STOCK PURCHASE AGREEMENT

         STOCK PURCHASE  AGREEMENT  dated as of January 2, 1998,  between ALLIED
LIFE FINANCIAL  CORPORATION,  an Iowa  corporation  (the  "Company"),  and STATE
STREET BANK AND TRUST COMPANY,  a  Massachusetts  trust  company,  solely in its
capacity  as trustee  under the Plan  defined  below and not  individually  (the
"Trustee").

                                   WITNESSETH;

         WHEREAS,  the Company has  established  and  maintains  The ALLIED Life
Financial  Corporation  Employee  Stock  Ownership  Plan (the  "Plan"),  for the
benefit of all employees eligible to participate therein;

         WHEREAS,  the Plan  qualifies as an  "employee  stock  ownership  plan"
within the meaning of Section  4975(e)(7) of the Internal  Revenue Code of 1986,
as amended (the "Code");

         WHEREAS,  the Company has  established  and  maintains  The ALLIED Life
Financial  Corporation  Employee  Stock  Ownership  Trust (the  "Trust") and the
Company has  appointed the Trustee to act as the trustee  thereof  pursuant to a
trust agreement between the Company and the Trustee dated June 20, 1994 (the
"Trust Agreement");

         WHEREAS,  the Trust  Agreement  provides  that the  assets of the trust
created  thereunder  shall be invested in, among other things,  shares of common
stock of the Company  ("Common  Stock") or  convertible  preferred  stock of the
Company;

         WHEREAS,  the  Company  has  designated  300,000  shares as a series of
convertible  preferred  stock,  with no par  value,  called  the  Series  A ESOP
Convertible  Preferred Stock, of which 122,717 shares were previously issued and
of which it has offered  13,163  shares for sale to the Trustee  (the  "Series A
Preferred Stock");

         WHEREAS,  as directed by the ESOP Committee (the "Committee") under the
terms of the Trust  Agreement,  the Trustee is authorized to purchase  shares of
Series A Preferred Stock and the Company wishes to issue and sell such shares of
Series A Preferred  Stock to the Trustee,  and no commission will be paid by the
Trustee in  connection  with the  purchase  of such shares of Series A Preferred
Stock; and

         WHEREAS,   the  Trustee  is  required  under  the  Trust  Agreement  to
independently  determine (i.e., without direction from the Company) the purchase
price  that  shall be paid for any stock of the  Company,  and the  Trustee  has
received an opinion of Houlihan Lokey Howard & Zukin (the  "Valuation  Opinion")
that the  purchase  of the shares of Series A  Preferred  Stock  pursuant to the
terms to this  Agreement is fair and equitable to the  participants  in the Plan
and the price to be paid for the  Series A  Preferred  Stock is not in excess of
adequate consideration.

         NOW  THEREFORE,  in  consideration  of these  premises  and the  mutual
promises  contained herein,  the parties hereto,  intending to be legally bound,
hereby agree as follows:

         1. The Trustee  hereby  agrees to purchase  (the  "Purchase")  with the
funds directed by the Committee, and the Company hereby agrees to issue and sell
for cash to the Trust 13,163  shares of Series A Preferred  Stock (the "Series A
Preferred  Stock") for an aggregate  purchase  price (the  "Purchase  Price") of
$287,936.00  (or $21.875 per  share).  The Company  will pay all stamp and other
transfer  taxes,  if any, which may be payable in respect of the issuance,  sale
and delivery of the Series A Preferred Stock and shall be entitled to any refund
thereof.

         2. The  Purchase  shall be  consummated  at or about 8:00 A.M.  Central
Standard Time on January 2, 1998 (such date of delivery being hereinafter called
the  "Delivery  Date") at the offices of the  Company,  Des  Moines,  Iowa or as
otherwise agreed by the parties hereto.  On the Delivery Date, the Trustee shall
deliver  to the  Company  the  Purchase  Price in  immediately  available  funds
together  with an  opinion  of  Goodwin,  Procter & Hoar,  LLP,  counsel  to the
Trustee,  in the form  attached  as Annex A hereto  and a copy of the  Valuation
Opinion,  and  the  Company  will  deliver  to  the  Trustee  a  certificate  or
certificates representing the Series A Preferred Stock which shall be registered
in the name of the  Trustee,  as trustee  under the Plan,  or in the name of its
nominee,  together with an opinion of Katherine E. Schmidt,  Associate Corporate
Counsel of the Company, in the form attached as Annex B hereto.


