SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-K

              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                 For the fiscal year ended December 31, 2001, or

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                        For the Transition Period from to

                         Commission File Number 2-35669

                    Southern Security Life Insurance Company
                    ----------------------------------------
             (Exact name of registrant as specified in its Charter)

           FLORIDA                                   59-1231733
----------------------------------                ----------------
(State or other jurisdiction            (I.R.S. Employer Identification Number)
of incorporation or organization)

755 Rinehart Road, Lake Mary, Florida                     32746
-------------------------------------                     -----
(Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code:    (407)  321-7113
                                                       ---------------

Securities registered pursuant to Section 12(b) of the Act:

                                                       Name of each exchange
Title of each Class                                    on which registered
-------------------                                   ---------------------
      None                                                    None

Securities registered pursuant to Section 12(g) of the Act:

                                                      Name of each exchange
Title of each Class                                   on which registered
-------------------                                  ---------------------
      None                                                   None


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 the  filing
requirements for the past 90 days.

                                      X      Yes                 No
                                           -------             -----

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Company's  knowledge,  in  definitive  proxy or  information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant as of March 28, 2002 was approximately $5,832,913.

As of March 29, 2002, registrant had issued and outstanding 1,907,989 shares of
Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  definitive  Proxy  Statement for the  Registrant's  2002 Annual
Meeting of Stockholders' are incorporated by reference into Part III hereof.




<PAGE>



                                     PART I

Item 1.  Business.
-----------------

Southern Security Life Insurance Company (the "Company") is a legal reserve life
insurance  company  authorized  to  transact  business in the states of Alabama,
Florida,  Georgia, Hawaii, Indiana,  Illinois,  Kentucky,  Louisiana,  Michigan,
Missouri,  Oklahoma,  South Carolina,  Tennessee and Texas. It was  incorporated
under  Florida  law in 1966 and was  licensed  and  commenced  business in 1969.
During  2001  approximately  40% of the  premium  income of the Company was from
business in force in Florida, its state of domicile. The Company's only industry
segment is the ordinary life, accident and health and annuity business.

Effective December 17, 1998, Security National Financial  Corporation  ("SNFC"),
an SEC registrant,  acquired 100% of the assets of Consolidare Enterprises, Inc.
("Consolidare")  which owned  57.4% of the  outstanding  shares of the  Company.
During March 1999,  SNFC changed  Consolidare's  name to SSLIC Holding  Company,
Inc.

The Company at present  writes  universal  life policies with various  companion
riders as well as a traditional life product. In the past it has written various
forms of ordinary life insurance policies and annuity  contracts.  The Company's
accident and health insurance  business has never been a significant  portion of
the Company's  business.  It does not presently  write  industrial life or group
life  insurance  other than  through its  participation  as a  reinsurer  in the
Servicemen's  Group  Life  Insurance  Program  ("SGLI").  In 1996,  the  Company
introduced  a new whole life  product  designed  to appeal to the final  expense
market.

The Company  introduced  its first  universal life product in 1986 and currently
has two  principal  universal  life  products  in force.  These  universal  life
products  offer  flexibility  to the  client  as  well as tax  advantages,  both
currently and upon the death of the insured. These products allow the Company to
better  compete in the current market  environment.  In excess of 12% and 14% of
the first year premiums collected by the Company in 2001 and 2000, respectively,
were universal life products.

During 1996,  the Company  introduced a new series of products  designed for the
seniors market.  This new series targets the needs of senior citizens especially
as they plan for  their  final  expenses.  These new  policies  are  traditional
endowment  type  policies.  Because they are written to a senior market they are
designed to accommodate  adverse health  conditions.  Because of the size of the
policies they are usually  issued with only limited  underwriting.  The coverage
size of the policy is roughly  equivalent to the insured's  anticipated  funeral
costs.  This new  series  represented  88% and 86% of the  first  year  premiums
collected in 2001 and 2000. New field sales  representatives  are being actively
recruited to market the product.

The Company is continuing to support its traditional universal life marketing as
well. The Company  established a lead generation  program which has been coupled
with a recruiting program for new sales agents to help rebuild the market.  This
has helped to  increase  opportunities  to expand  sales of its  universal  life
products which are designed to provide an insurance program as well as a savings
vehicle through the cash values of the policy.

The following table provides  information (on a statutory basis)  concerning the
amount and  percentage of premium income  resulting from the principal  lines of
insurance written by the Company during the periods indicated:

<TABLE>
<CAPTION>
                                2001                        2000                         1999
                               ====                        ====                         ====

                                        Per-                          Per-                        Per-
                         Amount        centage        Amount        centage       Amount        centage
Life
Insurance-
<S>                 <C>                  <C>   <C>                   <C>    <C>                  <C>
Ordinary (1)(2)     $7,167,157            89%   $7,568,550            91%   $8,103,864            92%

Individual
Annuities (1)          149,424             2%       89,623             1%       46,348             1%

Life
Insurance-
Group (SGLI)           589,779             7%      497,070             6%      438,124             5%

Other -
Accident & Health      145,134             2%      169,203             2%      205,872             2%
                    ----------    ----------    ----------    ----------    ----------    ----------
                    $8,051,494           100%   $8,324,446           100%   $8,794,208           100%
                    ==========    ==========    ==========    ==========    ==========    ==========

                                                         2
</TABLE>
<PAGE>



     (1)  A portion of each of the deposit term policies  previously sold by the
          Company represents  ordinary life insurance and the balance represents
          an individual annuity.

     (2)  The 2001,  2000, and 1999 premium  income for life  insurance-ordinary
          are  net  of  reductions  of  $831,358,   $923,648,   and  $1,236,735,
          respectively, in ceded premium paid to all reinsurers,  including Mega
          Life.

The following table gives information on auditing standards generally accepted
in the United States of America concerning operating ratios of the Company for
the periods indicated:

                                   2001              2000           1999
                                   ----              ----           ----

Total Net Insurance
 Revenues                     $  6,736,027    $  6,698,869    $  6,901,546

Benefit Costs Paid or
 Provided:
  Amount                      $  4,482,588    $  5,109,411    $  4,453,564
  Ratio to Net Insurance
   Revenue                           66.6%           76.3%           64.5%

Amortization of Deferred Policy
 Acquisition Expenses:
  Amount                      $  2,197,399    $  1,797,320    $  3,029,223
  Ratio to Net Insurance
   Revenue                            32.6%           26.8%           43.9%
General Insurance Expenses:
  Amount                      $  3,835,165    $  3,529,381    $  3,261,134
  Ratio to Net Insurance
   Revenue                            56.9%           52.7%           47.3%

Income Before Income
 Taxes:
  Amount                           $     87,841    $    198,365    $    782,126
  Ratio to Net Insurance
   Revenue                                  1.3%            3.0%           11.3%
  Ratio to Total Revenue and
   Investment Income                         .8%            1.9%            6.8%
  Ratio to Equity                            .5%            1.2%            5.0%

                                                        3

<PAGE>



The following table provides information about the Company concerning changes in
life insurance in force during the periods indicated (exclusive of acciden- tal
death benefits):

<TABLE>
<CAPTION>
                                                         2001                 2000          1999
                                                         ----                 ----          ----
                                                                  (In thousands except lapse ratios)
Total life insurance in force at beginning of period:
<S>                                                    <C>             <C>             <C>
  Ordinary Whole Life &
   Endowment-Participating                              $        30     $       238     $       532
  Ordinary Whole Life &
   Endowment-Non-Participating                              732,433         892,962         913,683
  Term                                                       78,770           3,646           4,799
  Reinsurance Assumed                                       558,575         558,571         548,515
                                                        -----------     -----------     -----------

  Total                                                 $ 1,369,808     $ 1,455,417     $ 1,467,529
Additions (including re-
insurance assumed):
  Ordinary Whole Life &
   Endowment-Participating                                 $     --         $    --        $     --
  Ordinary Whole Life &
   Endowment-Non-Participating                               55,785          60,589          66,591
  Term                                                        2,487              --              --
  Reinsurance Assumed                                       250,240           4,121          22,402
                                                        -----------     -----------     -----------

  Total                                                 $   308,512     $    64,710     $    88,993

Terminations:
  Death                                                 $     2,822           2,313           2,172
  Lapse and Expiry                                           21,875          22,398          31,418
  Surrender                                                  97,483         125,086          67,515
  Other                                                     (11,854)            522              --
                                                        -----------     -----------     -----------
  Total                                                 $   110,326     $   150,319     $   101,105

Life Insurance in force at end of period:
  Ordinary Whole Life &
   Endowment-Participating                              $       180     $        30     $       238
  Ordinary Whole Life &
   Endowment-Non-Participating                              708,789         732,433         892,962
  Term                                                       72,752          78,770           3,646
  Reinsurance Assumed                                       786,273         558,575         558,571
                                                        -----------     -----------     -----------

  Total                                                 $ 1,567,994     $ 1,369,808     $ 1,455,417
Reinsurance Ceded                                          (179,242)       (210,365)       (250,691)
                                                        -----------     -----------     -----------
Total after Reinsurance Ceded                           $ 1,388,752     $ 1,159,443     $ 1,204,726
                                                        ===========     ===========     ===========
Lapse Ratio (Reflecting termina-
tion by surrender and lapse;
ordinary life insurance only):                                 13.8%           16.1%            9.1%
</TABLE>

The Company invests and reinvests  portions of its funds in securities which are
permitted  investments  under the laws of the State of Florida,  and part of its
revenue is derived from this source. Generally,  securities comprising permitted
investments  include  obligations  of  Federal,  state  and  local  governments;
corporate  bonds and  preferred  and common  stocks;  real estate  mortgages and
certain leases. The following table summarizes certain information regarding the
Company's investment activities:

                   Average          Gross         Net
Fiscal            Investment      Investment   Investment        Net
Year              Assets (1)       Income(2)    Income (3)     Yield (4)
-----             ----------      ----------   ----------     ---------
2001             $50,560,334     $ 3,876,422   $ 3,866,966      7.65%
2000             $50,444,329     $ 3,959,061   $ 3,935,607      7.80%
1999             $50,221,950     $ 3,924,271   $ 3,909,373      7.78%


(1)  Computed  by summing  the  beginning  and ending  investment  and cash
     balances and dividing by 2.
(2)  Excludes  investment gains and losses.
(3)  Net of investment expense and before income taxes. (4) Computed on
     an annualized  basis.  Represents  ratio of net  investment  income to
     average invested assets.

                                        4

<PAGE>



The Company  continues its  activities  as a qualified  lender under the Federal
Family Educational Loan Program.  Through this program the Company makes various
types of student  and parent  loans  available.  All  student  loans made by the
Company are  guaranteed by the Federal  Government.  As it has in the past,  the
Company  sells  these  student  loans on a periodic  basis to the  Student  Loan
Marketing Association ("SLMA") thereby keeping these funds liquid.

The Company  presently  sells its policies on a general  agency basis  through a
field force consisting of approximately 937 agents. All such agents are licensed
as agents of, and sell for, the Company and are independent  contractors who are
paid exclusively on a commission basis for sales of the Company's policies. Some
of the Company's agents are part-time  insurance  agents.  Most of the Company's
agents are associated with Insuradyne Corporation,  a wholly-owned subsidiary of
Security National Financial Corporation.  See "Certain Relationships and Related
Transactions" in item 13, Part III of this Report.

Effective January 1, 1999, the Company entered into an  Administrative  Services
Agreement  with its ultimate  parent  Security  National  Financial  Corporation
(Security National).  Under the terms of the Administrative  Services Agreement,
all  of  the  Company's   employees  became  employees  of  Security   National.
Administrative  functions  previously  performed  by the  Company  are now being
furnished to the Company under this Agreement.  The Company will pay to Security
National  $250,000  per  month or $3  million  per  year for the  Administrative
services.

Section 624.408 of the Florida Statutes  requires a stock life insurance company
to maintain minimum surplus on a statutory basis at the greater of $1,500,000 or
four percent of total  liabilities.  The Company's  required  statutory  minimum
surplus calculated in accordance with this section is approximately  $1,896,000.
If the capital and  surplus of the  Company  computed on such basis  should fall
below that amount,  then the Company's license to transact insurance business in
the State of Florida,  the Company's most significant  market,  could be revoked
unless the  deficiency  is promptly  corrected.  As of December  31,  2001,  the
Company had statutory  capital and surplus of $8,459,700,  well in excess of the
required minimum.

The  Risk-Based  Capital for Life and/or Health  Insurers  Model Act (the "Model
Act") was adopted by the National Association of Insurance  Commissioners (NAIC)
in 1992.  The main  purpose of the Model Act is to provide a tool for  insurance
regulators  to  evaluate  the  capital  resources  of insurers as related to the
specific  risks which they have incurred and is used to determine  whether there
is a need for possible  corrective action. The Model Act or similar  regulations
may have been or may be enacted by the various states.

The Model Act provides for four different levels of regulatory  action,  each of
which may be  triggered if an insurer's  Total  Adjusted  Capital is less than a
corresponding "level" of Risk-Based Capital ("RBC").

          The "Company Action Level" is triggered if an insurer's Total Adjusted
          Capital is less than 200% of its  "Authorized  Control  Level RBC" (as
          defined in the Model Act), or less than 250% of its Authorized Control
          Level RBC and the insurer has a negative  trend ("the  Company  Action
          Level").  At the  Company  Action  Level,  the  insurer  must submit a
          comprehensive  plan  to  the  regulatory  authority  of its  state  of
          domicile which discusses  proposed  corrective  actions to improve its
          capital position.

          The  "Regulatory  Action  Level" is triggered  if an  insurer's  Total
          Adjusted  Capital is less than 150% of its  Authorized  Control  Level
          RBC. At the Regulatory  Action Level,  the  regulatory  authority will
          perform  a  special  examination  of the  insurer  and  issue an order
          specifying corrective actions that must be followed.

          The  "Authorized  Control  Level" is triggered  if an insurer's  Total
          Adjusted  Capital is less than 100% of its  Authorized  Control  Level
          RBC,  and  at  that  level  the  regulatory  authority  is  authorized
          (although not mandated) to take regulatory control of the insurer.

          The  "Mandatory  Control  Level" is triggered  if an  insurer's  Total
          Adjusted Capital is less than 70% of its Authorized Control level RBC,
          and at that  level  the  regulatory  authority  must  take  regulatory
          control of the insurer.  Regulatory control may lead to rehabilitation
          or liquidation of an insurer.

                                        5

<PAGE>



Based on  calculations  using the NAIC  formula as of  December  31,  2001,  the
Company was well in excess of all four of the control levels listed.

The industry in which the Company is engaged is highly competitive. There are in
excess of 850 life insurance companies licensed in Florida,  where a substantial
amount of the Company's  premium  income is produced,  and there are  comparable
numbers of insurance companies licensed in Alabama,  Georgia,  Hawaii,  Indiana,
Illinois,  Kentucky,  Louisiana,  Michigan,  Missouri, Oklahoma, South Carolina,
Tennessee and Texas. Many of the Company's competitors have been in business for
longer periods of time, have substantially  greater financial resources,  larger
sales organizations,  and have broader  diversification of risks. A large number
of the  Company's  competitors  engage in business in many states and  advertise
nationally  while the Company  conducts  its business on a regional  basis.  The
Company is not a significant  factor in the life insurance business in any state
where the Company does business.

The states of Alabama,  Florida, Georgia, Hawaii, Illinois,  Indiana,  Kentucky,
Louisiana,  Michigan,  Missouri,  Oklahoma, South Carolina,  Tennessee and Texas
require that insurers  secure and retain a license or a certificate of authority
based on compliance with established  standards of solvency and demonstration of
managerial  competence.  The Company,  like other life  insurers,  is subject to
extensive regulation and supervision by state insurance regulatory  authorities.
Such regulation relates generally to such matters as minimum capitalization, the
nature of and  limitations on  investments,  the licensing of insurers and their
agents,  deposits of securities for the benefit and protection of policyholders,
the  approval of policy forms and premium  rates,  periodic  examination  of the
affairs of insurance  companies,  the  requirement of filing annual reports on a
specified form and the provision for various reserves and accounting standards.

The  Company  reinsures  or places a portion  of its  insured  risks  with other
insurers.  Reinsurance  reduces the amount of risk  retained  on any  particular
policy  and,  correspondingly,  reduces  the risk of loss to the  Company,  thus
giving it greater financial  stability.  Reinsurance also enables the Company to
write more  policies  and  policies in larger  amounts  than it would  otherwise
consider prudent. On the other hand,  reinsurance  potentially reduces earnings,
since a portion of the premiums  received must be paid to the insurers  assuming
the reinsured portion of the risk.

The Company  currently  cedes its new  reinsurance  to  Businessmen's  Assurance
Company  ("BMA")  and the  Reinsurance  Company of  Hannover,  both of which are
unaffiliated  reinsurers.  Under the terms of the  reinsurance  agreements,  the
Company cedes all risks in excess of the Company's current retention limits.

The  Company  currently  retains a maximum of $75,000 on any one life and lesser
amounts on substandard risks.

Reinsurance  for policy amounts in excess of the Company's  retention  limits is
ceded on a renewable  term  basis,  under  which the amount  reinsured  normally
decreases annually by the amount of increase in the policy reserve. In addition,
the  Company has  coinsurance  agreements  with  several  insurers,  under which
premiums are shared based upon the share of the risk assumed.

