company's  other  filings  with  the
Securities and Exchange Commission.

         Additionally,  the  Company  may  not  be  successful  in  identifying,
acquiring,   and  integrating   additional   start-up   locations  and  possible
acquisitions,   implementing  improved  management  and  accounting  information
systems and controls and may be dependent upon additional  capital and equipment
purchases for future  growth.  There may be other risks and  uncertainties  that
management is not able to predict.

         When  used  in  this  report,   the  words   "anticipate,"   "believe,"
"estimate," "expect," "intends," and similar expressions,  as they relate to the
Company are intended to identify forward-looking statements,  although there may
be certain forward-looking statements not accompanied by such expressions.

Item 3.  Quantitative and Qualitative Disclosure About Market Risk.

                  There  have  been no  material  changes  from the  information
provided in the Company's Annual Report on Form 10-K for the year ended December
31, 1998.

<PAGE>


PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         Not applicable.

Item 2.  Changes in Securities and Use of Proceeds

         Not applicable.

Item 3.  Defaults Upon Senior Securities

         Not applicable.

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

         Not applicable.

Item 5.  Other Information

         Not applicable.

Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibits:
                  See Exhibit Index attached hereto.

         (b)      Reports on Form 8-K:
                  None.





<PAGE>


                                   SIGNATURES

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



                         LINCOLN HERITAGE CORPORATION
                                           (Registrant)



May 17, 1998        By:    /s/ Clifton Mitchell
                         President and Chief Executive Officer
                         (Principal   Financial  and   Accounting Officer)


<PAGE>


<TABLE>

EXHIBIT INDEX
<CAPTION>

Ex. No.       Description
<S>         <C>

   27.1       Financial Data Schedule for the three months ended March 31, 1999.

</TABLE>