                                       83
<PAGE>

         3. The Company hereby represents, warrants and covenants to the Trustee
as follows:

                                     a. the  Company (i) is a  corporation  duly
                       organized,  validly  existing and in good standing  under
                       the laws of the State of Iowa and (ii) has full corporate
                       power  and   authority   to  execute  and  deliver   this
                       Agreement,  to carry  out the  transactions  contemplated
                       hereby,   to  own,  lease  and  operate  its  assets  and
                       properties,  and to carry on its  business  as now  being
                       conducted;

                                     b. this Agreement has been duly authorized,
                       executed and  delivered by the Company and  constitutes a
                       valid and binding obligation of the Company,  enforceable
                       against the Company in accordance with its terms, subject
                       to   applicable   bankruptcy,    insolvency,   fraudulent
                       conveyance,  reorganization,  moratorium and similar laws
                       affecting  creditors'  rights  generally  and to  general
                       principles of equity (regardless of whether considered in
                       a proceeding at law or in equity);

                                     c. the execution,  delivery and performance
                       of this Agreement by the Company and the  consummation of
                       the transactions contemplated hereby will not violate (i)
                       the Company's Articles of Incorporation or By-laws,  each
                       as  amended  to  date  or,  (ii)  any  provision  of  any
                       agreement,  instrument,  order, award, judgment or decree
                       to which the  Company is a party or by which it or any of
                       its  businesses  or  properties  are bound,  or (iii) any
                       statute,  rule or  regulation  of any  federal,  state or
                       local government or governmental agency applicable to the
                       Company except in the case of subparagraphs (ii) or (iii)
                       of this Section 3(c) for any such violations which either
                       individually  or in the  aggregate do not have a material
                       adverse  effect  on the  business  or  properties  of the
                       Company and its subsidiaries taken as a whole;

                                     d.  except for any  necessary  applications
                       with The NASDAQ  Stock  Market with  respect to any newly
                       issued  shares of Common  Stock  which may be issued upon
                       conversion of the Series A Preferred  Stock, no approval,
                       authorization  or other action by, or filing  (other than
                       such  filings  of the  Company  as may  be  necessary  in
                       connection with any  registration  for sale of the common
                       stock that may be issuable upon  conversion of the Series
                       A Preferred  Stock)  with,  any  government  authority is
                       required  to be  obtained  or  made  by  the  Company  in
                       connection  with the execution,  delivery and performance
                       by the Company of this Agreement and the  consummation of
                       the transactions contemplated hereby;


                                     e.  the  Certificate  of  Designations  was
                       filed with the Secretary of State effective June 21, 1994
                       prior to which the Series A Preferred Stock were duly and
                       validly  authorized and, when issued and delivered to and
                       paid for by the Trustee  pursuant to this Agreement,  (i)
                       will be validly issued,  fully paid and nonassessable and
                       not liable to any further  call or  assessment,  (ii) the
                       certificates  representing  the Series A Preferred  Stock
                       comply with the applicable  requirements  of Iowa law and
                       (iii) the Trustee  will  acquire  full  right,  title and
                       interest in and to the Series A Preferred  Stock free and
                       clear  of  any  and  all  liens,   claims,   charges  and
                       encumbrances  (other than rights of  participants  in the
                       Plan);

                                     f. the  Company  (i) has  duly and  validly
                       authorized and reserved for issuance a sufficient  number
                       of shares of Common Stock, as may be issued, from time to
                       time, upon conversion of the Series A Preferred Stock and
                       (ii) such  shares  of  Common  Stock,  when  issued  upon
                       conversion of the Series A Preferred  Stock in accordance
                       with the  Certificate  of  Designations,  will be validly
                       issued,  fully paid and  nonassessable  and not liable to
                       any further call or assessment and will not be subject to
                       preemptive rights;