The Company remains directly liable to policyholders  for the full amount of all
insurance  directly  written by it,  even though all or a portion of the risk is
reinsured.  Reinsurers,  however, are obligated to reimburse the Company for the
reinsured  portion of any claims paid.  Consequently,  if any reinsurer  becomes
insolvent or is otherwise unable to make such  reimbursement,  the Company would
suffer an unexpected  loss. The Company has no reason to believe that any of its
reinsurers  will  be  unable  to  perform  their   obligations   under  existing
reinsurance agreements.

On  December  31,  1992,  the Company  entered  into a  Coinsurance  Reinsurance
Agreement with United Group Insurance Company  ("UGIC"),  now Mega Life. In this
agreement,  UGIC agreed to indemnify and the Company  agreed to transfer risk to
UGIC in the amount of 18% of all  universal  life premium  paying  polices which
were in force on December 31, 1992.  Mega Life is an A- rated  company with A.M.
Best and is an authorized reinsurer in the State of Florida.

As a result of the 1992 agreement,  the Company will continue to pay reinsurance
premiums  to Mega Life  while  receiving  ceding  commissions.  As a part of the
coinsurance  agreement,  Mega  Life  agreed  to share in the  expenses  of death
claims, surrenders, commissions, taxes and the funding of policy loans.

                                        6

<PAGE>



The Company does not assume any  reinsurance  at the present time other than its
minor  participation  in  Servicemembers'  Group Life  Insurance and other small
blocks of business.

For  reporting  to state  regulatory  authorities  the  Company is  required  to
establish  policy  benefit and other reserves which are calculated in accordance
with statutory  requirements and standards of actuarial practice and established
at amounts  which,  with  additions  from  premiums to be  received  and assumed
interest on policy reserves compounded  annually,  are believed to be sufficient
to meet policy  obligations  as they mature.  Life  reserves for the Company are
based  upon  the  Commissioner's  1958  and  1980  Standard  Ordinary  Table  of
Mortality,  with interest on policies computed at 3, 3-1/2, 4 or 4-1/2%. Annuity
reserves are based on the 1937 Standard Annuity Table, with interest on policies
computed  at 3-1/2 or 4%.  Reserves  on the  annuity  portion  of the  Company's
deposit  term  policies are computed on the  accumulation  method.  Reserves for
universal  life  policies,  which  comprise most of the  Company's  insurance in
force, have been valued by using the CRVM method.

In preparing  financial  statements in accordance with U.S.  generally  accepted
accounting  principles,  the cost of  insurance,  expense  charges and surrender
charges on universal  life  products  are  recognized  as revenue.  For "Annuity
Contracts"  with flexible terms,  amounts  received from  policyholders  are not
recognized  as revenue  but are  recorded  as  deposits  in a manner  similar to
interest-bearing instruments.  Accumulations on these universal life and annuity
contracts are held as "Policyholders'  Account Balances." For all other policies
(primarily  whole-life)  premiums  are  recorded  as revenue  and  reserves  are
calculated  using the net level premium  method.  Accumulation  values for these
types of policies are held as benefit reserves.  See "Future Policy Benefits" in
Note 1 of the Notes to Financial Statements included in this report.

The Company maintains its own policy files,  prepares its own policy forms (with
the assistance of its consulting actuaries), selects risks, calculates premiums,
prepares premium notices,  preauthorized checks and commission  statements,  and
maintains all of its accounting records.

The Company is not affected by Federal,  state or local  provisions  relating to
discharge  of  materials  into the  environment.  The  Company  has not  spent a
material  amount of money  during the last three  fiscal  years on research  and
development  activities.  The  business of the Company is not seasonal in nature
and is not  dependent  on the sources and  availability  of raw  materials.  The
business  of the  Company  is not  dependent  upon a  single  customer  or a few
customers,  and no  material  portion of the  Company's  business  is subject to
renegotiation of profits or termination at the election of the Government.

Item 2.  Properties.
-------------------

The Company's  corporate  headquarters is located in a two story office building
in Lake Mary,  Florida,  which is owned by the  Company.  The  Company  occupies
approximately one-half of the second floor of the building. Approximately 94% of
the remaining rentable space was leased as of December 31, 2001.

Item 3.  Legal Proceedings.
--------------------------

An action was brought  against the Company in July 1999 by Dorothy Ruth Campbell
in the Circuit  Court of Escambia  County,  Alabama.  The action arises out of a
denial of coverage under a $10,000 insurance  policy.  The claims are for breach
of contract, bad faith and fraudulent misrepresentation. In the action, Campbell
seeks compensatory and punitive damages plus interest. The Company has filed its
response to the  complaint and certain  discovery  has taken place.  The Company
intends to vigorously defend the matter.

An action was brought against the Company by National Group  Underwriters,  Inc.
("NGU")  in state  court in the  State of  Texas.  The case was  removed  by the
Company to the United States District Court for the Northern  District of Texas,
Fort Worth  Division,  with Civil No.  4:01-CV-403-E.  An Amended  Complaint was
filed on or about July 18, 2001.  The Amended  Complaint  asserts that NGU had a
contract  with the Company  wherein NGU would  submit  applications  for certain
policies of insurance to be issued by the Company.  It is alleged that  disputes
have  arisen  between NGU and the Company  with  regard to the  calculation  and
payment of certain advanced commissions as well as certain production bonuses.

                                        7

<PAGE>



NGU  alleges  that it "has been  damaged  far in excess of the  $75,000  minimum
jurisdictional  limits of this Court." NGU also seeks  attorney's fees and costs
as well as prejudgment and postjudgment interest. A second amended complaint and
a third amended  complaint which included a fraud claim were filed. A motion was
filed by the Company to dismiss the third amended complaint, including the fraud
claim. The court denied the motion.  The Company has  counterclaimed for what it
claims to be a debit  balance owing to it pursuant to the  relationship  between
the parties with said counterclaim seeking an amount in excess of $625,000 (said
amount potentially  subject to reduction as premiums are received).  The Company
is also seeking to recover  attorney's fees and costs, as well punitive  damages
on two of its causes of action. NGU has filed a motion to dismiss certain of the
counterclaims.  The Company has pending a motion for change of venue of the case
to Salt Lake City, Utah. The Company intends to vigorously  defend the matter as
well as prosecute its counterclaims.

The Company is not a party to any other legal  proceedings  outside the ordinary
course of the Company's  business or to any other legal  proceedings  which,  if
adversely determined, would have a material adverse effect on the Company or its
business.

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

At the annual  stockholders  meeting  held on October  4,  2001,  the  following
matters  were acted upon:  (i) eight  directors  consisting  of George R. Quist,
William C. Sargent, Scott M. Quist, Charles L. Crittenden, Dr. Robert G. Hunter,
H. Craig Moody, G. Robert Quist and Norman G. Wilbur were elected to serve until
the next annual  stockholders  meeting or until their respective  successors are
elected and qualified (for George R. Quist,  1,485,424  votes were cast in favor
of  election,  1,300  votes  were  cast  against  election  and  there  were  no
abstentions;  for  William  C.  Sargent,  1,485,384  votes were cast in favor of
election,  1,340 votes were cast against election and there were no abstentions;
for Scott M. Quist, 1,485,284 votes were cast in favor of election,  1,440 votes
were cast  against  election  and there  were no  abstentions;  for  Charles  L.
Crittenden,  1,485,384 votes were cast in favor of election and 1,340 votes were
cast against  election and there were no abstentions;  for Dr. Robert G. Hunter,
1,485,524  votes  were  cast in favor of  election,  1,200  votes  cast  against
election and there were no abstentions; for H. Craig Moody, 1,485,484 votes were
cast in favor of election,  1,240 votes cast against  election and there were no
abstentions;  for G. Robert Quist,  1,485,484 votes in favor of election,  1,240
votes were cast against  election and there were no  abstentions;  for Norman G.
Wilbur,  1,485,524  votes were cast in favor of election,  1,200 votes were cast
against  election and there were no  abstentions);  and (ii) the  appointment of
Tanner + Co., as the Company's independent accountants for the fiscal year ended
December 31, 2001,  was ratified  (with  1,490,164  votes cast for  appointment,
25,560 votes against appointment and 16,500 abstentions).

                                     PART II

Item 5.  Market for the Company's Common Stock and Related Stockholder Matters.
------------------------------------------------------------------------------

     (a) Principal  Market and Stock Price.  The  principal  market on which the
Company's  common  stock  is  traded  is the  over-the-counter  market.  Trading
information  with  respect to the  Company's  shares is  available  through  the
National  Association of Securities Dealers Automated  Quotation (NASDAQ) System
under the symbol SSLI.

                                        8

<PAGE>



The table below presents the high and low market prices for the Company's common
stock during the calendar  quarters  indicated,  as quoted in the NASDAQ system.
The quotations represent prices between dealers in securities and do not include
retail markups, markdowns or commissions and do not necessarily represent actual
transactions.

                                      QUARTER ENDED
-------------------------------------------------------------------------------
                           2001                            2000
-------------------------------------------------------------------------------
          Mar.31  Jun.30  Sep.30  Dec.31    Mar.31  Jun.30  Sep.30  Dec.31
          ------  ------  ------  ------    ------  ------  ------  ------
Common
Shares:
  High    3.75     3.25    3.33    3.50      5.00    5.00    4.69    4.38
  Low     3.13     3.12    3.13    2.80      4.66    4.00    4.00    3.50

          (b)  Approximate  Number of Holders of Common Stock.  There were 1,287
     holders of record of the Company's  Common Stock at December 31, 2001.

          (c) Dividends.  The Company has paid no cash dividends to stockholders
     during  the  past  two  years,  and it is not  anticipated  that  any  cash
     dividends will be paid at any time in the foreseeable  future.  The payment
     of  dividends by the Company is subject to the  regulation  of the State of
     Florida Department of Insurance. Under such regulation an insurance company
     may  pay  dividends,  without  prior  approval  of  the  State  of  Florida
     Department  of  Insurance,  equal to or less than the greater of (a) 10% of
     its  accumulated  capital gains (losses) and accumulated  operating  income
     (losses)  (i.e.  unassigned  surplus) or (b) certain net operating  profits
     (losses) and realized capital gains (losses) of the Company,  as defined in
     the applicable insurance statutes. In no case can such dividends be paid if
     the  Company  will have less than 115% of the  minimum  required  statutory
     surplus as to policyholders  after the dividend is paid. The maximum amount
     which the  Company  could pay as a dividend  during  2002  pursuant to such
     regulation is approximately $97,000.

                                        9

<PAGE>



Item 6.  Selected Financial Data.
--------------------------------

The  following  table  presents  selected  financial  data  (on  a  GAAP  basis)
concerning the Company and its financial results during the periods indicated.
<TABLE>
<CAPTION>

                                                               YEARS ENDED DECEMBER 31,

                               2001                  2000                1999                1998                1997
                               ----                 ------              ------              ------              ------
Revenues:
<S>                     <C>                  <C>                 <C>                 <C>
Life insurance
    premiums and
    policy charge       $     6,736,027      $     6,698,869     $     6,901,546      $     7,228,227      $     7,643,650

Net investment
    income                    3,866,966            3,935,607           3,909,373            3,587,147            3,545,311
Realized Gain
    (loss) on
    investments                   --                   --                  --                 525,181              506,795
Other revenue, net                --                   --                715,128               --                   --
                        ---------------      ---------------     ---------------      ---------------      ---------------

Total Revenue                10,602,993           10,634,476          11,526,047           11,340,555           11,695,756

Benefits, Losses
    & Expenses:
 Insurance living
    benefits                  2,186,664            2,243,331           2,614,754            2,483,197            2,459,638
 Insurance death
    benefits                  2,360,265            1,549,116           1,917,134            1,529,294            1,847,375
 Increase (decrease)
    in policy
    reserves                    (64,341)           1,316,964             (78,324)             334,329              124,461
 Amortization of
    deferred policy
    acquisition
    costs                     2,197,399            1,797,320           3,029,223            3,484,689            3,542,617
 Commissions and
    general
    expenses                  3,835,165            3,529,380           3,261,134            4,134,686            3,472,255
                        ---------------      ---------------     ---------------      ---------------      ---------------

Total expenses               10,515,152           10,436,111          10,743,921           11,966,195           11,446,346
Income (loss)
    before income
    taxes                        87,841              198,365             782,126             (625,640)             249,410
Income tax expense
    (benefit)                    16,865               38,105             150,168             (241 907               54,200
                        ---------------      ---------------     ---------------      ---------------      ---------------

NET INCOME (LOSS)      $        70,976      $       160,260      $       631,958      $      (383,733)     $       195,210
                       ===============      ===============      ===============      ===============      ===============

Weighted average
    number of
    shares
    outstanding
    (basic and
    diluted)                 1,907,989            1,907,989            1,907,989            1,907,989            1,907,989
                       ---------------      ---------------      ---------------      ---------------      ---------------

Basic income (loss)
    per common share              $.04                 $.08                 $.33                 $(.20)               $.10
                                  ====                 ====                 ====                 =====                ====

Diluted income (loss)
    per common share              $.04                 $.08                 $.33                $(.20)                $.10
                                  ====                 ====                 ====                =====                 ====

Shareholders'
    Equity             $    16,903,270      $    16,198,535      $    15,637,320      $    15,912,106      $    16,132,018
                       ===============      ===============      ===============      ===============      ===============

Shareholders'
    equity per
    common
    share                       $8.86                 $8.49                $8.20                $8.34                $8.45
                                =====                 =====                =====                =====                =====

Assets                $    77,479,328      $    77,125,931       $    77,208,941      $    81,205,193      $    82,142,465
                      ---------------      ---------------       ---------------      ---------------      ---------------

Life Insurance:
    Insurance in
    force             $ 1,567,994,000      $ 1,369,808,000       $ 1,455,417,000      $ 1,467,529,000      $ 1,558,810,000
                      ---------------      ---------------       ---------------      ---------------      ---------------

Individual
    insurance
    issued during
    current
    year             $    72,083,000      $    64,710,000        $    66,591,000      $    68,935,000      $    82,390,000
                     ---------------      ---------------        ---------------      ---------------      ---------------

Long term
    obligation       $     1,000,000      $     1,000,000        $     1,000,000      $     1,000,000      $     1,000,000
                     ---------------      ---------------        ---------------      ---------------      ---------------

Dividends
    declared per
    common share               $.00                 $.00                    $.00                 $.00                 $.00
                              =====                 ====                    ====                 ====                 ====

                                       10
</TABLE>

<PAGE>



Item 7.  Management's discussion and analysis of financial condition and results
of operation.

Overview.
--------

This analysis of the results of operations  and financial  condition of Southern
Security Life should be read in conjunction with the Selected Financial Data and
Financial  Statements  and Notes to the  Financial  Statements  included in this
report.

In recent  years,  the  Company  has  primarily  issued  two types of  insurance
products:  universal  life and final expense  products.  Universal life provides
insurance   coverage  with  flexible  premiums,   within  limits,   which  allow
policyholders  to  accumulate  cash  values.  The  accumulated  cash  values are
credited with  tax-deferred  interest,  as adjusted by the Company on a periodic
basis.  Deducted  from the cash  accumulations  are  administrative  charges and
mortality  costs.  Should a policy  surrender  in its early  years,  the Company
assesses a surrender fee against the cash value  accumulations based on a graded
formula.

Final expense products are traditional endowment type insurance policies written
for the senior market.  Because the products are written to a senior market they
are designed to accommodate  adverse health  conditions.  Because of the size of
the policies,  the products are usually  issued with only limited  underwriting.
The  coverage  size  of the  policy  is  roughly  equivalent  to  the  insured's
anticipated funeral costs.

An additional source of income to the Company is investment  income. The Company
invests those funds  deposited by  policyholders  of universal  life and annuity
products in debt and equity  securities,  mortgage loans, and warehouse mortgage
loans on a short-term  basis before selling the loans to investors in accordance
with the requirements and laws governing life insurance  companies,  in order to
earn  interest and dividend  income,  a portion of which is credited back to the
policyholders.  Interest  rates  and  maturities  of  the  Company's  investment
portfolio play an important  part in determining  the interest rates credited to
policyholders.

Product  profitability  is  affected  by  several  different  factors,  such  as
mortality  experience  (actual versus  expected),  interest rate spreads (excess
interest earned over interest credited to policyholders)  and controlling policy
acquisition costs and other costs of operation. The results of any one reporting
period  may be  significantly  affected  by the  level of death  claims or other
policyholder benefits incurred due to the Company's relatively small size.

Results of Operations

2001 Compared to 2000

Total revenues decreased by $31,000, or .3%, to $10,603,000 for fiscal year 2001
from  $10,634,000  for fiscal year 2000.  Contributing to this decrease in total
revenues was a $68,000 reduction in net investment income.

Net insurance  revenues  increased by $37,000,  or .6%, to $6,736,000 for fiscal
year 2001, from $6,699,000 for fiscal year 2000. This increase was primarily the
result of an increase in traditional life sales.

Net investment  income  decreased by $68,000,  or 1.7%, to $3,867,000 for fiscal
year 2001 from  $3,935,000  for fiscal  year  2000.  Investment  yield  slightly
decreased for the fiscal year 2001 from 7.8% in 2000 to 7.65% in 2001.

