<PAGE>
                                                                EXHIBIT 10.11(c)
                      CITIZENS INSURANCE COMPANY OF AMERICA
                                (Insurer's Name)

                             A Colorado Corporation

$30,000,000                                      Subordinated Debenture # 2004-1

FOR VALUE RECEIVED Citizens Insurance Company of America ("Company") subject to
and conditioned upon the terms, conditions, limitations and provisions hereof,
promises to pay to the order of Citizens, Inc. ("Holder") the principal sum of
thirty million dollars ($30,000,000) plus interest at the 30-day LIBOR Rate plus
1.80% per annum, as such rate is determined from time to time, such interest to
accrue daily from the date this Debenture is issued, or October 1, 2004. "LIBOR
Rate" means, for each 30-day period during the term of this note, commencing
with the 30-day period beginning on the date of this note and continuing with
each successive 30-day period thereafter:

      (a) the rate per annum equal to the rate determined by the British
Bankers' Association ("BBA") advisory reference panel of contributor banks to be
the offered rate that appears on Page 3750 of the Telerate screen (or any
successor thereto) that displays an average BBA Interest Settlement Rate for
deposits in U.S. Dollars with a term equivalent to an interest period of 30
days, determined as of approximately 11:00 a.m. (London time) on the first day
of such 30-day period (or if such day is not a business day, on the immediately
preceding day), or

      (b) if the rate referenced in the preceding subsection (a) does not appear
on such page or service or such page or service shall cease to be available, the
rate per annum equal to the rate determined by BBA to be the offered rate on
such other page or such other service that displays an average BBA Interest
Settlement Rate for deposits in U.S. Dollars with a term equivalent of 30 days,
determined as of approximately 11:00 a.m. (London time) on the first day of such
30-day period (or if such day is not a business day, on the immediately
preceding business day), provided such offered rate on such other page of such
other service is substantially comparable to the rate if determined by
subsection (a) above.

THIS DEBENTURE is issued pursuant to Section 10-3-239, C.R.S. and the PRINCIPAL
and ANY ACCRUED INTEREST THEREON shall not be a legal liability of the Company
until repayment of interest or principal has prior written approval of the
Commissioner of Insurance for the State of Colorado.

<PAGE>

THE REPAYMENT of principal and/or accrued interest shall be make only out of
surplus funds and only with the PRIOR WRITTEN APPROVAL OF THE COMMISSIONER OF
INSURANCE FOR THE STATE OF COLORADO when he is satisfied that the financial
condition of the Company warrants such action as set forth in Section 10-3-239,
C.R.S. Absent a reorganization, dissolution, 100% reissuance or liquidation of
the Company, approval for repayment may not be given, if after payment of
principal and/or interest, surplus would fall below three (3) times the
authorized control level as required by the most recent risk-based capital
calculation.

In the event of reorganization, dissolution, 100% reissuance or liquidation of
the Company after the retirement of all its outstanding obligations senior to
this Debenture, the holders this Debenture shall be entitled to preferential
right in remaining assets of the Company equal to the face amount of this
Debenture, or unpaid principal balance, plus accrued interest, before any
distribution of such assets to stockholders. Interest shall be payable first,
followed by payment of principal.

This Debenture is subordinate to policyholders to claimant and beneficiary
claims as well as to all other classes of creditors senior to this Debenture.

This Debenture is transferable only by assignment on the books of the Company
upon surrender of this Debenture properly assigned; provided, the grant of a
security interest in or pledge of this Debenture shall not require any such
assignment. The reissued Debenture must be submitted to the Commissioner of
Insurance for the State of Colorado and is subject to all terms, conditions and
limitations contained herein.

IN WITNESS WHEREOF Company has caused this Debenture to be signed by its duly
authorized officers this 1st day of October, 2004.

                                                BY: /s/ Mark A. Oliver
                                                   -----------------------------
                                                   Mark A. Oliver, President

ATTEST:

 /s/ Marcia F. Emmons
----------------------------------
Marcia F. Emmons, Secretary
                                       2