                                     g. the Plan has been  duly  authorized  and
                       established,  and  the  Trust  Agreement  has  been  duly
                       authorized, by all necessary corporate action on the part
                       of the  Company;  the Plan  constitutes  in all  material
                       respects in form an employee stock  ownership plan within
                       the  meaning  of  Section  4975(e)(7)  of the Code,  Code
                       Regulation  Section  54.4975-11 and Section  407(d)(6) of
                       the Employee  Retirement  Income Security Act of 1974, as
                       amended  ("ERISA");  and the  Series  A  Preferred  Stock
                       constitutes  a qualifying  employer  security  within the
                       meaning  of  Section  4975(e)(8)  of the Code;  provided,
                       however, that in making the representations  contained in
                       this  Section  3(g)  the  Company  has  relied  upon  the
                       correctness of the Trustee's representations contained in
                       Section 4(g) of this Agreement;


                                       84
<PAGE>


                                     h. the Company's  annual report on 10-K for
                       the year ended December 31, 1996 and quarterly reports on
                       10-Q for the  quarterly  periods  ended March 31, June 30
                       and  September 30, 1997,  on the  respective  dates filed
                       with the  Securities  and  Exchange  Commission  ("SEC"),
                       conformed in all material respects to the requirements of
                       the Securities Exchange Act of 1934, as amended;

                                     i.no person or other  entity is entitled to
                       any fees or commissions  due to the Company's  actions in
                       connection  with the  purchase  and sale of the  Series A
                       Preferred Stock;

                                     j. the Company  shall use its best  efforts
                       during  the  term  of the  Trust  to  cause  the  Plan to
                       maintain its qualification as an employee stock ownership
                       plan within the meaning of Section 4975 of the Code; and

                                     k.  the  Company  has  furnished  and  will
                       continue  to  furnish  to the  Trustee  from time to time
                       copies of all reports and financial  statements which the
                       Company  shall  send  or  make  available  to its  public
                       stockholders generally,  all other written communications
                       from the  Company to public  shareholders  generally  and
                       each  regular  or  periodic   report,   proxy  statement,
                       registration  statement or  prospectus,  if any, filed by
                       the Company with the SEC; and

         4. The Trustee represents and warrants to the Company as follows:

                                     a. the Trustee (i) is a duly  organized and
                       validly  existing  Massachusetts  trust  company  in good
                       standing  as a trust  company  and with  full  power  and
                       authority  to act as Trustee and exercise  trust  powers,
                       including without  limitation,  the trust powers provided
                       in and contemplated by the Trust Agreement,  and (ii) has
                       full corporate power and authority to execute and deliver
                       this   Agreement  and  to  carry  out  the   transactions
                       contemplated hereby;

                                     b. this Agreement has been duly authorized,
                       executed and  delivered by the Trustee and  constitutes a
                       valid and binding obligation of the Trustee,  enforceable
                       against the Trustee in accordance with its terms, subject
                       to   applicable   bankruptcy,    insolvency,   fraudulent
                       conveyance,  reorganization,  moratorium and similar laws
                       affecting  creditors'  rights  generally  and to  general
                       principles of equity (regardless of whether considered in
                       a proceeding at law or in equity);

                                     c. the execution,  delivery and performance
                       of this Agreement by the Trustee and the  consummation of
                       the transactions contemplated hereby will not violate (i)
                       the  Trustee's  Corporate  Charter  or  By-laws,  each as
                       amended to date, or (ii) any provision of any  agreement,
                       instrument, order, award, judgment or decree to which the
                       Trustee  is a  party  or  by  which  it  or  any  of  its
                       businesses or properties  are bound or (iii) any statute,
                       rule  or  regulation  of  any  federal,  state  or  local
                       government  or  governmental  agency  applicable  to  the
                       Trustee except in the case of subparagraphs (ii) or (iii)
                       of this Section 4(c) for any such violations which either
                       individually  or in the  aggregate do not have a material
                       adverse  effect  on the  business  or  properties  of the
                       Trustee;   provided,   however,   that  in   making   the
                       representations contained in clause (iii) of this Section
                       4(c), the Trustee has relied upon the  correctness of (1)
                       the Company's representations in Section 3(g), as limited
                       by  the  proviso  therein,   and  Section  3(i)  of  this
                       Agreement and (2) the Committee's  direction letter dated
                       December 30, 1997;