Benefits and claims  decreased by $626,000,  or 12.2%,  to $4,483,000 for fiscal
year 2001, from  $5,109,000 for the comparable  period in 2000. The decrease was
primarily due to a decrease in traditional life reserves.

The amortization of deferred policy  acquisition  costs increased by $400,000 or
22.3%,  to $2,197,000,  for fiscal year 2001, from $1,797,000 for the comparable
period in 2000. The increase in amortization  expense was in line with actuarial
assumptions.

Operating expenses increased by $305,000, or 8.6%, to $3,835,000 for fiscal year
2001 from $3,530,000 for the same period in 2000. The increase was primarily due
to increased marketing, legal expenses and provision for doubtful accounts.

                                       11

<PAGE>



2000 Compared to 1999

Total revenues  decreased by $892,000,  or 7.7%, to $10,634,000  for fiscal year
2000 from  $11,526,000  for fiscal year 1999.  Contributing  to this decrease in
total revenues was a $203,000 reduction in net insurance revenues and a $715,000
reduction in other revenue.

Net insurance revenues decreased by $203,000,  or 2.9%, to $6,699,000 for fiscal
year 2000, from $6,902,000 for fiscal year 1999. This decrease was primarily the
result of a change in the sales mix of the Company's insurance  products.  Since
March 1998,  the sales of the Company's  funeral plan products have been greater
than the universal life  products.  The universal life products were for greater
face  amounts  than the  funeral  plan  products.  Consequently,  the  insurance
revenues from final expense  products were less than those from  universal  life
products.

Net  investment  income  increased by $26,000,  or .7%, to $3,936,000 for fiscal
year 2000 from  $3,909,000  for fiscal  year  1999.  Investment  yield  slightly
increased for the fiscal year 2000 from 7.78% in 1999 to 7.8% in 2000.

There was no other  revenue  for fiscal  year 2000,  as  compared to $715,000 in
other  revenue  in  1999.  The  amount  of other  revenue  was the  result  of a
settlement from insurance claims filed for the recovery of the costs to litigate
a case against a former officer of the Company.

Benefits and claims  increased by $655,000,  or 14.7%,  to $5,109,000 for fiscal
year 2000, from  $4,454,000 for the comparable  period in 1999. The increase was
primarily  due to an  increase  in  traditional  life  reserves  as a result  of
additional policies in force of traditional life products.

The amortization of deferred policy  acquisition  costs decreased by $1,232,000,
or 40.7%, to $1,797,000 for fiscal year 2000, from $3,029,000 for the comparable
period in 1999.  The  decrease  in  amortization  expense was  primarily  due to
adjusting the amortization rate to the Company's current assumptions.

Operating expenses increased by $269,000, or 8.3%, to $3,530,000 for fiscal year
2000 from $3,261,000 for the same period in 1999. The increase was primarily due
to increased marketing and home office building expenses.

Liquidity and Capital Resources.
-------------------------------

The  Company  attempts  to  match  the  duration  of  invested  assets  with its
policyholder  liabilities.  The  Company may sell  investments  other than those
held-  to-maturity  in the portfolio to help in this timing;  however,  to date,
that has not been necessary.  The Company purchases short-term  investments on a
temporary  basis to meet the  expectations  of  short-term  requirements  of the
Company's products. The Company's investment philosophy is intended to provide a
rate of return which will persist during the expected  duration of  policyholder
liabilities regardless of future interest rate movements.

The Company's  investment  policy is to invest  predominantly  in fixed maturity
securities,  mortgage loans, and warehouse  mortgage loans on a short-term basis
before selling the loans to investors in accordance  with the  requirements  and
laws governing life insurance companies.  Bonds owned by the Company amounted to
$24,521,000  as of December 31, 2001 as compared to  $28,742,000  as of December
31,  2000.  This  represents  49.8%  and 60.6% of the  total  investments  as of
December  31, 2001 and December 31,  2000,  respectively.  Generally,  all bonds
owned  by the  Company  are  rated  by the  National  Association  of  Insurance
Commissioners.  Under this rating  system,  there are nine  categories  used for
rating bonds.  At December 31, 2001,  and at December 31, 2000,  the Company had
investments  in bonds  in  rating  categories  three  through  nine,  which  are
considered non-investment grade of $482,000 and $0, respectively.

If market conditions were to cause interest rates to change, the market value of
the fixed income portfolio  (approximately  $26.884 million) could change by the
following  amounts  based on the  respective  basis  point  swing (the change in
market values were calculated using a modeling technique):

(in millions of dollars)   -200bps       -100bps        +100bps       +200bps
------------------------   -------       -------        -------       -------

Change in Market Value     $1.513         $.728         $(.677)       $(1.307)

                                       12

<PAGE>



The  Company  has no other  financial  instruments  which  would  be  materially
susceptible to market risk.

The Company's insurance operations have historically  provided adequate positive
cash flow enabling the Company to continue to meet operational  needs as well as
increase  its  investment-grade  securities  to  provide  ample  protection  for
policyholders.

The Company has classified  certain of its fixed income  securities as available
for  sale,  with the  remainder  classified  as held to  maturity.  However,  in
accordance with Company policy, any such securities purchased in the future will
be classified as held to maturity. Business conditions,  however, may develop in
the future  which may  indicate a need for a higher  level of  liquidity  in the
investment  portfolio.  In that event the Company  believes it could sell short-
term investment grade securities before liquidating  higher-yielding longer term
securities.

The Company is subject to risk based capital guidelines established by statutory
regulators  requiring  minimum  capital  levels based on the  perceived  risk of
assets, liabilities,  disintermediation, and business risk. At December 31, 2001
and December 31, 2000, the Company exceeded the regulatory criteria.

Lapse  rates  measure the amount of  insurance  terminated  during a  particular
period.  The  Company's  lapse  rate for  life  insurance  in 2001 was  13.8% as
compared to a rate of 16.1% for 2000.

Effective December 17, 1998, the Company entered into an Administrative Services
Agreement with Security National Financial Corporation ("SNFC"). Under the terms
of the  agreement,  SNFC has agreed to provide the Company with certain  defined
administrative and financial services,  including accounting services, financial
reports and statements,  actuarial,  policyholder services,  underwriting,  data
processing,   legal,  building  management,   marketing  advisory  services  and
investment  services.  In consideration for the services to be provided by SNFC,
the Company shall pay SNFC an administrative services fee of $250,000 per month,
provided,  however,  that such fee shall be  reduced  to zero for so long as the
capital and surplus of the Company is less than or equal to  $6,000,000,  unless
the Company and SNFC  otherwise  agree in writing and such agreement is approved
by the Florida Department of Insurance.

The administrative services fee may be increased,  beginning on January 1, 2001,
to reflect  increases in the Consumer  Price Index,  over the index amount as of
January 1, 2000. The  Administrative  Services  Agreement shall remain in effect
for an initial term expiring on December 16, 2003. The term of the agreement may
be  automatically  extended for  additional  one-year  terms  unless  either the
Company or SNFC shall deliver a written notice on or before September 30, of any
year  stating to the other its  desire not to extend the term of the  agreement.
However, in no event can the agreement be terminated prior to December 16, 2003.

Student loans are a service the Company has  historically  made available to the
public as well as an  investment.  While the Company  anticipates  the  seasonal
demand  for  student  loan  funds and the  subsequent  sale of such loans to the
Student Loan Marketing Association (SLMA), there are times when additional funds
are  required  to meet  demand  for  student  loans  until such time as the sale
thereof to SLMA can be  completed.  In 1997 the Company  renewed its  $5,000,000
line of credit  with SLMA until 2007 in order to meet these  seasonal  borrowing
requirements.  The Company  made no draws  against  this line of credit  through
December 31, 2001.

The Company began a new association with USA Group, CAP Program in 1996, for the
purpose of making more student loan funds available  without  increased costs to
the Company. This association aided in eliminating borrowings for 2001 and 2000.

The Company has leased approximately 94% of the available space in its principal
office building and does not anticipate  significant capital expenditures to the
rental space.

                                       13

<PAGE>



The Private  Securities  Litigation  Reform Act of 1995 (the  "Act")  provides a
"safe harbor" for  forward-looking  statements to encourage companies to provide
prospective  information  about their  businesses  without fear of litigation so
long as those statements are identified as  forward-looking  and are accompanied
by meaningful  cautionary  statements  identifying  important factors that could
cause  actual  results  to  differ  materially  from  those  projected  in  such
statements.  The  company  desires  to  take  advantage  of  the  "safe  harbor"
provisions of the Act.

This Annual Report of Form 10-K contains  forward-looking  statements,  together
with related  data and  projections,  about the  Company's  projected  financial
results and its future plans and strategies.  However,  actual results and needs
of  the  Company  may  vary  materially  from  forward-looking   statements  and
projections  made from time to time by the Company on the basis of  management's
then-current expectations. The business in which the Company is engaged involves
changing and competitive  markets,  which may involve a high degree of risk, and
there can be no assurance that  forward-looking  statements and projections will
prove accurate.

Factors that may cause the Company's  actual results to differ  materially  from
those contemplated or projected, forecast, estimated or budgeted in such forward
looking  statements  include among  others,  the  following  possibilities:  (i)
heightened competition,  including the intensification of price competition, the
entry  of new  competitors,  and the  introduction  of new  products  by new and
existing competitors;  (ii) adverse state and federal legislation or regulation,
including  decreases  in rates,  limitations  on premium  levels,  increases  in
minimum capital and reserve requirements,  benefit mandates and tax treatment of
insurance products;  (iii) fluctuations in interest rates causing a reduction of
investment  income or increase in  interest  expense and in the market  value of
interest rate sensitive investment;  (iv) failure to obtain new customer, retain
existing customers or reductions in policies in force by existing customers; (v)
higher  service,  administrative,  or  general  expense  due  to  the  need  for
additional  advertising,  marketing,  administrative  or management  information
systems  expenditures;  (vi) loss or retirement of key  executives or employees;
(vii) increases in medical costs;  (viii) changes in the Company's liquidity due
to changes in asset and  liability  matching;  (ix)  restrictions  on  insurance
underwriting based on genetic testing and other criteria; (x) adverse changes in
the ratings obtained by independent  rating  agencies;  (xi) failure to maintain
adequate  reinsurance;  (xii) possible  claims  relating to sales  practices for
insurance  products and claim denials and (xiii)  adverse trends in morality and
morbidity.

In June 2001,  the Financial  Accounting  Standards  Board issued  Statements of
Financial Accounting  Standards No. 141, "Business  Combinations" (SFAS No. 141)
and No. 142,  "Goodwill  and Other  Intangibles"  (SFAS No.  142).  SFAS No. 141
requires  that the  purchase  method  of  accounting  be used  for all  business
combinations  initiated  after June 30, 2001.  The  statement  also  establishes
specific  criteria for recognition of intangible assets separately from goodwill
and requires  unallocated  negative goodwill to be written off immediately as an
extraordinary gain. SFAS No. 142 primarily addresses the accounting for goodwill
and intangible assets subsequent to their  acquisition.  The statement  requires
that goodwill and indefinite lived intangible  assets no longer be amortized and
be  tested  for  impairment  at  least  annually.  The  amortization  period  of
intangible assets with finite lives will no longer be limited to forty years.

In August 2001, the Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting Standards No. 144, "Accounting for the Impairment of Long-
Lived Assets".  This Statement addresses financial  accounting and reporting for
the impairment of long-lived assets and for long-lived assets to be disposed of.
This Statement  supersedes  FASB Statement 121 and APB Opinion No. 30.  However,
this Statement retains certain fundamental  provisions of Statement 121, namely;
recognition  and  measurement of the impairment of long-lived  assets to be held
and used, and  measurement  of long-lived  assets to be disposed of by sale. The
Statement  also  retains the  requirement  of Opinion 30 to report  discontinued
operations separately from continuing operations. This Statement also Amends ARB
No. 51 to eliminate the exception of consolidation for a temporarily  controlled
subsidiary.  The  provisions  of this  statement  are  effective  for  financial
statements issued for fiscal years beginning after December 15, 2001.

                                       14

<PAGE>



In June 2001,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  No.  143,  "Accounting  for  Asset  Retirement
Obligations".  This Statement addresses  financial  accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated  asset  retirement  costs.  This Statement is effective for financial
statements issued for fiscal years beginning after June 15, 2002.

The adoption of these statements is not expected to have a significant impact on
the Company's financial statements.

The  Company  adopted  Statement  of  Financial  Accounting  Standards  No. 140,
Accounting for Transfers and Servicing of Financing  Assets and  Extinguishments
of  Liabilities - a replacement  of FASB Statement No. 125 (FAS 140) on April 1,
2001. This standard revises the standards for accounting for securitizations and
other  transfers  of  financial  assets  and  collateral  and  requires  certain
disclosures,   but   carries   over  most  of  FAS  125's   provisions   without
reconsideration.    This   Statement   is   effective   for    recognition   and
reclassification  of collateral and for disclosures  relative to  securitization
transactions and collateral for fiscal years ending after December 15, 2000. The
adoption of FAS 140 did not have a material  impact on the  Company's  financial
position or results of operations.

Item 8.  Financial Statements and Supplementary Data.
-----------------------------------------------------

The following financial statements of Southern Security Life Insurance Company
are included in Part II, Item 8:

                                                                   Page Number

Independent Auditors' Report............................................16

Balance Sheet-December 31, 2001 and 2000................................17

Statement of Operations - years ended
December 31, 2001, 2000 and 1999........................................19

Statement of Shareholders' Equity-years
ended December 31, 2001, 2000 and 1999..................................20

Statement of Cash Flows - years ended
December 31, 2001, 2000 and 1999........................................21

Notes to Financial Statements...........................................23

                                       15

<PAGE>



                         Report of Independent Auditors













Board of Directors & Shareholders
Southern Security Life Insurance Company:




We have  audited  the  accompanying  balance  sheet of  Southern  Security  Life
Insurance Company as of December 31, 2001 and 2000 and the related statements of
operations,  shareholders'  equity,  and cash  flows for the three  years in the
period ended  December 31, 2001. In connection  with our audits of the financial
statements, we have also audited the amounts included in the financial statement
schedules as listed in the accompanying  index under Item 14(a). These financial
statements  and  financial  statement  schedules are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial statement presentation.  We believe that our audits provide reasonable
basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of  Southern  Security  Life
Insurance  Company  at  December  31,  2001 and  2000,  and the  results  of its
operations  and its cash flows for the three years in the period ended  December
31, 2001, in conformity with  accounting  principles  generally  accepted in the
United States of America.  Also in our opinion,  the related financial statement
schedules,  when considered in relation to the basic financial  statements taken
as a whole, present fairly, in all material respects,  the information set forth
therein.

Tanner + Co.

Salt Lake City, Utah
March 21, 2002

                                       16

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                                  Balance Sheet

                           December 31, 2001 and 2000

Assets                                      2001          2000
------                                      ----          ----
Investments (note 3):
    Fixed maturities held-to-maturity
      (fair value, $3,250,894 and
      $5,273,032 at December 31,
      2001 and 2000, respectively)      $ 3,156,650   $ 5,374,204
    Securities available-for-sale,
      at fair value:
      Fixed maturities (cost of
        $20,459,833 at December 31,
        2001 and $23,419,358 at
        December 31, 2000)               21,364,731    23,367,483
      Equity securities
        (cost, $316,293 and
        $327,674 at December 31,
        2001 and 2000, respectively)        372,183       358,932
    Mortgage loans                        2,268,292     2,298,163
    Policy and student loans              8,181,223     8,220,736
    Short-term investments (note 11)     13,860,534     7,814,813
                                        -----------   -----------
                                         49,203,613    47,434,331

Cash and cash equivalents                 1,969,055     2,513,668
Accrued investment income                   613,280       610,474
Deferred policy acquisition costs
    (note 4)                             12,974,390    13,211,413
Policyholders' account balances on
    deposit with reinsurer (note 7)       7,148,068     7,434,750
Reinsurance receivable (note 7)             569,163       324,793
Receivables:
    Agent balances, net                   1,005,535     1,208,378
    Other                                   722,075       279,567
Property and equipment, net,
    at cost (note 5)                      2,491,062     2,542,384
Investment in affiliate at cost             783,087     1,566,173
                                        -----------   -----------

                                        $77,479,328   $77,125,931
                                        ===========   ===========



























See accompanying notes to financial statements.