                                     d.  no  approval,  authorization  or  other
                       action by, or filing with, any governmental  authority is
                       required  to be  obtained  or  made  by  the  Trustee  in
                       connection  with the execution,  delivery and performance
                       by the Trustee of this Agreement and the  consummation of
                       the transactions contemplated hereby;

                                       85
<PAGE>

                                     e. the  Trustee is  acquiring  the Series A
                       Preferred   Stock  on  behalf  of  the  Plan  solely  for
                       investment  purposes  and not with a view to, or for sale
                       in connection with, any distribution  thereof;  provided,
                       however,  that  the  Series  A  Preferred  Stock  will be
                       allocated to the accounts of the participants in the Plan
                       pursuant to the terms of the Plan and  distributions  may
                       be made to participants and  beneficiaries of the Plan in
                       shares of Common Stock  issuable  upon  conversion of the
                       Series A Preferred  Stock or payable upon  redemption  of
                       the Series A Preferred Stock,  including upon exercise of
                       the rights  set forth in  Section 7 of the  Certificateof
                       Designations,  or in  shares of  Common  Stock  otherwise
                       acquired  by the  Trustee  pursuant  to the  terms of the
                       Plan,  it being  understood  that the Series A  Preferred
                       Stock  are  being  sold  to the  Trustee  pursuant  to an
                       exemption  from  the  registration  requirements  of  the
                       Securities  Act of  1933,  as  amended  (the  "Securities
                       Act"), in reliance upon this representation and warranty;

                                     f. the  purchase  of the Series A Preferred
                       Stock on the Delivery  Date by the Trust for the Purchase
                       Price is for not greater than "adequate consideration" as
                       that phrase is defined in Section 3(18) of ERISA, and any
                       proposed regulations thereunder,  and will not constitute
                       a prohibited  transaction  under  Section 406 of ERISA or
                       Section  4975(c) of the Code by reason of the  exemptions
                       set forth in Section 408(e) of ERISA and Section  4975(d)
                       (13)  of  the  Code;   provided   that  in   making   the
                       representations  contained  in  this  Section  4(f),  the
                       Trustee has relied upon the  correctness of the Company's
                       representations contained in Sections 3(g), as limited by
                       the proviso  therein,  and 3(i) of this Agreement as well
                       as the Valuation Opinion;

                                     g. the Series A Preferred  Stock  purchased
                       by the Trust have a conversion  price which is reasonable
                       as of the date hereof; provided,  however, that in making
                       the  representations  contained in this Section 4(g), the
                       Trustee has relied upon the  correctness of the Valuation
                       Opinion; and

                                     h. no person or other entity is entitled to
                       any   commissions   due  to  the  Trustee's   actions  in
                       connection  with the  purchase  and sale of the  Series A
                       Preferred Stock.

         5. The  Trustee  hereby (i)  acknowledges  that the Series A  Preferred
Stock  purchased on behalf of the Trust pursuant to this Agreement may, by their
terms, be issued only to the Trustee or a successor  trustee acting on behalf of
the Trust, (ii) acknowledges that the Trust Agreement  provides that none of the
Series A Preferred  Stock  shall be  transferred  in any manner to  participants
under the Plan but in lieu thereof  shares of Common Stock shall be  distributed
to  participants  or transferred to the  participants'  Section 401(k)  accounts
pursuant to the terms of the Plan,  (iii)  acknowledges  that the Certificate of
Designations  provides that any Series A Preferred  Stock that are  transferred,
sold or otherwise disposed of by the Trustee shall be automatically, and without
any action on the part of the Company,  converted  into shares of Common  Stock,
and (iv) agrees not to transfer,  sell or otherwise dispose of any of the Series
A Preferred  Stock or other shares of Series A Preferred  Stock or to attempt to
do so, except in compliance with the Trust Agreement.  Nothing contained in this
Section 5 shall be deemed to  restrict  the  ability  of the  Trustee to convert
shares of Series A Preferred Stock into shares of Common Stock or to require the
Company to redeem shares of Series A Preferred Stock, in each case in accordance
with the Certificate of Designations, or the ability of the Trustee to transfer,
sell or otherwise  dispose of shares of Common Stock of the Company  issued upon
conversion of shares of Series A Preferred  Stock or upon a redemption of shares
of Series A Preferred Stock.

         6. The Trustee  understands  that the  certificate(s)  representing the
Series A  Preferred  Stock  will bear the  following  legend and that a notation
restricting  their  transfer  will be made on the  stock  transfer  books of the
Company:

                              The shares of Series A preferred stock represented
                by  this   certificate   have  not  been  registered  under  the
                Securities Act of 1933, as amended. Such shares of stock may not
                be sold,  assigned,  pledged  or  otherwise  transferred  in the
                absence  of  an  effective  registration  statement  under  said
                Securities  Act covering  such transfer or an opinion of counsel
                satisfactory  to  the  issuer  that   registration   under  said
                Securities Act is not required.

                              The   shares   of   stock   represented   by  this
                certificate are subject to restrictions on transfer set forth in
                the  Certificate of Designations  relating to the  Corporation's
                Series  A  ESOP  Convertible  Preferred  Stock  and  in a  Stock
                Purchase  Agreement dated as of January 2, 1998. The Corporation
                will  furnish  a copy of such  agreement  to the  holder of this
                certificate without charge upon written request.

                                       86
<PAGE>

         7. The Company has at its expense,  prepared,  filed,  and obtained the
effectiveness of, and will use its best efforts to cause to remain effective,  a
registration statement on an appropriate form, including a final prospectus (the
"Registration  Statement"),  under and complying with the Securities Act and the
rules  and  regulations  thereunder,  relating  to the  number  of shares of the
Company's  Common Stock into which the Series A Preferred Stock are from time to
time convertible or as are acquired upon a redemption or repurchase, including a
redemption  pursuant  to the  provisions  of  Section  7 of the  Certificate  of
Designations,  as shall be necessary,  in the opinion of counsel to the Company,
for the  Trustee  to carry  out its  responsibilities  under  the Plan and Trust
Agreement.  Whenever shares of Common Stock are so registered, the Company shall
also use its best  efforts to  register or qualify  such  shares  covered by the
Registration  Statement  under  the  "blue  sky"  or  securities  laws  of  such
jurisdictions  within the United States as the Trustee may  reasonably  request;
provided,  however,  that the  Company  shall not be  required to consent to the
general service of process for all purposes in any jurisdiction  where it is not
then qualified to do business.

         8. The Company agrees that it will use its best efforts to maintain the
qualification of the Plan as an employee stock ownership plan within the meaning
of Section 4975(e)(7) of the Code.

         9. The  representations,  warranties  and  agreements in this Agreement
shall survive the date hereof and the Delivery Date.

         10. This  Agreement  shall be governed by and  construed in  accordance
with the laws of the  State of Iowa  applicable  to  contracts  to be  executed,
delivered and  performed in such state,  to the extent not preempted by the laws
of  the  United  States  of  America.   The  parties  hereby   irrevocably   and
unconditionally consent to submit to the exclusive jurisdiction of the courts of
the State of Iowa and the United States of America located in Polk County,  Iowa
for any  actions,  suits  or  proceedings  arising  out of or  relating  to this
Agreement.  This Agreement,  the Plan and Trust Agreement  (including  documents
referred  to  therein  or  delivered  pursuant  thereto)  set forth  the  entire
Agreement of the parties with respect to the subject matter contained herein and
supersede  all prior oral and written  agreements,  if any,  between the parties
with respect to such subject matter.  This Agreement shall bind and inure to the
benefit of all  successors  to, and assigns of, the  parties  hereto;  provided,
however,  that the Trustee  shall not assign or otherwise  transfer its interest
in, or  obligations  under,  this Agreement  without the written  consent of the
Company,  except  that the Trustee may  assign,  without the  Company's  written
consent, all its rights hereunder to any institution  exercising trust powers in
connection with any such institution  assuming the duties of a trustee under the
Trust  Agreement.  In the event that any  provision of this  Agreement  shall be
declared  unenforceable  by a court of competent  jurisdiction,  such  provision
shall be stricken  herefrom  and the  remainder of this  Agreement  shall remain
binding  on the  parties  hereto.  In the event any such  provision  shall be so
declared unenforceable due to its scope or breadth, then it shall be narrowed to
the scope or breadth permitted by law.