                                       17

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                            Balance Sheet (continued)

                           December 31, 2001 and 2000



Liabilities and Shareholders' Equity            2001           2000
------------------------------------            ----           ----
Liabilities:
    Policy liabilities and accruals
      (notes 6 and 7):                     $  2,901,599   $  2,965,940
  Future policy benefits:
      Policyholders' account balances        47,601,259     48,722,138
      Unearned revenue                        4,694,563      4,948,989
      Other policy claims and benefits
        payable                               1,147,403        580,196
    Other policyholders' funds, dividend
      and endowment accumulations                64,045         72,890
    Funds held related to reinsurance
      treaties (note 7)                       1,379,640      1,417,216
    Note payable to related party
      (note 9)                                1,000,000      1,000,000
    Due to affiliated insurance
      agency (note 11)                          193,689        151,689
    General expenses accrued                     93,436        157,944
    Unearned investment income                  357,322        323,830
    Other liabilities                           247,665         28,488
    Income taxes (note 10)                      895,437        558,076
                                           ------------   ------------

                                             60,576,058     60,927,396
                                           ------------   ------------

Shareholders' equity (notes 2,3 and 12):
    Common stock, $1 par, authorized
      3,000,000 shares; issued and out-
      standing, 1,907,989 shares              1,907,989      1,907,989
    Capital in excess of par                  4,011,519      4,011,519
    Accumulated other comprehensive
        income (loss)                           558,131        (75,628)
    Retained earnings                        10,425,631     10,354,655
                                           ------------   ------------

                                             16,903,270     16,198,535
Commitments and contingencies
    (notes 7 and 15)                                 --             --
                                           ------------   ------------

                                           $ 77,479,328   $ 77,125,931
                                           ============   ============

                                       18

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                             Statement of Operations

                  Years ended December 31, 2001, 2000, and 1999


                                      2001         2000          1999
                                      ----         ----          ----
Revenues:
    Net insurance revenues       $ 6,736,027   $ 6,698,869   $ 6,901,546
    Net investment income
       (notes 3 and 11)            3,866,966     3,935,607     3,909,373

    Other revenue, net                    --            --       715,128
                                 -----------   -----------   -----------

                                  10,602,993    10,634,476    11,526,047
                                 -----------   -----------   -----------

Benefits, claims and expenses:

    Benefits and claims            4,482,588     5,109,411     4,453,564
    Amortization of deferred
      policy acquisition
      costs (note 4)               2,197,399     1,797,320     3,029,223
    Operating expenses
      (notes 9 and 11)             3,835,165     3,529,380     3,261,134
                                 -----------   -----------   -----------

                                  10,515,152    10,436,111    10,743,921
                                 -----------   -----------   -----------

     Income before
       income taxes                   87,841       198,365       782,126

Income tax expense (note 10)          16,865        38,105       150,168
                                 -----------   -----------   -----------

    Net income                   $    70,976   $   160,260   $   631,958
                                 ===========   ===========   ===========

Basic and diluted net
    income per share
    of common stock (note 12)    $       .04   $       .08   $       .33
                                 ===========   ===========   ===========



























See accompanying notes to financial statements.

                                       19

<PAGE>

<TABLE>
<CAPTION>


                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                        Statement of Shareholders' Equity

                    Years ended December 31, 2001, 2000, 1999




                                                                                 Accumulated
                                                                  Capital           other
                                    Common          Stock        in excess      comprehensive   Retained
                                    Shares          Amount        of par           income       earnings          Total
                                   ---------       ----------    ---------         ------       --------          -----
<S>                              <C>             <C>            <C>            <C>              <C>           <C>
Balances,
 December 31, 1998                  1,907,989    $  1,907,989   $  4,011,519   $    430,161    $  9,562,437   $ 15,912,106
                                 ------------    ------------   ------------   ------------    ------------   ------------
Comprehensive Income (loss):
    Net income for the year                --              --             --             --         631,958        631,958
    Unrealized depreciation of
        securities available
        for sale                           --              --             --       (906,744)             --       (906,744)
                                 ------------    ------------   ------------   ------------    ------------   ------------
Total comprehensive loss                                                                                          (274,786)
                                                                                                              ------------

Balances,
 December 31, 1999                  1,907,989       1,907,989      4,011,519       (476,583)     10,194,395     15,637,320
                                 ------------    ------------   ------------   ------------    ------------   ------------

Comprehensive Income (loss):
    Net income for the year                --              --             --             --         160,260        160,260
    Unrealized depreciation of
        securities available
        for sale                           --              --             --        400,955              --        400,955
                                 ------------    ------------   ------------   ------------    ------------   ------------
Total comprehensive gain                                                                                           561,215
                                                                                                              ------------

Balances,
 December 31, 2000                  1,907,989       1,907,989      4,011,519        (75,628)     10,354,655     16,198,535
                                 ------------    ------------   ------------   ------------    ------------   ------------

Comprehensive Income (loss):
    Net income for the year                --              --             --             --          70,976         70,976
    Unrealized depreciation of
        securities available
        for sale                           --              --             --        633,759              --        633,759
                                 ------------    ------------   ------------   ------------    ------------   ------------
Total comprehensive loss                                                                                           704,735
                                                                                                              ------------

Balances,
 December 31, 2001                  1,907,989    $  1,907,989   $  4,011,519   $    558,131    $ 10,425,631   $ 16,903,270
                                 ============    ============   ============   ============    ============   ============
</TABLE>

See accompanying notes to financial statements.

                                                            20

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                             Statement of Cash Flows

                    Years ended December 31, 2001, 2000, 1999



<TABLE>
<CAPTION>
                                                                   2001                     2000                   1999
                                                                   ----                     ----                   ----
Cash flows provided by (used in) operating activities:
<S>                                                      <C>            <C>            <C>
      Net income                                         $    70,976    $   160,260    $   631,958
      Adjustments to reconcile net
            cash provided by (used in)
            operating activities:
      Depreciation and amortization                          270,792        260,956        286,514
      Loss on disposal of property,
            plant & equipment                                     --          1,886         15,180
      Deferred income taxes                                   22,623         (9,426)        11,009
      Amortization of deferred
            policy acquisition costs                       2,197,399      1,797,320      3,029,223
      Acquisition costs deferred                          (1,898,971)    (2,206,125)    (2,084,438)
      Change in assets and liabilities
            affecting cash provided by
            operations:
            Accrued investment income                         (2,806)       (27,566)       (18,790)
            Accounts receivable                             (239,665)       (78,683)       (63,291)
            Reinsurance receivable                          (244,370)        48,666        (67,201)
            Other policy claims and
                  future benefits payable                    502,866      1,356,753        (78,706)
            Policyholders' account balances                2,119,312      2,080,769      2,585,204
            Funds held under reinsurance                     (37,576)       (58,296)        56,155
            Unearned premiums                               (291,269)      (331,998)      (840,474)
            Dividend and endowment
                  accumulations                               (8,845)         3,101          5,051
            Payable to affiliated
                  insurance agent                             47,894        (44,096)       172,914
            Income taxes payable                             (57,470)       (46,738)       139,159
            Other liabilities                                182,378        (16,125)      (651,872)
                                                         -----------    -----------    -----------

      Net cash provided by operating
            activities                                   $ 2,633,268    $ 2,890,658    $ 3,127,595
                                                         -----------    -----------    -----------

Cash flows from (used in) investing activities:
      Purchase of investments:
      Purchase of investments
            held-to-maturity                                $     --    $(2,606,749)   $  (477,150)
      Purchase of equity securities                               --       (916,815)      (766,662)
      Proceeds from maturity of
            held-to maturity securities                    2,220,802      1,210,272      1,446,315
      Proceeds from maturity of
            available-for-sale securities                  2,814,816      1,225,522      2,739,662
      Proceeds from sale of available-
            for-sale securities (equity and
            fixed maturity)                                  794,356             --             --
      Purchase of mortgage loan                                   --       (825,000)    (1,500,000)
      Repayment of mortgage loans                             29,871         24,525          2,312
      Net change in short-term
            investments                                   (6,045,721)       780,280      2,839,890
      Net change in policy and
            student loans                                     39,513        238,236          3,466
      Acquisition of property and
            equipment                                        (78,009)      (224,129)          (635)
                                                         -----------    -----------    -----------

      Net cash provided by (used in)
            investing activities                         $  (224,372)   $(1,093,858)   $ 4,287,198
                                                         -----------    -----------    -----------
</TABLE>

                                       21

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                             Statement of Cash Flows

                    Years ended December 31, 2001, 2000, 1999

<TABLE>
<CAPTION>


                                                2001             2000            1999
                                                ----             ----            ----
<S>                                           <C>              <C>             <C>
Cash flows from financing activities:
      Receipts from universal life and
            certain annuity policies
            credited to policyholder
            account balances                   5,037,521       5,765,790       6,662,558
      Return of policyholder account
            balances on universal life
            and certain annuity policies      (7,991,030)     (9,129,406)    (10,679,256)
                                            ------------    ------------    ------------

Net cash used in financing
      activities                             $ (2,953,509)   $ (3,363,616)   $ (4,016,698)
                                             ------------    ------------    ------------

Increase (decrease) in cash and
      cash equivalents                           (544,613)     (1,566,816)      3,398,095

Cash and cash equivalents at
      beginning of year                         2,513,668       4,080,484         682,389
                                             ------------    ------------    ------------
Cash and cash equivalents at
      end of year                            $  1,969,055    $  2,513,668    $  4,080,484
                                             ============    ============    ============

Supplemental schedule of cash flow
      information:
      Interest paid during the
            year                             $     97,240    $    105,000    $     90,000
                                             ============    ============    ============

      Income taxes paid during the
            year                             $     57,470    $     94,365      $       --
                                             ============    ============    ============

Change in market value adjustments-
 investments available-for-sale:
      Fixed maturities                       $    956,773    $    786,282    $ (1,645,893)
      Equity securities                            24,632        (121,202)        112,598

Change in deferred acquisition
      costs                                        61,405         (71,611)        235,048
Change in premium deposit funds                   (36,843)         42,967        (141,029)
Deferred income tax asset
      (liability)                                (372,208)       (235,481)        532,532
                                               ----------    ------------    ------------

Accumulated comprehensive income
Net change in unrealized
      appreciation (depreciation)            $    633,759    $    400,955    $   (906,744)
                                             ============    ============    ============

</TABLE>

















See accompanying notes to financial statements.

                                       22

<PAGE>



                        SOUTHERN SECURITY LIFE INSURANCE
                           COMPANY Notes to Financial
                    Statements December 31, 2001, 2000, 1999

1.     Nature of business and summary of significant accounting policies:
       -----------------------------------------------------------------

       (a)     Nature of business

               The primary business of Southern  Security Life Insurance Company
               (the  "Company") is the issuance of long duration  universal life
               insurance  contracts.  The majority of the Company's  business is
               conducted in the states of Alabama (13%),  Florida (40%), Georgia
               (10%), and Texas (11%). None of the remaining ten states in which
               the Company is licensed to conduct  business account for over 10%
               of the Company's total business.

               Prior to  December  17,  1998,  certain  executive  officers  and
               directors of the Company were  shareholders of  approximately  60
               percent of the shares of SSLIC Holding Company,  Inc.,  (formerly
               Consolidare Enterprises,  Inc.). SSLIC Holding Company, Inc. owns
               75.0% of the Company's voting securities at December 31, 2001.

               Effective  December 17,  1998,  100% of the common stock of SSLIC
               Holding Company, Inc. was acquired by Security National Financial
               Corporation  ("SNFC").  Accordingly,  from December 17, 1998, the
               Company is a 75.0% owned, indirect subsidiary of SNFC.

               The  following is a  description  of the most  significant  risks
               facing life and health  insurers  and how the  Company  mitigates
               those risks:

               Legal/regulatory  risk is the risk that  changes  in the legal or
               regulatory  environment in which an insurer  operates will create
               additional expenses not anticipated by the insurer in pricing its
               products.  That is,  regulatory  initiatives  designed  to reduce
               insurer  profits,   new  legal  theories  or  insurance   company
               insolvencies  through  guaranty fund assessments may create costs
               for  the  insurer  beyond  those  recorded  in  the  consolidated
               financial  statements.  The Company  seeks to mitigate  this risk
               through geographic marketing of their insurance products.

               Credit risk is the risk that issuers of  securities  owned by the
               Company will default or that other parties, including reinsurers,
               which owe the Company money,  will not pay. The Company  attempts
               to mitigate  this risk by adhering to a  conservative  investment
               strategy,  by maintaining  sound reinsurance and by providing for
               any amounts deemed uncollectible.

               Interest  rate risk is the risk that  interest  rates will change
               and cause a decrease  in the value of an  insurer's  investments.
               This  change  in  rates  may  cause  certain   interest-sensitive
               products to become uncompetitive, may cause disintermediation, or
               may cause the Company to not achieve its target interest  margins
               between interest earned on invested assets and interest  required
               to be  credited to  policyholder  account  balances.  The Company
               mitigates  this risk by  charging  fees for  nonconformance  with
               certain  policy  provisions,  by offering  products that transfer
               this risk to the  purchaser,  and/or by  attempting  to match the
               maturity  schedule of its assets with the expected payouts of its
               liabilities. To the extent that liabilities come due more quickly
               than assets mature, an insurer would have to sell assets prior to
               maturity and potentially recognize a gain or loss.

       (b)     Basis of financial statements

               The financial  statements have been prepared on the basis of U.S.
               generally accepted  accounting  principles  ("GAAP"),  which vary
               from  reporting  practices  prescribed or permitted by regulatory
               authorities.

               The  accompanying  financial  statements have been prepared using
               the  historic  cost basis of  accounting  and do not  reflect any
               adjustments  related to allocation  of the purchase  price of the
               Company's  parent,   SSLIC  Holding  (Formerly   Consolidare)  by
               Security National Financial Corporation at December 17, 1998.

                                       23

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


       (c)     Use of estimates

               In preparing the financial statements,  management is required to
               make estimates and assumptions  that affect the reported  amounts
               of  assets  and   liabilities.   Actual   results   could  differ
               significantly from those estimates.

               The estimates susceptible to significant change are those used in
               determining  the liability for future policy benefits and claims,
               deferred  income taxes and  deferred  policy  acquisition  costs.
               Although  some   variability  is  inherent  in  these  estimates,
               management believes that the amounts provided are adequate.

       (d)     Investments

               Investments in all debt  securities  and those equity  securities
               with readily  determinable  market values are classified into one
               of   three   categories:    held-    to-maturity,    trading   or
               available-for-sale.  Classification  of investments is based upon
               management's current intent. Debt securities which management has
               a  positive  intent  and  ability  to  hold  until  maturity  are
               classified  as  securities  held-to-maturity  and are  carried at
               amortized cost. Unrealized holding gains and losses on securities
               held-to-maturity  are not reflected in the financial  statements.
               Debt and equity  securities  that are  purchased  for  short-term
               resale  would  be  classified  as  trading  securities.   Trading
               securities  would  be  carried  at fair  value,  with  unrealized
               holding gains and losses included in earnings; the Company has no
               securities  classified as trading securities.  All other debt and
               equity  securities  not included in the above two  categories are
               classified   as   securities    available-for-sale.    Securities
               available-for-sale  are  carried at fair value,  with  unrealized
               holding   gains  and  losses   reported  in   accumulated   other
               comprehensive  income which is included in  stockholders'  equity
               after   adjustment   for  deferred   income  taxes  and  deferred
               acquisition costs related to universal life products.

               The   Company's   carrying   value   for   investments   in   the
               held-to-maturity and available-for-sale  categories is reduced to
               its estimated  realizable  value if a decline in the market value
               is deemed  other than  temporary.  Such  reductions  in  carrying
               values are recognized as realized losses and charged to income.

               Interest  on  fixed  maturities  and  short-term  investments  is
               recognized  to  income as it  accrues  on the  principal  amounts
               outstanding  adjusted for  amortization of premiums and discounts
               computed  by  the  scientific   method  which   approximates  the
               effective yield method.  Realized gains and losses on disposition
               of  investments   are  included  in  net  income.   The  cost  of
               investments  sold is  determined  on the specific  identification
               method.  Dividends  are  recorded  as income  on the  ex-dividend
               dates.

               Mortgage  loans on real estate and  mortgage  loans held as short
               term investments are reported at the unpaid  principal  balances,
               adjusted  for  amortization  of premium or accretion of discount,
               less allowance for possible losses.

               Policy  loans  and  student  loans  are  carried  at  the  unpaid
               principal  balance,  less any amounts deemed to be uncollectible.
               The  Company's  policy  is that  policy  loans  are not  made for
               amounts  in excess  of the cash  surrender  value of the  related
               policy. Accordingly, policy loans are fully collateralized by the
               related  liability  for future  policy  benefits for  traditional
               insurance policies and by the policyholders'  account balance for
               interest sensitive policies.

                                       24

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


       (e)     Cash and cash equivalents

               For  purposes  of the  statements  of  cash  flows,  the  Company
               considers all highly liquid debt  instruments  purchased  with an
               original maturity of three months or less to be cash equivalents.

       (f)     Deferred policy acquisition costs

               The  costs of  acquiring  new  business,  net of the  effects  of
               reinsurance,   principally  commissions  and  those  home  office
               expenses that tend to vary with and are primarily  related to the
               production  of new  business,  have been  deferred  to the extent
               recoverable   from  future  profit   margins.   Deferred   policy
               acquisition  costs  applicable to  traditional  life policies are
               being  amortized  over the  premium-paying  period of the related
               policies in a manner that will charge each year's  operations  in
               direct  proportion to the estimated premium revenue over the life
               of the  policies.  Premium  revenue  estimates are made using the
               same interest,  mortality and withdrawal  assumptions as are used
               for computing liabilities for future policy benefits. Acquisition
               costs relating to universal life policies are being  amortized in
               relation to the incidence of expected gross profits over the life
               of the  policies.  Gross  profits for  universal  life  contracts
               consist of revenue  representing  policy  charges for the cost of
               insurance,  administration of the contracts and surrender charges
               plus  investment  income less  expenses for interest  credited to
               policyholder account balances, policy administrative expenses and
               expected benefit  payments in excess of policy account  balances.
               Deferred  policy  acquisition  costs are  adjusted to reflect the
               impact  of  unrealized   gains  and  losses  on  fixed   maturity
               securities available for sale.