                                       87
<PAGE>

         11. This Agreement may be executed in two  counterparts,  each of which
shall be deemed an original,  but each of which taken together shall  constitute
one and the same instrument.

         12. This Agreement may not be modified with respect to the  obligations
of a party hereto except by an instrument in writing signed by such party.

         13. The terms and  provisions  of the Trust  Agreement  relating to the
nature of the  responsibilities  of the Trustee and the  indemnification  by the
Company of the Trustee are incorporated  herein by reference and made applicable
to this Agreement.

         14.  All  notices,   requests,  or  other  communications  required  or
permitted to be delivered hereunder shall be in writing, delivered to each party
hereto  at its  address  specified  in the  Trust  Agreement  and  shall  become
effective  as  therein  provided.  Any party  hereto  may from time to time,  by
written notice given as aforesaid, designate any other address to which notices,
requests or other communications addressed to it shall be sent.

         IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first above written.

                                             ALLIED LIFE FINANCIAL CORPORATION

                                             By /s/ Samuel J. Wells

                                             Name: Samuel J. Wells

                                             Title: President


                                             STATE  STREET BANK
                                             AND   TRUST    COMPANY
                                             solely in its capacity
                                             as  Trustee  under the
                                             Plan     and     Trust
                                             Agreement  referred to
                                             herein     and     not
                                             individually


                                             By /s/ John Scott Feely

                                             Name _________________________

                                             Title ________________________

                                       88
<PAGE>



                                     Annex A


                                                               January 2, 1998



ALLIED Life Financial Corporation
701 Fifth Avenue
Des Moines, Iowa 50391


    Re: The ALLIED Life Financial Corporation Employee Stock Ownership Trust

Ladies and Gentlemen:

         We have  acted as  special  counsel  for  State  Street  Bank and Trust
Company  ("State  Street"),  as  trustee  (the  "Trustee")  of The  ALLIED  Life
Financial Corporation Employee Stock Ownership Trust (the "Trust"),  which forms
a part of The ALLIED Life Financial  Corporation  Employee Stock  Ownership Plan
(as amended and restated effective as of January 1, 1996, the "Plan"), and which
is  evidenced  by the Trust  Agreement  dated  June 20,  1994 (the  "ESOP  Trust
Agreement")  between  the Trustee and ALLIED  Life  Financial  Corporation  (the
"Company"),  in connection with the purchase by the Trustee of _______ shares of
Series A ESOP  Convertible  Preferred  Stock of the  Company,  no par value (the
"Preferred  Stock") pursuant to the Stock Purchase Agreement dated as of January
2, 1998  between the Company and the Trustee (the "Stock  Purchase  Agreement").
Capitalized  terms used herein that are not defined herein have the meanings set
forth in the Stock Purchase Agreement.

         In connection  therewith,  we have reviewed executed copies of: (i) the
ESOP Trust Agreement and the Stock Purchase  Agreement;  (ii) the Certificate of
Designations  of  Series  A ESOP  Convertible  Preferred  Stock of  ALLIED  Life
Financial Corporation;  (iii) the corporate charter and by-laws of State Street,
both as amended to date; (iv) other records, documents, and instruments relating
to the powers and organization of State Street and to State Street's  acceptance
of fiduciary duties, obligations and trusts; and (v) such other certificates and
documents  as we have deemed  relevant or  necessary  as a basis for the opinion
expressed below.