               The Company has performed tests concerning the  recoverability of
               deferred acquisition costs. These methods include those typically
               used by many companies in the life insurance  industry.  Further,
               the Company  conducts a sensitivity  analysis of its  assumptions
               that are used to  estimate  the future  expected  gross  profits,
               which management has used to determine the future  recoverability
               of the deferred acquisition costs.

       (g)     Property and Equipment

               Property and  equipment  are recorded at cost,  less  accumulated
               depreciation. Depreciation and amortization on capital leases and
               property and equipment  are  determined  using the  straight-line
               method over the estimated  useful lives of the assets or terms of
               the lease.  Expenditures for maintenance and repairs are expensed
               when incurred and betterments are  capitalized.  Gains and losses
               on sale of property and equipment are reflected in operations.

       (h)     Investment in affiliate

               The Company  holds  investments  in its parent  company's  common
               stock. This reciprocal stockholding is accounted for based on the
               treasury stock approach.  The value of the investment is recorded
               at  cost  and  will  be   classified   as  treasury   stock  upon
               consolidation with its parent company.

       (i)     Future policy benefits

               The  liability for future policy  benefits for  traditional  life
               policies  has been  provided on a net level  premium  basis based
               upon  estimated  investment  yields,  withdrawals,  mortality and
               other  assumptions that were appropriate at the time the policies
               were issued.  Such estimates are based upon industry data and the
               Company's  past  experience  as adjusted to provide for  possible
               adverse deviation from the estimates.

       (j)     Policyholder account balance

               Insurance  reserves for universal  life  policies are  determined
               following the retrospective  deposit method and consist of policy
               values that accrue to the benefit of the policyholder,  unreduced
               by surrender charges.

                                       25

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


       (k)     Recognition of premium revenue and related costs
               ------------------------------------------------

               Premiums are recognized as revenue as follows:

               Universal  life policies - premiums  received from  policyholders
               are   reported   as   deposits.   Cost   of   insurance,   policy
               administration  and surrender  charges which are charged  against
               the   policyholder   account  balance  during  the  period,   are
               recognized  as revenue as earned.  Amounts  assessed  against the
               policyholder  account balance that represent  compensation to the
               Company  for  services  to be  provided  in  future  periods  are
               reported as unearned  revenue and  recognized in income using the
               same assumptions and factors used to amortize  acquisition  costs
               capitalized.

               Annuity  contracts with flexible  terms - premiums  received from
               policyholders are reported as deposits.

               All other  policies  -  recognized  as revenue  over the  premium
               paying period.

       (l)     Income taxes

               Deferred tax assets and liabilities are recognized for the future
               tax   consequences   attributable  to  differences   between  the
               financial  statement  carrying  amounts  of  existing  assets and
               liabilities and their  respective tax bases.  Deferred tax assets
               and  liabilities are measured using enacted tax rates expected to
               apply to  taxable  income in the years in which  those  temporary
               differences  are expected to be recovered or settled.  The effect
               on deferred tax assets and  liabilities  of a change in tax rates
               is recognized in income in the period that includes the enactment
               date.

       (m)     Impairment of Long-Lived Assets

               The Company reviews its long-lived assets for impairment whenever
               events or changes in  circumstances  indicate  that the  carrying
               amount of the assets may not be recoverable through  undiscounted
               future cash flows.  If it is determined  that an impairment  loss
               has  occurred  based  on  expected  cash  flows,   such  loss  is
               recognized in the statement of operations.

       (n)     Earnings (Loss) Per Common Share

               The  computation  of basic  earnings  (loss) per common  share is
               based on the weighted average number of shares outstanding during
               each year.

               The computation of diluted  earnings per common share is based on
               the  weighted  average  number of shares  outstanding  during the
               year, plus the common stock equivalents that would arise from the
               exercise of stock options  outstanding,  using the treasury stock
               method and the average  market  price per share  during the year.
               There were no common  stock  equivalents  outstanding  during the
               years ended December 31, 2001 and 2000.  Common stock equivalents
               are  not  included  in the  diluted  earnings  (loss)  per  share
               calculation when their effect is antidilutive.

       (o)     Reclassification

               Certain  amounts   presented  in  the  2000  and  1999  financial
               statements  have  been   reclassified  to  conform  to  the  2001
               presentation.

       (p)     Pending accounting change

               In June 2001,  the Financial  Accounting  Standards  Board issued
               Statements of Financial  Accounting  Standards No. 141, "Business
               Combinations"  (SFAS No.  141) and No. 142,  "Goodwill  and Other
               Intangibles  SFAS  No.  142).  SFAS  No.  141  requires  that the
               purchase   method  of   accounting   be  used  for  all  business
               combinations  initiated  after June 30, 2001.  The statement also
               establishes

                                       26

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


               specific criteria for recognition of intangible assets separately
               from goodwill and requires  unallocated  negative  goodwill to be
               written off  immediately as an  extraordinary  gain. SFAS No. 142
               primarily  addresses the  accounting  for goodwill and intangible
               assets subsequent to their  acquisition.  The statement  requires
               that goodwill and indefinite lived intangible assets no longer be
               amortized  and be tested for  impairment at least  annually.  The
               amortization  period of intangible  assets with finite lives will
               no longer be limited to forty years.

               In August 2001, the Financial  Accounting  Standards Board issued
               Statement of Financial  Accounting Standards No. 144, "Accounting
               for  the  Impairment  of  Long-Lived   Assets".   This  Statement
               addresses  financial  accounting and reporting for the impairment
               of long-lived assets and for long-lived assets to be disposed of.
               This Statement  supersedes FASB Statement 121 and APB Opinion No.
               30.  However,   this  Statement   retains   certain   fundamental
               provisions of Statement 121, namely;  recognition and measurement
               of the  impairment of long-lived  assets to be held and used, and
               measurement  of long- lived assets to be disposed of by sale. The
               Statement  also retains the  requirement  of Opinion 30 to report
               discontinued  operations  separately from continuing  operations.
               This  Statement also Amends ARB No. 51 to eliminate the exception
               of consolidation  for a temporarily  controlled  subsidiary.  The
               provisions   of  this   statement  are  effective  for  financial
               statements  issued for fiscal years  beginning after December 15,
               2001.

               In June 2001,  the Financial  Accounting  Standards  Board issued
               Statement of Financial  Accounting Standards No. 143, "Accounting
               for  Asset  Retirement  Obligations".  This  Statement  addresses
               financial  accounting  and reporting for  obligations  associated
               with  the  retirement  of  tangible  long-lived  assets  and  the
               associated  asset retirement  costs.  This Statement is effective
               for financial  statements issued for fiscal years beginning after
               June 15, 2002.

               The  adoption  of  these  statements  is not  expected  to have a
               significant impact on the Company's financial statements.

               The Company adopted Statement of Financial  Accounting  Standards
               No. 140,  Accounting  for  Transfers  and  Servicing of Financing
               Assets and Extinguishments of Liabilities - a replacement of FASB
               Statement  No.  125 (FAS  140) on April 1,  2001.  This  standard
               revises the  standards for  accounting  for  securitizations  and
               other  transfers of financial  assets and collateral and requires
               certain   disclosures,   but  carries  over  most  of  FAS  125's
               provisions without  reconsideration.  This Statement is effective
               for  recognition  and  reclassification  of  collateral  and  for
               disclosures   relative   to   securitization   transactions   and
               collateral  for fiscal years ending after  December 15, 2000. The
               adoption  of FAS  140  did  not  have a  material  impact  on the
               Company's financial position or results of operations.

2.     Basis of financial statements
       -----------------------------

     The more significant U.S. generally accepted accounting  principles applied
     in the preparation of financial  statements that differ from life insurance
     statutory  accounting  practices  prescribed  or  permitted  by  regulatory
     authorities are as follows:

          a.   Costs of acquiring  new  business  are  deferred  and  amortized,
               rather than being charged to operations as incurred.

          b.   The liability for future policy benefits and expenses is based on
               reasonable estimates of expected mortality,  morbidity, interest,
               withdrawals  and  future  maintenance  and  settlement  expenses,
               rather than on statutory rates for mortality and interest.

          c.   The liability for  policyholder  funds  associated with universal
               life and certain annuity contracts are based on the provisions of
               Statement of Financial  Accounting  Standards No. 97, rather than
               on the statutory rates for mortality and interest.

                                       27

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)

          d.   Investments  in  securities  are  reported as  described  in Note
               1.(d),  rather than in accordance with valuations  established by
               the National  Association  of Insurance  Commissioners  ("NAIC").
               Pursuant to NAIC valuations,  bonds eligible for amortization are
               reported at  amortized  value;  other  securities  are carried at
               values prescribed by or deemed acceptable by NAIC.

          e.   Deferred income taxes,  if applicable,  are recognized for future
               tax   consequences   attributable  to  differences   between  the
               financial  statement  carrying  amounts  of  existing  assets and
               liabilities and their respective tax bases.

          f.   The statutory  liabilities  for the asset  valuation  reserve and
               interest  maintenance  reserve  have  not  been  provided  in the
               financial statements.

          g.   Certain   assets,   principally   receivables   from  agents  and
               equipment,  are  reported  as assets  rather  than being  charged
               directly to surplus.

          h.   Costs  attributable  to the public  offering of the common shares
               have been  reclassified  from  accumulated  surplus to capital in
               excess of par.

          i.   Realized  gains or losses on the sale or maturity of  investments
               are  included in the  statement of income and not recorded net of
               taxes and amounts transferred to the interest maintenance reserve
               as required by statutory accounting practices.

          j.   Certain proceeds from a note payable (note 9) that are treated as
               shareholders'  equity for  statutory  purposes  are  treated as a
               liability under U.S. generally accepted accounting principles.

          k.   Reinsurance  assets and liabilities are reported on a gross basis
               rather  than  shown on a net  basis  as  permitted  by  statutory
               accounting practices.

          A reconciliation of net income (loss) for the years ended December 31,
          2001, 2000, 1999 and shareholders'  equity as of December 31, 2001 and
          2000 between the amounts reported on a statutory basis and the related
          amounts presented on the basis of U.S. generally  accepted  accounting
          principles is as follows:

<TABLE>
<CAPTION>
                                        Net Income (loss)                     Shareholders'
                                          Years ended                            Equity
                                          December 31,                         December 31,
                                          ------------                       --------------
                           2001              2000           1999          2001             2000
                           ----              ----           ----          ----             ----
<S>                   <C>             <C>             <C>             <C>             <C>
As reported
on a statutory
 basis                $   (429,143)   $     80,477    $    533,233    $  8,459,703    $  8,405,211
                      ------------    ------------    ------------    ------------    ------------
Adjustments:
  Deferred policy
  acquisition
  costs, net              (298,428)        408,805        (709,737)     12,974,390      13,211,413
Future policy
  benefits, un-
  earned premiums
  and policy-
  holders' funds         1,191,046        (203,129)      1,097,132      (5,201,550)     (6,355,753)
 Deferred
  income taxes            (159,189)         15,008         382,364        (710,787)       (500,605)
 Asset valuation
  reserve                       --              --              --         592,535         347,134
 Interest main-
  tenance reserve          (34,017)        (36,063)        (35,191)        465,082         499,099
 Non-admitted
  assets                  (100,000)             --              --       1,190,406       1,412,229
 Unrealized gains
  -SFAS 115                     --              --              --         664,326         666,899
Capital and
  surplus note                  --              --              --      (1,000,000)     (1,000,000)
 Other adjustments,
  net                      (99,293)       (104,838)       (635,843)       (530,835)       (487,092)
                      ------------    ------------    ------------    ------------    ------------
 Net difference            500,119          79,783          98,725       8,443,567       7,793,324
                      ------------    ------------    ------------    ------------    ------------
As reported on a
 GAAP basis           $     70,976    $    160,260    $    631,958    $ 16,903,270    $ 16,198,535
                      ============    ============    ============    ============    ============
</TABLE>

                                       28

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


          Under  applicable  laws and  regulations,  the  Company is required to
          maintain minimum surplus as to policyholders, determined in accordance
          with  regulatory  accounting  practices,  in the  aggregate  amount of
          approximately $1,900,000.

          The payment of dividends  by the Company is subject to the  regulation
          of the State of Florida Department of Insurance.

          The Insurance  Commissioner's approval is not required if the dividend
          is equal to or less  than the  greater  of:  (a) 10% of the  Company's
          surplus as to  policyholders'  derived  from  realized  net  operating
          profits on its  business and net realized  capital  gains;  or (b) the
          Company's entire net operating  profits and realized net capital gains
          derived during the immediately preceding calendar year, if the Company
          will have surplus as to  policyholders  equal to or exceeding  115% of
          the minimum required  statutory surplus as to policyholders  after the
          dividend is declared and paid. As a result of such  restrictions,  the
          maximum  dividend which may be paid by the Company during 2001 without
          prior  approval is  approximately  $97,000.  Accordingly,  GAAP excess
          earnings over a statutory basis are not available for dividends.

          The Risk-Based  Capital  ("RBC") for Life and/or Health Insurers Model
          Act (the  "Model  Act") was  adopted by the  National  Association  of
          Insurance  Commissioners (NAIC) in 1992. The main purpose of the Model
          Act is to provide a tool for  insurance  regulators  to  evaluate  the
          capital of insurers.  Based on calculations using the appropriate NAIC
          formula,  the Company  exceeded the RBC  requirements  at December 31,
          2001.

3.   Investments

         (a)      Equity securities and fixed maturities

          Equity securities  consist of $372,183 and $358,932 of common stock at
          fair value at December 31, 2001 and 2000 respectively.

          Unrealized  (depreciation)   appreciation  in  investments  in  equity
          securities  for the years ended  December 31, 2001,  2000, and 1999 is
          $24,632, $(121,203) and $112,598, respectively.

          The amortized  cost and estimated  fair values of  investments in debt
          securities are as follows:
<TABLE>
<CAPTION>

                                                    Gross             Gross     Estimated
                                      Amortized   Unrealized        Unrealized    Fair
                                         Cost        Gains            Losses      Value
                                      ---------    ----------        ----------  ---------
<S>                                <C>           <C>              <C>         <C>
December 31, 2001:
     Held-to-maturity:
       U.S. Treasury securities
       and obligations of U.S.
       government corporations
       and agencies (guaranteed)   $   500,000   $     1,560       $    --   $   501,560

     Corporate securities            2,092,104        97,916        29,771     2,160,249

     Mortgage-backed securities        564,546        24,539            --       589,085
                                   -----------   -----------   -----------   -----------
                                     3,156,650       124,015        29,771     3,250,894
                                   -----------   -----------   -----------   -----------

     Available-for-sale:
       U.S. Treasury securities
       and obligations of U.S.
       government corporations
       and agencies (guaranteed)       595,585        58,415            --       654,000

     Corporate securities           19,864,248       846,483            --    20,710,731

     Mortgage-backed securities             --            --            --            --
                                   -----------   -----------   -----------   -----------
                                    20,459,833       904,898            --    21,364,731
                                   -----------   -----------   -----------   -----------
                                   $23,616,483   $ 1,028,913   $    29,771   $24,615,625
                                   ===========   ===========   ===========   ===========
</TABLE>

                                       29

<PAGE>

<TABLE>
<CAPTION>


                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


                                                       Gross             Gross    Estimated
                                     Amortized       Unrealized       Unrealized    Fair
                                       Cost            Gains            Losses      Value
                                     --------        ---------        ----------  ---------
<S>                               <C>             <C>               <C>        <C>
December 31, 2000:
     Held-to-maturity:
       U.S. Treasury
       securities and obligations
       of U.S. government
       corporations and
       agencies (guaranteed)        $ 2,001,985   $    13,327        $   --   $ 2,015,312

     Corporate securities             2,587,861        64,419       188,876     2,463,404

     Mortgage-backed
       securities                       784,358         9,958            --       794,316
                                    -----------   -----------   -----------   -----------
                                      5,374,204        87,704       188,876     5,273,032
                                    -----------   -----------   -----------   -----------


     Available-for-sale:
       U.S. Treasury
       securities and obligations
       of U.S. government
       corporations and
       agencies (guaranteed)          3,367,086        45,003           648     3,411,441

     Corporate securities            19,987,436        91,913       188,214    19,891,135

     Mortgage-backed
       securities                        64,836            71            --        64,907
                                    -----------   -----------   -----------   -----------
                                     23,419,358       136,987       188,862    23,367,483
                                    -----------   -----------   -----------   -----------
                                    $28,793,562   $   224,691   $   377,738   $28,640,515
                                    ===========   ===========   ===========   ===========
</TABLE>

     Fair values reflected in available-for-sale and held-to-maturity categories
     are based on NAIC  values,  versus  values  associated  with normal  market
     pricing  services.   The  estimated  difference  for  both  categories  was
     immaterial for all years presented.

     Unrealized appreciation (depreciation) of fixed maturities for years ending
     December 31, 2001,  2000, 1999 is $1,152,189,  $678,644,  and  $(1,747,058)
     respectively.

     The amortized cost and estimated fair value of fixed maturities at December
     31,  2001,  by  contractual   maturity,   are  summarized  below.  Expected
     maturities will differ from contractual  maturities  because  borrowers may
     have the  right  to call or  prepay  obligations  with or  without  call or
     prepayment penalties.

     Fixed maturity securities held-to-maturity:

                                                    Amortized    Estimated
                                                      Cost       Fair value
       Due in 2002                              $   750,000   $   752,435
       Due in 2003 through 2006                     379,251       406,099
       Due in 2007 through 2011                     957,321       953,958
       Due after 2011                               505,532       549,317

       Mortgage-backed securities                   564,546       589,085
                                                -----------   -----------
                                                $ 3,156,650   $ 3,250,894
                                                ===========   ===========

Fixed maturity securities available-for-sale:

       Due in 2002                              $ 3,321,893   $ 3,359,944
       Due in 2003 through 2006                  13,341,257    14,001,917
       Due in 2007 through 2011                   3,698,902     3,896,995
       Due after 2011                                97,781       105,875

       Mortgage-backed securities                        --            --
                                                -----------   -----------
                                                $20,459,833   $21,364,731
                                                ===========   ===========

                                       30

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


          Proceeds  from the sale of  equity  securities  and  fixed  maturities
          available  for sale and the  related  realized  gains and  losses  are
          summarized as follows:

                                                2001        2000        1999
                                            ----------   ----------   ----------
Proceeds from sale of
    equity securities                       $  794,356   $     --     $     --
                                            ----------   ----------   ----------

Proceeds from sale of
    fixed maturities
    available-for-sale                      $2,814,816   $1,225,522   $2,739,662
                                            ----------   ----------   ----------

Realized gains (losses) Fixed maturities:
Gross realized gains                           $    --      $    --   $  --
Gross realized (losses)                             --           --      --
Equity securities:
Gross realized gains                                --           --      --
Gross realized (losses)                             --           --      --
                                            ----------   ----------   ----------
                                            $      --    $       --   $     --
                                            ==========   ==========   ==========

     Certain of the fixed maturity securities  classified as  available-for-sale
     and  held-to-maturity  were called during the year ended December 31, 2001,
     2000, 1999 resulting in the following realized gains and losses:

                             2001    2000   1999
                             ----    ----   ----
Held-to-maturity:
    Gross realized gains   $   --   $  --   $  --
Available-for-sale:
    Gross realized gains       --      --      --
                           ------   -----   -----
                           $   --   $  --   $  --
                           ======   =====   =====

     Investments, aggregated by issuer, in excess of 10% of shareholders' equity
     (before net unrealized gains and losses on  available-for-sale  securities)
     at December 31, 2001 and 2000, other than investments  issued or guaranteed
     by the United States government are as follows:

         2001                                   Carrying Amount
         ----                                   ---------------
             Federal Express                       $2,036,560
             Dean Witter Discover                   4,252,500
             Philip Morris Inc.                     5,813,260

         2000
             Federal Express                       $2,072,820
             Dean Witter Discover                   4,105,788
             Philip Morris, Inc.                    5,469,305

      (b)   Concentrations of credit risk

          At December  31, 2001 and 2000,  the Company  owned  $482,000  and $0,
          respectively, of less-than-investment grade corporate debt securities.
          The Company also invests in subsidized and unsubsidized  student loans
          totaling   $95,819  and  $61,576  at  December   31,  2001  and  2000,
          respectively, which are guaranteed by the U.S. government.  Subsequent
          to December  31,  2001,  all of these loans were sold at their  unpaid
          principal balance.

                                       31

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


      (c)   Investment income

          Net investment income for the years ended December 31, 2001, 2000, and
          1999 consists of the following:

                             2001         2000        1999
                             ----         ----        ----
Interest:
Fixed maturities         $1,790,992   $2,014,883   $2,123,671
Policy and student
     loans                  468,904      505,319      579,774
Short-term
     investments          1,105,434      937,077      859,699
Mortgage loans              206,212      190,068       25,759
Rental income               304,879      278,302      319,758

Dividends on equity
     securities common
     stock, including
      mutual fund                --       33,412       15,610
                         ----------   ----------   ----------
                          3,876,421    3,959,061    3,924,271
Less investment
     expenses                 9,455       23,454       14,898
                         ----------   ----------   ----------
                         $3,866,966   $3,935,607   $3,909,373
                         ==========   ==========   ==========

      (d)   Investments on deposit

          In order to comply with  statutory  regulations,  investments  were on
          deposit with the Insurance Departments of certain states as follows:

                     2001        2000         1999
                     ----        ----         ----

Florida          $1,707,042   $1,708,735   $1,708,530
Alabama             100,737      100,199      100,702
South Carolina      302,210      300,595      302,106
Georgia             252,933      250,496      251,755
Indiana             202,347      200,000      199,855
                 ----------   ----------   ----------

                 $2,565,269   $2,560,025   $2,562,948
                 ==========   ==========   ==========

          Certain of these assets,  totaling  approximately $850,000 for each of
          the years ended  December 31, 2001 and 2000,  are  restricted  for the
          future benefit of policyholders in a particular state.

4.    Deferred policy acquisition costs
      ---------------------------------

          Deferred  policy  acquisition  costs at December 31, 2001,  2000, 1999
          consist of the following:

                                          2001           2000           1999
                                          ----           ----           ----
Deferred policy acquisition
     costs at beginning
     of year                        $ 13,211,413   $ 12,874,219    $ 13,583,956
Policy acquisition costs deferred:
Commissions                            1,249,453      1,384,782       1,223,187
Underwriting & issue costs               269,070        398,622         440,200
Other                                    380,448        422,721         421,051
Change in unrealized
     appreciation
     (depreciation)                       61,405        (71,611)        235,048
                                    ------------   ------------    ------------
                                       1,960,376      2,134,514       2,319,486
Amortization of
     deferred policy
     acquisition costs                (2,197,399)    (1,797,320)     (3,029,223)
                                    ------------   ------------    ------------
Deferred policy
     acquisition costs
     at end of year                 $ 12,974,390   $ 13,211,413    $ 12,874,219
                                    ============   ============    ============

                                       32

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


5.    Property and equipment

      Property and equipment consists of the following:

                                 December 31,   December 31,
                                     2001          2000
                                ------------  ------------
Land                            $   982,027    $   982,027
Building and improvements         2,397,325      2,348,973
Furniture and equipment             956,533        945,345
                                -----------    -----------
                                  4,335,885      4,276,345
Less accumulated depreciation    (1,844,823)    (1,733,961)
                                -----------    -----------
                                $ 2,491,062    $ 2,542,384
                                ===========    ===========


     Depreciation  expense for the years ended  December  31, 2001,  2000,  1999
     totaled $129,330, $115,425, and $135,145, respectively.

6.    Future policy benefits

     At  December  31,  2001 and 2000,  future  policy  benefits,  exclusive  of
     universal life and flexible term annuities consist of the following:

                         December 31,   December 31,
                            2001          2000
                         -----------    -----------

Life insurance            $2,600,757   $2,677,841
Annuities                    193,744      235,032
Accident & health
  insurance                  107,098       53,067
                          ----------   ----------
Total life & health
 future policy benefits   $2,901,599   $2,965,940
                          ==========   ==========


     Life  insurance  in-force  aggregated  approximately  $1.4 billion and $1.2
     billion  at  December  31,  2001,  and 2000,  respectively.  Mortality  and
     withdrawal   assumptions  are  based  upon  the  Company's  experience  and
     actuarial  judgment with an allowance for possible  unfavorable  deviations
     from the expected experience.

     The mortality tables used in calculating benefit reserves for non universal
     life  contracts are the  1965-1970  Basic Select and Ultimate for males and
     the 1980 U.S.  Population  mortality  table  modified for company  expected
     experience.

     For non-universal life policies written during 1983 through 1988,  interest
     rates used are 8.0 percent for policy years one through five, decreasing by
     .1 percent per year for policy years six through twenty, to 6.5 percent for
     policy years  twenty-one  and  thereafter.  For certain non universal  life
     contracts  written in  1996-2001,  interest  rates of 6.75% level have been
     assumed.  For  non-universal  life  policies  written  in 1982  and  prior,
     interest  rates  vary,  depending  on policy  type,  from 7 percent for all
     policy  years to 6 percent for policy  years one through five and 5 percent
     for years six and  thereafter.  For universal  life policies  written since
     1988,  the interest rate used is a credited rate  generally  based upon the
     Company's investment yield less 1.25%.

7.    Reinsurance

     The Company routinely cedes and, to a limited extent,  assumes  reinsurance
     to limit its  exposure to loss on any single  insured.  Ceded  insurance is
     treated as a risk and liability of the assuming companies.

     As of December 31, 2001,  ordinary  insurance coverage in excess of $75,000
     is  reinsured;  however  for some  policies  previously  issued,  the first
     $30,000,  $40,000  or  $50,000  was  retained  and the  excess  ceded.  The
     retention limit for some substandard risks is less than $75,000.  Reinsured
     risks  would give rise to  liability  to the  Company in the event that the
     reinsuring company were unable to

                                       33

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


     meet its  obligations  under the  reinsurance  agreement  in force,  as the
     Company remains  primarily liable for such  obligations.  Under reinsurance
     agreements exclusive of the MEGA agreement discussed below, the Company has
     ceded premium of $278,828,  $275,288,  and $424,255 included in reinsurance
     premiums ceded, and received recoveries of $624,314, $131,886 and $162,871,
     included in annuity,  death and other benefits for the years ended December
     31, 2001, 2000, 1999, respectively.

     On December 31, 1992, the Company entered into a reinsurance agreement with
     The MEGA Life and Health Insurance Company ("MEGA"), ceding an 18% share of
     all  universal  life policies in force at December 31, 1992 as a measure to
     manage the future  needs of the  Company.  The  reinsurance  agreement is a
     co-insurance  treaty  entitling  the assuming  company to 18% of all future
     premiums,  while making them  responsible  for 18% of all future claims and
     policyholder loans relating to the ceded policies. In addition, the Company
     receives certain commission and expense reimbursements.

     For the years ended  December  31,  2001,  2000,  1999,  the Company  ceded
     premiums  to  MEGA  of  $365,247,   $419,353  and  $424,592,   included  in
     reinsurance  ceded,  and  received  recoveries  of  $494,683,  $478,485 and
     $576,194, included in annuity, death and other benefits,  respectively. The
     funds held related to  reinsurance  treaties of $1,379,640  and  $1,417,216
     represent  the 18% share of policy loans ceded to the reinsurer at December
     31, 2001 and 2000, respectively.

8.    Notes payable

     As of  December  31,  2001,  the  Company  had an unused  line of credit of
     $5,000,000  which is secured by student  loans  equaling 115% of the unpaid
     principal balance. The facility bears interest at a variable rate per annum
     payable monthly and expires on September 18, 2007.

9.    Note payable to related party
      -----------------------------

     A note  payable to a related  party  consists  of amounts  due on demand to
     Security   National  Life   Insurance   Company.   The  note  qualifies  as
     shareholders'  equity for statutory  accounting purposes in accordance with
     Section  628.401 of the Florida  Statutes.  At December 31, 2001,  the note
     bears interest at 9.0% percent (payable  monthly);  principal  repayment is
     contingent  upon the  Company  maintaining  statutory  surplus in excess of
     $1,900,000 and obtaining  approval in advance by the Florida  Department of
     Insurance.  Interest expense relating to the balance of the note payable to
     the related party during 2001, 2000, 1999 aggregated $97,000, $105,000, and
     $90,000 respectively.

10.    Income taxes

     The Company's income tax liability at December 31 is summarized as follows:

                                 2001            2000
                                 ----            ----

         Current                $  --         $ 57,471
         Deferred               895,437        500,605
                               --------       --------
         Total                 $895,437       $558,076
                               ========       ========

                                       34

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


     Total  income  taxes  including  taxes  on  the  change  in  the  value  of
     investments  for the years ended December 31, 2001,  2000, and 1999 were as
     follows:

                           2001        2000         1999
                           ----        ----         ----

Tax expense (benefit)
  in operations         $  16,865   $  38,105    $ 150,168
Tax on unrealized
  appreciation
  (depreciation) of
  investments             372,208     235,481     (532,532)
                        ---------   ---------    ---------
                        $ 389,073   $ 273,586    $(382,364)
                        =========   =========    =========

     Income tax expense  (benefit) for the years ended December 31, 2001,  2000,
     1999 is summarized as follows:

                2001        2000        1999
                ----        ----        ----

Current:
Federal     $  (5,759)   $  40,812    $ 123,268
State              --        6,719       15,891
            ---------    ---------    ---------

               (5,759)      47,531      139,159
            ---------    ---------    ---------
Deferred:
 Federal       20,691       (7,073)       9,693
 State          1,933       (2,353)       1,316
            ---------    ---------    ---------

               22,624       (9,426)      11,009
            ---------    ---------    ---------

            $  16,865    $  38,105    $ 150,168
            =========    =========    =========


     Income tax expense  (benefit) for the years ended December 31, 2001,  2000,
     1999 differs from  "expected"  tax  (computed by applying the U.S.  federal
     income tax rate to pretax income) as a result of the following:

                                         2001        2000         1999
                                         ----        ----         ----
Computed "expected" tax expense
   (benefit)                         $  29,866    $  67,444    $ 265,923
Increase (reduction) in income
   taxes resulting from:
     Small life insurance
          company deduction             (7,162)      (3,485)    (139,195)
     Changes in the valuation
          allowance for deferred
          tax assets, allocated to
          income tax expense            (7,115)     (27,338)      17,590
   State taxes, net of federal
     income tax benefit                  1,276        1,484        5,850
                                     ---------    ---------    ---------
                                     $  16,865    $  38,105    $ 150,168
                                     =========    =========    =========

     Under  tax laws in effect  prior to 1984,  a  portion  of a life  insurance
     company's gain from  operations was not currently taxed but was accumulated
     in a memorandum  "Policyholders'  Surplus  Account." As a result of the Tax
     Reform Act of 1984, the balance of the  Policyholders'  Surplus Account has
     been  frozen as of  December  31, 1983 and no  additional  amounts  will be
     accumulated in this account.  However,  distributions from the account will
     continue  to be  taxed,  as under  previous  law,  if any of the  following
     conditions occur:

                                       35

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


          a.   The Policyholders' Surplus exceeds a prescribed maximum, or;
          b.   Distributions,   other   than  stock   dividends,   are  made  to
               shareholders in excess of  Shareholders'  Surplus,  as defined by
               prior law, or;
          c.   The entity  ceases to qualify for  taxation  as a life  insurance
               company, or;
          d.   the tax deferred status of the Policyholder's  Surplus Account is
               modified by future tax legislation.

     At December 31, 2001,  the balance of the  Policyholders'  Surplus  account
     aggregated  approximately  $236,000.  The Company has not recorded deferred
     income taxes totaling  approximately  $80,000 relating to this amount as it
     has no plan to  distribute  the  amounts in  Policyholders'  Surplus in the
     foreseeable  future.  The Tax  Reform  Act of 1986  enacted a new  separate
     parallel  tax  system  referred  to as the  Alternative  Minimum  Tax (AMT)
     system.  AMT is based on a flat rate  applied to a broader tax base.  It is
     calculated separately from the regular federal income tax and the higher of
     the two  taxes is paid.  The  excess of the AMT over  regular  tax is a tax
     credit,  which can be carried  forward  indefinitely  to reduce regular tax
     liabilities of future years. In 2001,  2000, 1999, AMT exceeded regular tax
     by $-0-, $19,854, and $27,338,  respectively. At December 31, 2001, the AMT
     tax credit available to reduce future regular tax totaled $262,528.

     The tax  effect of  temporary  differences  that  give rise to  significant
     portions  of the  deferred  tax  assets and  deferred  tax  liabilities  at
     December 31, 2001 and 2000 are presented below:

                                           2001           2000
                                        ----------     ---------

Deferred tax assets:
Unearned revenue, due to deferral of
  "front-end" fee                      $ 1,829,505    $ 1,939,023
Policy liabilities and accruals,
   principally due to adjustments
   to reserves for tax purposes          1,683,457      2,003,251
Deferred policy acquisition costs
  related to unrealized appreciation
  (depreciation)                           128,365        137,601

Alternative minimum tax credit
   carry forwards                          269,643        262,528
                                       -----------    -----------

Total gross deferred tax assets          3,910,970      4,342,403
Less valuation allowance                  (269,643)      (262,528)
                                       -----------    -----------

Net deferred tax assets                  3,641,327      4,079,875
                                       -----------    -----------

Deferred tax liabilities:
Deferred policy acquisition costs       (4,469,612)    (4,565,655)
Other                                      294,104        (22,576)
Unrealized (appreciation)
depreciation of securities                (361,256)         7,751
                                       -----------    -----------

Total gross deferred tax liabilities    (4,536,764)    (4,580,480)
                                       -----------    -----------

Net deferred tax (liability)           $  (895,437)   $  (500,605)
                                       ===========    ===========

     The net  change  in the  total  valuation  allowance  for the  years  ended
     December  31,  2001  and  2000  was an  increase  of  $7,115  and  $27,338,
     respectively.