         In our examination,  we have assumed without any  investigation (i) the
legal capacity of each natural person, (ii) the full power and authority of each
person other than State Street to execute,  deliver and perform its  obligations
under each  document  heretofore  executed  and  delivered  or  hereafter  to be
executed and delivered and to do each other act heretofore  done or hereafter to
be done by such person,  (iii) the due authorization,  execution and delivery by
each person other than State  Street of each  document  heretofore  executed and
delivered or hereafter  to be executed  and  delivered by such person,  (iv) the
legality,  validity,  binding effect and  enforceability as to each person other
than  State  Street  of each  document  heretofore  executed  and  delivered  or
hereafter to be executed and delivered and of each other act heretofore  done or
hereafter to be done by such person, (v) the genuineness of each signature other
than those of officers of State Street and the  completeness and authenticity of
each  document  submitted  to us as an  original,  (vi)  the  conformity  to the
original of each document  submitted to us as a copy,  (vii) the authenticity of
the original of each document  submitted to us as a copy and (viii) no amendment
or  modification  hereafter  of any  provision of any  document.  Insofar as our
opinion  relates  to, or  depends  on,  any  matter of fact,  we have  relied on
representations as set forth in the Stock Purchase  Agreement,  and upon written
statements and certificates of officers of State Street and of public officials.

         We are members of the Bar of the  Commonwealth  of  Massachusetts  and,
accordingly, we express no opinion herein concerning any law other than the laws
of the Commonwealth of  Massachusetts  and the Federal laws of the United States
of America, to the extent specifically referred to herein.

         As used in this  opinion  with  respect to any matter,  the  qualifying
phrase "to the best of our knowledge" means that, without  independent review or
verification,  nothing  has come to the  attention  of John J. Cleary or John O.
Newell, the attorneys principally  responsible for performing legal services for
the Trustee with respect to said matter.

         We express no opinion as to matters  governed by the  Internal  Revenue
Code of 1986 (the "Code") or the Employee Retirement Income Security Act of 1974
("ERISA"), both as amended, or federal or state securities laws.

                                       89
<PAGE>

         Based on and subject to the foregoing, we are of the opinion that:

         1. State  Street,  acting  solely in its  capacity as Trustee,  has all
requisite  power and authority to execute,  deliver and perform its  obligations
under the Stock Purchase Agreement.

         2. The  execution,  delivery  and  performance  of the  Stock  Purchase
Agreement  by State  Street,  as  Trustee,  will not  violate the charter or the
by-laws of State Street or, to the best of our knowledge, any order, judgment or
decree binding on State Street (individually or as trustee).

         3. The Stock Purchase Agreement has been duly executed and delivered by
State Street, as Trustee.

         4.  No  authorization,  approval  or  consent  of,  and no  filings  or
registrations  with,  any  governmental  or  regulatory  authority or agency are
necessary  for the  execution,  delivery or  performance  by State Street of the
Stock Purchase Agreement or for the validity or enforceability  thereof,  except
for filings with the Internal  Revenue  Service or the Department of Labor which
may from time to time be required by ERISA or the Code.

         We express no opinion  as to any  matter  other than as  expressly  set
forth above,  and no other opinion is intended to be implied nor may be inferred
herefrom.  The opinions  expressed herein are given as of the date hereof and we
undertake no obligation  hereby and disclaim any obligation to advise you of any
change  after the date  hereof  pertaining  to any  matter  referred  to herein.
Neither  this  opinion nor any part hereof may be  delivered  to, used or relied
upon by any person or entity other than you without our prior written consent.



                                                 Very truly yours,

                                                 GOODWIN, PROCTER & HOAR, LLP


                                       90
<PAGE>


                                     Annex B



January 2, 1998


State Street Bank and Trust Company
Legal Division, Q6N
200 Newport Avenue
North Quincy, MA 02171

Ladies and Gentlemen:

I have acted as legal  counsel of ALLIED  Life  Financial  Corporation,  an Iowa
corporation (the "Company"),  and in such capacity I have advised the Company in
connection with The ALLIED Life Financial  Corporation  Employee Stock Ownership
Trust (the "ESOP Trust"), a trust established under that certain Trust Agreement
dated June 20,  1994 (the  "Trust  Agreement"),  between  the  Company and State
Street Bank and Trust  Company,  as trustee (the  "Trustee" or "State  Street"),
which  implements  and forms a part of the  ALLIED  Life  Financial  Corporation
Employee Stock Ownership Plan (the "Plan"),  and in connection with the purchase
by the Trustee of ______ shares of Series A ESOP Convertible  Preferred Stock of
the  Company,  no par  value  (the  "Preferred  Stock" or  "Preferred  Shares"),
pursuant  to the Stock  Purchase  Agreement  between the Company and the Trustee
dated January 2, 1998 (the "Stock Purchase  Agreement").  Capitalized terms used
herein without  definition shall have the meanings ascribed to them in the Stock
Purchase Agreement.