                                       36

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


     In assessing the realizability of deferred tax assets, management considers
     whether it is more likely than not that some portion or all of the deferred
     tax assets will not be realized.  The ultimate  realization of deferred tax
     assets is dependent upon the generation of future taxable income during the
     periods in which those temporary differences become deductible.  Management
     considers the  scheduled  reversal of deferred tax  liabilities,  projected
     future  taxable  income,  and  tax  planning   strategies  in  making  this
     assessment.   Based  upon  the  level  of  historical  taxable  income  and
     projections  for future  taxable income over the periods which the deferred
     tax assets are deductible,  management  believes it is more likely than not
     the Company will realize the benefits of these deductible differences,  net
     of the existing valuation allowances at December 31, 2001.

11.     Related party transactions

     The Company's  general  agent,  Insuradyne  Corporation,  is a wholly-owned
     subsidiary of Security National Financial Corporation.  The balances due to
     an affiliated insurance agency reflected in the accompanying balance sheets
     principally  represent  earned  commission due to  Insuradyne.  The Company
     incurred commission expense to Insuradyne  aggregating  $122,787,  $180,941
     and $175,409,  in 2001,  2000,  and 1999,  respectively.  These amounts are
     included  as  components  of   acquisition   costs   deferred  and  related
     amortization.  Insuradyne incurred  insurance-related  expenses aggregating
     $77, $1,147, and $495 in 2001, 2000, 1999, respectively.

     Effective  December 31, 1998,  the Company  entered into an  Administrative
     Services  Agreement with its ultimate  parent Security  National  Financial
     Corporation  (Security  National).  Under the  terms of the  Administrative
     Services  Agreement,  all of the Company's  employees  became  employees of
     Security National.  Administrative  functions  previously  performed by the
     Company are now being  furnished to the Company  under the  Agreement.  The
     Company pays to Security National $250,000 per month or $3 million per year
     for these administrative services.

     On  December  28,  1998 the  Company  entered  into a Loan  Funding and Fee
     Agreement and Agency  Agreement (the  "Agreement")  with Security  National
     Mortgage Company  ("SNMC"),  a subsidiary of Security  National.  Under the
     terms of the Agreement, SNMC assigns their interest in residential mortgage
     loans that have been pre-sold to third party investors to the Company.  The
     Company  purchases  these  loans and holds them as  short-term  investments
     until it receives the proceeds from the third party investors.  The Company
     receives  interest  income  from SNMC  based  upon how long the loans  were
     outstanding. At December 31, 2001 and 2000 the Company had outstanding loan
     purchases  of  $13,860,534  and  $7,814,813,   respectively.   Included  in
     investment income is $984,872 and $732,691 for the years ended December 31,
     2001 and 2000, respectively.

     The  Company  received  for the years  ended  December  31,  2001 and 2000,
     $132,141 and $182,248 respectively, as rental income from Security National
     for a lease of office space in the  Company's  building  under the terms of
     the Administrative Services Agreement.

     The  Company  received  for the years  ended  December  31,  2001 and 2000,
     $77,394  and  $123,393  respectively,  in  interest  income  from  Security
     National for short-term  loans of which $344,308 and $0 were outstanding as
     of December 31, 2001 and 2000, respectively.

                                       37

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


12.     Earnings per share

     The  following  table  sets  forth the  computation  of basic  and  diluted
     earnings per share:

                                            2001        2000         1999
                                            ----        ----         ----
Numerator for basic and diluted
   Earnings per share:
      Net income                       $   70,976   $  160,260   $  631,958
Denominator:
      Denominator for basic
        earnings per share
        weighted average shares         1,907,989    1,907,989    1,907,989

      Effective dilutive securities:
        Agent stock options                 --           --           --

Dilutive potential common shares            --           --           --
Denominator for diluted
      earnings per share weighted
      average shares and assumed
        conversions                     1,907,989    1,907,989    1,907,989
Basic earnings per share                     $.04         $.08         $.33
Diluted earnings per share                   $.04         $.08         $.33

13.     Agents' incentive stock bonus plan
        ----------------------------------

     The Company has an incentive bonus plan for agents that was adopted January
     1, 1995 by the Company's Board of Directors and effective  through December
     31, 2001.  Agents that  qualify  under the plan have the option to purchase
     shares of common stock.  The number of shares of common stock is determined
     on the date of the award as the number of whole  shares  equal to the award
     based on the  applicable  stock  price on December 31 of the year the agent
     has  qualified for the bonus.  For each share of common stock  purchased by
     the agent,  the Company will  concurrently  award an  equivalent  number of
     shares to the agent.  Awards  were  granted  in 1999  under this plan.  The
     Company incurred expenses of approximately $5,010 relating to the Company's
     matching  number of shares.  There were no awards granted in 2001 and 2000.
     If the agent does not purchase  the shares  within the  designated  period,
     then the agent forfeits their rights to purchase the shares of common stock
     as well as the matching number of shares to be contributed by the Company.

14.     Disclosures about fair value of financial instruments
        -----------------------------------------------------

     Statement of Financial  Accounting Standards No. 107 Disclosures About Fair
     Value of Financial  Instruments (SFAS 107) requires the Company to disclose
     estimated fair value  information.  The following  methods and  assumptions
     were used by the Company in estimating fair values of financial instruments
     as disclosed herein:

     Cash and cash  equivalents,  short-term  investments and policy and student
     loans:  The  carrying  amount  reported  in the  balance  sheet  for  these
     instruments approximate their fair value.

     Investment securities  available-for-sale and held-to-maturity:  Fair value
     for fixed  maturity and equity  securities is based on quoted market prices
     at the reporting date for those or similar investments.

     Policyholders'  account balances:  The fair values for policyholder account
     balances are based on their approximate surrender values.

                                       38

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


     The following table presents the carrying amounts and estimated fair values
     of financial instruments held at December 31, 2001 and 2000. The fair value
     of a financial  instrument is the amount at which the  instrument  could be
     exchanged in a current transaction between willing parties.

                                    2001                         2000
                           ----------------------       -----------------------
                           Carrying     Estimated      Carrying      Estimated
                            amount      fair value      amount       fair value
                           --------     ----------     --------      ----------
Financial assets:
Fixed maturities
   held-to-maturity
   (see note 3)          $ 3,156,650   $ 3,250,894   $ 5,374,204   $ 5,273,032
Fixed maturities
   available-for-
   sale (see note 3)      21,364,731    21,364,731    23,367,483    23,367,483
Equity securities
   available-for-sale        372,183       372,183       358,932       358,932
Mortgage loans             2,268,292     2,268,292     2,298,163     2,298,163
Policy and student loans   8,181,223     8,181,223     8,220,736     8,220,736
Short-term investments    13,860,534    13,860,534     7,814,813     7,814,813
Cash and cash equivalents  1,969,055     1,969,055     2,513,668     2,513,668

Financial liabilities:
Policy liabilities-
   policyholders'
   account balances      $47,601,259   $44,808,386   $48,722,138   $45,680,048

15.     Legal proceedings

     Lawsuits  against  the  Company  have  arisen in the  normal  course of the
     Company's business. However, contingent liabilities arising from litigation
     and other matters are not considered  material in relation to the financial
     position of the Company.

     To the best of the  Company's  knowledge,  it has no  potential  or pending
     contingent  liabilities  that might be material to the Company's  financial
     condition,  results of  operations  or  liquidity  pursuant  to product and
     environmental liabilities.

                                       39

<PAGE>



                                                                     Schedule I
                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
        Summary of Investments Other Than Investments in Related Parties
                                December 31, 2001

<TABLE>
<CAPTION>


                                                Number of
                                                shares or                                  Amount at
                                             units-principal                              which shown
                                                amounts of                      Fair        in the
Type of investment                            bonds or notes      Cost          value     balance sheet
------------------                            --------------      ----          -----     -------------
<S>                                           <C>             <C>           <C>           <C>
Fixed maturities held-for-investment:
   U.S. Government and government
       agencies and authorities                     500,000   $   500,000   $   501,560   $   500,000
   Public utilities                                      --            --            --            --
   Industrial and miscellaneous                   2,205,539     2,166,044     2,243,181     2,166,044
   Special revenue and special assessment
       of agencies and authorities of
       governments and political subdivisions       490,239       490,606       506,153       490,606
                                                -----------   -----------   -----------   -----------

   Total fixed maturities held for investment     3,195,778     3,156,650     3,250,894     3,156,650

Fixed maturities available-for-sale:
   U.S. Government and government
       agencies and authorities                     600,000       595,585       654,000       654,000
  Public utilities                                  655,000       673,398       702,717       702,717
   Industrial and miscellaneous                  18,860,000    19,190,850    20,008,014    20,008,014
   Special revenue and special assessment
       of agencies and authorities of
       governments and political subdivisions            --            --            --            --
                                                -----------   -----------   -----------   -----------

   Total fixed maturities available for sale     20,115,000    20,459,833    21,364,731    21,364,731
                                                -----------   -----------   -----------   -----------
                                                 23,310,778    23,616,483    24,615,625    24,521,381
                                                ===========   -----------   ===========   -----------

Equity securities:
   Common, including investments
       in mutual fund                                43,067       316,293       372,183       372,183
                                                ===========                 ===========

Mortgage loans                                                  2,268,292     2,268,292

Policy loans                                                    8,085,404     8,085,404

Student loans                                                      95,819        95,819

Short-term investments                                         13,860,534    13,860,534
                                                              -----------   -----------
   Total investments                                          $48,242,825   $49,203,613
                                                              ===========   ===========
</TABLE>

See accompanying auditors' report.

                                       40

<PAGE>


<TABLE>
<CAPTION>

                                                                                                 Schedule III
                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                       Supplementary Insurance Information

                          December 31, 2001, 2000, 1999


                          Future policy                        Other                             Benefits  Amortization
               Deferred    benefits,     Policy-              policy                              claims    of deferred
                policy    losses claims   holders'           claims &                  Net       losses &     policy      Other
              acquisition   and loss      account  Unearned  benefits    Premium    investmen    settlement  acquisition operating
                  cost       expenses    balances  premiums   payable    revenue      income      expenses      costs    expenses
              -----------   ----------   --------  --------  --------    -------       ------     --------      -----    --------
<S>         <C>           <C>       <C>          <C>         <C>        <C>           <C>        <C>           <C>        <C>
2001 Life
  and
  annuities $12,974,390   2,901,599  47,601,259   4,694,563   1,147,403   6,736,027   3,866,966   4,482,588     2,197,399 3,835,165
            =========== =========== =========== =========== =========== ===========  ========== ===========   =========== =========

2000 Life
  and
  annuities $13,211,413   2,965,940  48,722,138   4,948,989     580,196   6,698,869   3,935,607   5,109,411     1,797,320 3,529,381
            =========== =========== =========== =========== =========== ===========  ========== ===========   =========== =========

1999 Life
  and
  annuities $12,874,219   1,648,976  50,377,101   5,323,954     540,407   6,901,546   3,909,373   4,453,564     3,029,223 3,261,134
            =========== =========== =========== =========== =========== ===========  ========== ===========   =========== =========
</TABLE>









See accompanying auditors' report.

                                       41

<PAGE>

<TABLE>
<CAPTION>


                                                                                            Schedule IV
                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                                   Reinsurance

                          December 31, 2001, 2000, 1999


                                                                                                 Percentage
                                                      Ceded to       Assumed                      of amount
                                                        other       from other                     assumed
                                    Direct amount     companies      companies      Net amount      to net
                                    -------------     ---------      ---------      ----------      ------
<S>                                <C>              <C>             <C>            <C>                      <C>
December 31, 2001:
   Life insurance in force         $ 750,557,000     179,242,000     817,437,000   1,388,752,000              59%
                                   =============   =============   =============   =============   =============

   Premiums:
     Life insurance                $   6,579,409         635,733         649,916       6,593,592              10%
     Accident & health insurance         150,777           8,342              --         142,435              --
                                   -------------   -------------   -------------   -------------   -------------

   Total Premiums                  $   6,730,186         644,075         649,916       6,736,027              10%
                                   =============   =============   =============   =============   =============

December 31, 2000:
   Life insurance in force         $ 811,233,000     210,365,000     558,575,000   1,159,443,000              48%
                                   =============   =============   =============   =============   =============

   Premiums:
     Life insurance                $   6,641,835         668,323         557,352       6,530,864               9%
     Accident & health insurance         194,323          26,318              --         168,005              --
                                   -------------   -------------   -------------   -------------   -------------

   Total Premiums                  $   6,836,158         694,641         557,352       6,698,869               8%
                                   =============   =============   =============   =============   =============

December 31, 1999:
   Life insurance in force         $ 896,846,000     250,691,000     558,571,000   1,204,726,000              46%
                                   =============   =============   =============   =============   =============

   Premiums:
     Life insurance                $   7,126,938         984,550         537,797       6,680,185               8%
     Accident & health insurance         236,536          15,175              --         221,361              --
                                   -------------   -------------   -------------   -------------   =============

   Total Premiums                  $   7,363,474         999,725         537,797       6,901,546               8%
                                   =============   =============   =============   =============   =============

</TABLE>


                                       42

<PAGE>



Item 9.  Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
----------------------------------------------------------

None

                                    PART III

Item 10.  Directors and executive officers of the Company.
---------------------------------------------------------

The Company's Board of Directors consists of eight persons, four of whom are not
employees of the Company.  There is no family relationship  between or among any
of the directors, except that Scott M. Quist and G. Robert Quist are the sons of
George R. Quist. The following table sets forth certain information with respect
to the directors and executive officers of the Company.

                                   Director
Name                   Age         Since        Position(s) with the Company
----                   ---       --------       ----------------------------
George R. Quist         81     December 1998    Chairman of the Board,
                                                President and Chief
                                                Executive Officer

Scott M. Quist          48     December 1998    First Vice President, General
                                                Counsel, Chief Operating
                                                Officer and Director

G. Robert Quist         50     April 1999       Vice President, Secretary and
                                                Director

J. Lynn Beckstead, Jr.  48     March 2002       Vice President and Director

Charles L. Crittenden   82     December 1998    Director

Robert G. Hunter        42     December 1998    Director

H. Craig Moody          48     December 1998    Director

Norman G. Wilbur        63     December 1998    Director

Stephen M. Sill         56     March 2002       Vice President, Treasurer and
                                                Chief Financial Officer

Committees of the Board of Directors  include an executive  committee,  on which
George  Quist,  Scott  Quist,  and Moody  serve;  an audit  committee,  on which
Crittenden,  Moody,  and Wilbur serve;  and a compensation  committee,  on which
Crittenden, Wilbur and George Quist serve.

The  following  is a  description  of the  business  experience  of  each of the
directors and executive officers.

George R. Quist has been Chairman of the Board,  President  and Chief  Executive
Officer  of the  Company  since  December  1998.  Mr.  Quist has also  served as
Chairman  of the  Board,  President  and Chief  Executive  Officer  of  Security
National  Financial  Corporation  since October 1979.  From 1960 to 1964, he was
Executive  Vice  President  and  Treasurer of Pacific  Guardian  Life  Insurance
Company.  From 1946 to 1960,  he was an agent,  District  Manager and  Associate
General Agent for various insurance  companies.  Mr. Quist also served from 1981
to 1982 as the President of The National Association of Life Companies,  a trade
association  of 642  life  insurance  companies,  and  from  1982 to 1983 as its
Chairman of the Board.

Scott M. Quist has been First Vice President,  General Counsel and a director of
the Company since  December 1998 and its Chief  Operating  Officer since October
2001. Mr. Quist has also served as First Vice  President,  General Counsel and a
director of Security National Financial Corporation since May 1986 and its Chief
Operating  Officer since October  2001.  From 1980 to 1982,  Mr. Quist was a tax
specialist with Peat, Marwick,  Mitchell, & Co., in Dallas,  Texas. From 1986 to
1991,  he was a treasurer  and  director  of The  National  Association  of Life
Companies,  a trade association of 642 insurance companies until its merger with
the American Council of Life Companies. Mr. Quist has been a member of the Board
of Governors of the Forum 500 Section  (representing small insurance  companies)
of the American Council of Life Insurance. Mr. Quist has also served as regional
director  of Key Bank of Utah since  November  1993.  Mr.  Quist is  currently a
director  and  immediate  past  president  of  the  National  Alliance  of  Life
Companies, a trade association of over 200 life companies.

G. Robert Quist has been a director of the Company  since April 1999.  Mr. Quist
has also served as Vice President and Secretary of Security  National  Financial
Corporation  since March 15, 2002.  He has served as President and a director of
Big Willow Water Company  since 1987 and as a director of  Associated  Investors
Company  of  Hawaii   since  1987.   He  has  also  served  as  a  director  and
Secretary-Treasurer of the Utah Cemetery Association since 1987.

                                       43

<PAGE>



J. Lynn  Beckstead  Jr. has been a Vice  President and a director of the Company
since  March 15,  2002.  Mr.  Beckstead  has also served as Vice  President  and
director of Security  National  Financial  Corporation  since March 15, 2002. In
addition he is President of Security National Mortgage Company,  an affiliate of
the Company, and has served in this position since July 1993. From 1980 to 1993,
Mr.   Beckstead  was  Vice  President  and  a  director  of  Republic   Mortgage
Corporation. From 1983 to 1990, Mr. Beckstead was Vice President and director of
Richards  Woodbury Mortgage  Corporation.  From 1980 to 1983, he was a principal
broker  for  Boardwalk  Properties.  From  1978 to  1980,  Mr.  Beckstead  was a
residential loan officer for Medallion  Mortgage Company.  From 1977 to 1978, he
was a residential construction loan manager of Citizens Bank.

Charles L.  Crittenden  has been a director of the Company since  December 1998.
Mr. Crittenden is also a Director of Security National Financial Corporation and
has served in this position  since October 1979.  Mr.  Crittenden  has been sole
stockholder of Crittenden  Paint & Glass Company since 1958. He is also an owner
of Crittenden Enterprises, a real estate development company and Chairman of the
Board of Linco, Inc.

Robert G. Hunter,  M.D. has been a director of the Company since  December 1998.
Dr. Hunter is also a director of Security National Financial Corporation and has
served in this position since October 1998. Dr. Hunter is currently a practicing
physician  in  private  practice.  Dr.  Hunter  created  the State  Wide  E.N.T.
Organization (Rocky Mountain E.N.T., Inc.) where he is currently a member of the
Executive  Committee.  He is  Chairman  of Surgery  at  Cottonwood  Hospital,  a
delegate to the Utah Medical Association and a delegate representing Utah to the
American Medical Association, and a member of several medical advisory boards.

H. Craig Moody has been a director of the Company since December 1998. Mr. Moody
is also a director of Security National Financial  Corporation and has served in
this position since September 1995. Mr. Moody is owner of Moody & Associates,  a
political  consulting and real estate company.  He is a former Speaker and House
Majority Leader of the House of Representatives of the State of Utah.

Norman G. Wilbur has been a director of the Company  since  December  1998.  Mr.
Wilbur is also a director of Security  National  Financial  Corporation  and has
served in this position  since  October 1998. Mr Wilbur worked for J.C.  Penny's
regional  offices in budget and  analysis.  His final  position  was  Manager of
Planning  and  Reporting  for J.C.  Penney's  stores.  After 36 years  with J.C.
Penny's,  he took an option of an early retirement in 1997. Mr. Wilbur is a past
board member of a homeless organization in Plano, Texas.

Stephen M. Sill has been Vice President,  Treasurer and Chief Financial  Officer
of the Company since March 15, 2002. He has been a Vice President, Treasurer and
Chief Financial Officer of Security National  Financial  Corporation since March
15, 2002.  From 1998 to 2002,  Mr. Sill was Vice President and Controller of the
Company.  From 1997 to 2002,  Mr.  Sill was Vice  President  and  Controller  of
Security National Financial Corporation. From 1989 to 1993, he was Controller of
Flying J. From 1978 to 1989,  Mr. Sill was Senior Vice  President and Controller
of Surety Life Insurance  Company.  From 1975 to 1978, he was Vice President and
Controller of Sambo's Restaurant,  Inc. From 1974 to 1975, Mr. Sill was Director
of Reporting of Northwest  Pipeline  Corporation.  From 1970 to 1974,  he was an
auditor  with  Arthur  Andersen & Co. Mr.  Sill is a director  of the  Insurance
Accounting and Systems Association (IASA), a national  association of over 1,300
insurance companies and associate members.

Executive Officers

The following table sets forth certain information with respect to the executive
officers of the Company (the business biographies set forth above):

Name                       Age           Title
George R. Quist (1)        81       Chairman of the Board, President and
                                    Chief Executive Officer

Scott M. Quist (1)         48       First Vice President, General Counsel
                                    and Chief Operating Officer

G. Robert Quist (1)        50       Vice President and Secretary

Stephen M. Sill            56       Vice President, Treasurer and
                                    Chief Financial Officer

(1) George R. Quist is the father of Scott M. Quist and G. Robert Quist.

The Board of Directors  of the Company has a written  procedure  which  requires
disclosure to the board of any material  interest or any affiliation on the part
of any of its officers, directors or employees which is in conflict or may be in
conflict with the interests of the Company.

No director,  officer or 5% stockholder of the Company or its  subsidiaries,  or
any  affiliate  thereof  has  had  any  transactions  with  the  Company  or its
subsidiaries during 2001 or 2000.

                                       44

<PAGE>



Each  of  the  directors  are  board  members  of  Security  National  Financial
Corporation (the ultimate parent of the Company) with the exception of G. Robert
Quist,  which has a class of equity  securities  registered under the Securities
Exchange  Act of 1934,  as amended.  In  addition,  Scott M. Quist is a regional
director of Key Bank of Utah. All directors of the Company hold office until the
next annual meeting of  stockholders,  until their  successors have been elected
and qualified, or until their earlier resignation or removal.

                                       45

<PAGE>



Item 11.  Executive compensation.
--------------------------------

     (a) Summary  compensation.  The following table sets forth, for each of the
last three fiscal years, the compensation  received by George R. Quist, Chairman
of the Board,  President  and Chief  Executive  Officer of the Company,  and all
other  executive  officers at December 31, 2001,  whose salary and bonus for all
services in all  capacities  exceed  $100,000 for the fiscal year ended December
31, 2001.

<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE

                                                                                       Long Term Compensation

                                           Annual Compensation                Awards           Awards       Payouts


    (a)                  (b)        (c)           (d)          (e)           (f)              (g)         (h)           (i)
                                                              Other      Restricted       Securities                All other
Name and                                                     Annual         Stock         Underlying     LTIP         Compen-
Principal                                                 Compensation     Awards          Options/     Payouts       sation
Position                Year     Salary($)     Bonus($)        ($)           ($)            SARs(#)       ($)            $
-----------------------------------------------------------------------------------------------------------------------------
President
and Chief
Executive
Officer
<S>                  <C>          <C>             <C>          <C>           <C>             <C>          <C>          <C>
George R. Quist(1)   2001         $0              $0           $0            $0               N/A         N/A          N/A

George R. Quist(1)   2000         $0              $0           $0            $0               N/A         N/A          N/A

George R. Quist(1)   1999         $0              $0           $0            $0               N/A         N/A          N/A
</TABLE>

          (1)  Effective   January  1,  1999,   the  Company   entered  into  an
               Administrative   Services  Agreement  with  its  ultimate  parent
               Security  National  Financial  Corporation  (Security  National).
               Under the terms of the Administrative Services Agreement,  all of
               the Company's  employees became  employees of Security  National.
               Administrative  functions previously performed by the Company are
               now being  furnished  to the Company  under this  Agreement.  The
               Company  pays to  Security  National  $250,000  per  month  or $3
               million per year for the Administrative services.

     (b) Perquisites. Executive officers of the Company who are employees of the
Company are covered under a group life, group  disability,  and  hospitalization
plan that  does not  discriminate  in favor of  officers  and that is  generally
available  to all  salaried  employees.  The  Company  does not have a  pension,
retirement  or  other   deferred   compensation   plan,  or  any  other  similar
arrangement.

     (c)  Director's  fees  and  other  fees.  Directors  did  not  receive  any
compensation in 1999, 2000 or 2001.

     (d)  Compensation  committee  interlocks  and  insider  participation.  The
Executive Committee of the Company's Board of Directors makes  recommendation to
the board  concerning  the  compensation  of the Company's  executive  officers.
Subsequently, the board makes all final decisions concerning such compensation.

     (e) Employee contracts.  The Company does not have any employees contracts.
         ------------------

Item 12. Security ownership of certain beneficial owners and management.

The  following  table sets forth,  as of December  31,  2001,  information  with
respect to the only persons known by the Company to be the  beneficial  owner of
more than 5% of the Company's outstanding voting securities:

                                                    Number of Shares
     Title                                            and Nature of
      of           Name and Address of                 Beneficial     Percent
     Class          Beneficial Owner                   Ownership      of Class
   ---------      ---------------------             ---------------  ---------
    Common   SSLIC Holding Company Inc., formerly
    Shares   Consolidare Enterprises, Inc.            1,095,496        57.4%
             c/o Security National Life Ins. Co.       Direct
             5300 S 360 W, Suite 200
             Salt Lake City, UT 84123

    Common  Security National Life Insurance Company   334,230         17.5%
    Shares  5300 South 360 West, Suite 200             Direct
            Salt Lake City, Utah 84123

Item 13.  Certain relationships and related transactions.
--------------------------------------------------------

Insuradyne Corporation, a wholly-owned subsidiary of Security National Financial
Corporation,  serves as general  agent for the  Company,  pursuant  to a general
agency  agreement,  which is terminable by either party with 30 days notice.  In
such capacity, Insuradyne receives a commission on the first year commissionable
premium  on  certain  of the  Company's  policies  as well  as a  small  renewal
commission on certain other policies.  In accordance with the Florida  Insurance
Code,  a  copy  of  the  Company's  General  Agency  Agreement  with  Insuradyne
Corporation was filed with and approved by the Florida  Department of Insurance.
Management  of the  Company  believes  that  the  terms  of its  General  Agency
Agreement  with  Insuradyne are as favorable to the Company as terms which could
be obtained from independent third parties.

                                       46

<PAGE>



During 2001 and 2000,  gross  commissions in the amount of $122,787 and $180,941
respectively,  were earned by Insuradyne Corporation.  At December 31, 2001, the
Company  owed  $187,890  to  Insuradyne  as a result  of  commissions  earned by
Insuradyne but for which Insuradyne has not yet requested payment.

No  director  or officer of the  Company or any  associates  of any  director or
officer of the Company was indebted to the Company at December 31, 2001.

The Company  continues  to be indebted to its  parent,  Security  National  Life
Insurance Company (SNLIC), in the amount of $1,000,000, pursuant to a promissory
note dated  December  1988,  which bears interest at the annual rate of interest
equal to the prime rate (as  hereinafter  defined)  plus 2%, with such  interest
rate  not to be  less  than  9% nor in  excess  of  11%.  For  purposes  of this
promissory  note,  prime rate is defined to mean the prime rate as  announced by
Compass Bank,  Birmingham,  Alabama, from time to time, as its prime rate (which
interest  rate  is  only  a  bench  mark,  is  purely  discretionary  and is not
necessarily  the  best  or  lowest  rate  charged  borrowing  customers).   This
promissory note is due on demand and is payable out of capital surplus in excess
of $1,900,000,  pursuant to Florida  Statutes  ss.628.401  (1990).  Interest and
principal  can only be repaid upon the express  written  approval of the Florida
Department of Insurance.

The Company entered into an Administrative Services Agreement dated December 17,
1998 with SNFC. Under the terms of the agreement, SNFC has agreed to provide the
Company  with   certain   defined   administrative   and   financial   services,
underwriting,  data processing,  legal, building management,  marketing advisory
services  and  investment  services.  In  consideration  for the  services to be
provided by SNFC, the Company shall pay SNFC an  administrative  services fee of
$250,000 per month,  which may be  increased,  beginning on January 1, 2001,  to
reflect  increases in Consumer Price Index,  over the index amount as of January
1, 2000.

The Administrative Services Agreement shall remain in effect for an initial term
expiring  on  December  16,  2003.  However,  the term of the  agreement  may be
automatically extended for an additional one-year term unless either the Company
or SNFC shall  deliver a written  notice on or before  September  30 of any year
stating to the other its desire not to extend the term of the  agreement.  SSLIC
Holding  Company,  a  wholly  owned  subsidiary  of  SNLIC,  and owns 75% of the
outstanding  shares  of common  stock of the  Company.  SNLIC is a wholly  owned
subsidiary of SNFC. In addition,  George R. Quist,  the Company's  President and
Chief Executive  Officer is the President and Chief  Executive  Officer of SNFC;
Scott M. Quist,  the Company's First Vice  President,  General Counsel and Chief
Operating  Officer,  is the First  Vice  President,  General  Counsel  and Chief
Operating  Officer of SNFC; G. Robert Quist,  the Company's  Vice  President and
Secretary,  is the Vice  President and Secretary of SNFC;  Stephen M. Sill,  the
Company's Vice  President,  Treasurer and Chief Financial  Officer,  is the Vice
President, Treasurer and Chief Financial Officer of SNFC. Finally, the directors
of the  Company,  with the  exception  of G.  Robert  Quist,  also  serve as the
directors of SNFC. See Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation.

On December 28, 1998 the Company  entered into a Loan Funding and Fee  Agreement
and Agency Agreement (the  "Agreement")  with Security National Mortgage Company
("SNMC"),  a subsidiary of SNFC. Under the terms of the Agreement,  SNMC assigns
its  interest in  residential  mortgage  loans that have been  pre-sold to third
party investors to the Company. The Company purchases these loans and holds them
as short-term  investments  until it receives the proceeds from the  third-party
investors.  The  Company  receives  fee income from SNMC based upon how long the
loans  were  outstanding.  At  December  31,  2001 and  2000,  the  Company  had
outstanding loan purchases of $13,860,534 and $7,814,813, respectively. Included
in investment  income is $984,872 and $732,691 for the years ended  December 31,
2001 and 2000, respectively.

The Company  received for the years ended  December 31, 2001 and 2000,  $132,141
and  $182,248,  respectively,  as rental  income from SNFC for a lease of office
space in the Company's building under the terms of the  Administrative  Services
Agreement.

The Company received for the year ended December 31, 2001 and 2000,  $77,394 and
$123,393,  respectively,  in interest  income from SNFC for short-term  loans of
which none were outstanding as of December 31, 2001.

                                       47

<PAGE>



                                     PART IV


Item 14. Financial statements, exhibits filed and reports on Form 10-K.

                                                                    Page Number
   (a)      1.       See item 8
                           ----------

            2.       Supplemental Schedules

                     Required Financial Data - for the years ended
                     December 31, 2001, 2000 and 1999 - included in Part
                     II, Item 8:

                     Schedule I - Summary of Investments -
                     Other than Investments in Related
                     Parties................................................40

                     Schedule III - Supplementary Insurance
                     Information............................................41

                     Schedule IV - Reinsurance..............................42

Schedules  other than those listed above have been omitted  because they are not
applicable  or because the  required  information  is included in the  financial
statements and notes thereto or in Item 7 - Management's Discussion and Analysis
of Financial Condition and Results of Operations.

                                       48

<PAGE>



3.       Exhibits

      Exhibit     Document
         No.

          3.   Articles of  Incorporation,  as amended,  and Bylaws, as amended,
               dated September  1994,  incorporated by reference from the Annual
               Report on Form 10-K for fiscal year ended December 31, 1994.

          10.A Revolving Financing Agreement between the Company and the Student
               Loan   Marketing   Association,   dated   September   19,   1996,
               incorporated  by  reference  from Annual  Report on Form 10-K for
               fiscal year ended December 31, 1997.

          10.B Reinsurance  Agreement  between  the  Company  and  United  Group
               Insurance  Company,  dated  December  31,  1992  incorporated  by
               reference  from Annual  Report on Form 10-K for fiscal year ended
               December 31, 1992.

          10.C Agency Agreement between the Company and Insuradyne  Corporation,
               incorporated  by  reference  from Annual  Report on Form 10-K for
               fiscal year ended December 31, 1993.

          10.D Administrative   Services   Agreement  between  the  Company  and
               Security National Financial  Corporation dated December 17, 1998,
               incorporated  by  reference  from Annual  Report on Form 10-K for
               fiscal year ended December 31, 1998.

          10.E Agency  Agreement  between  the  Company  and  Security  National
               Mortgage  Company  dated  December  28,  1998,   incorporated  by
               reference  from Annual  Report on Form 10-K for fiscal year ended
               December 31, 1999.

          10.F Loan Funding and Fee  Agreement  between the Company and Security
               National  Mortgage  Company dated December 28, 1998,  from Annual
               Report on Form 10-K for fiscal year ended December 31, 1999.

          11.  Statement Re Computation of Net Income per common share

b)        Reports on Form 8-K
          -------------------

          None

                                       49

<PAGE>



Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY


Dated: March 29, 2002                 By:     George R. Quist
                                              ------------------------
                                              George R. Quist
                                              Chairman of the Board, President
                                              and Chief Executive Officer

Pursuant to the requirements of the Securities  Exchange Act of 1934 as amended,
this report has been signed by the following persons in counterpart on behalf of
the Company on the dates indicated:



Signature                      Title                               Date
---------                      -----                               ----
George R. Quist              Chairman of the                    March 29, 2002
                             Board, President and
                             Chief Executive Officer
                             (Principal Executive
                             Officer)

Scott M. Quist               First Vice President,              March 29, 2002
                             General Counsel, Chief
                             Operating Officer and
                             Director

Stephen M. Sill              Vice President and
                             Treasurer (Principal
                             Financial and Accounting
                             Officer)                           March 29, 2002

G. Robert Quist              Vice President, Secretary
                             and Director                       March 29, 2002

J. Lynn Beckstead, Jr.       Vice President and Director        March 29, 2002

Charles L. Crittenden        Director                           March 29, 2002

Robert G. Hunter             Director                           March 29, 2002

H. Craig Moody               Director                           March 29, 2002

Norman G. Wilbur             Director                           March 29, 2002

                                       50

<PAGE>


                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                                   EXHIBIT 11

                            COMPUTATION OF NET INCOME

                                PER COMMON SHARE



                         2001         2000         1999
                     ----------    ---------    ----------
Weighted Average
Shares Outstanding    1,907,989    1,907,989    1,907,989
Net Income (Loss)    $   70,976   $  160,260   $  631,958
Per Share Amount     $      .04   $      .08   $      .33

                                       51

<PAGE>