In  connection  therewith,  I have  reviewed  executed  copies  of (i) the Stock
Purchase  Agreement,  (ii) the  Certificate  of  Designations  in respect to the
Series A Preferred  Stock (the  "Certificate of  Designations"),  and (iii) such
other  certificates  and  documents as I have deemed  relevant or necessary as a
basis for the opinion expressed below.

In such  connection,  I have  assumed the  genuineness  of all  signatures,  the
authenticity  of all documents  submitted to me as originals,  the conformity to
original documents of all documents  submitted to me as photostatic or certified
copies,  and the authenticity of the originals of such copies. I have relied, to
the  extent  I deem  such  reliance  proper,  upon  representations  made in the
documents and certificates or representations made in writing by duly authorized
representatives of the Company.

In  rendering  the  opinions  contained  herein,  I have  assumed that (a) State
Street, as Trustee,  has all requisite power and authority to execute,  deliver,
and perform its  obligations  under the Stock Purchase  Agreement;  (b) that the
execution,  delivery,  and performance of the Stock Purchase  Agreement by State
Street, as Trustee,  will not violate the charter or bylaws of State Street; and
(c) that the Stock  Purchase  Agreement has been executed and delivered by State
Street as Trustee and constitutes the legal,  valid,  and binding  obligation of
the ESOP Trust,  enforceable in accordance with its terms, except as enforcement
may be limited by (i) bankruptcy,  insolvency,  reorganization,  or similar laws
affecting the  enforcement  of creditors'  rights  generally,  or (ii) equitable
principles of general  applicability  (regardless of whether such enforceability
is considered in a proceeding in equity or law). I express no opinion with 
respect to the laws of any jurisdiction other than the State of Iowa and the
United States of America.  These opinions are expressed as of the  date  hereof
and are  therefore  subject  to  subsequent  interpretive, regulatory,
legislative, and judicial developments.

                                       91
<PAGE>

Based on and subject to the foregoing, I am of the opinion that:

                           1.  The  Company  is  validly  existing  and in  good
                  standing  under  the  laws of the  State  of Iowa  and has all
                  requisite corporate power to execute, deliver, and perform the
                  Stock Purchase Agreement.  The Company has taken all necessary
                  corporate  action to authorize the  execution,  delivery,  and
                  performance of the Stock Purchase Agreement.

                           2.  The  Stock  Purchase   Agreement  has  been  duly
                  executed and delivered by the Company and is the legal, valid,
                  and binding agreement of the Company,  enforceable against the
                  Company in accordance with its respective terms, except as the
                  enforceability  thereof  may be  limited  by  (i)  bankruptcy,
                  insolvency, reorganization, moratorium, fraudulent conveyance,
                  or similar laws affecting the enforcement of creditors' rights
                  generally   or   (ii)   equitable    principles   of   general
                  applicability  (regardless of whether such  enforceability  is
                  considered in a proceeding in equity or at law).

                           3. The Preferred Shares have the rights, preferences,
                  and   qualifications   set   forth  in  the   Certificate   of
                  Designations,  have been validly authorized,  and upon payment
                  therefor as provided in the Stock Purchase Agreement,  will be
                  validly issued and outstanding and will constitute  fully-paid
                  and   nonassessable   shares  of  Series  A  ESOP  Convertible
                  Preferred  Stock of the Company.  The shares of the  Company's
                  common stock, no par value ("Common Stock") initially reserved
                  for issuance and to be issued upon conversion of the Preferred
                  Shares  in  accordance  with  their  terms  have been duly and
                  validly authorized and are sufficient in number for conversion
                  of all the Preferred  Shares,  and such Common Stock,  when so
                  issued upon such conversion,  will be duly and validly issued,
                  fully-paid, and nonassessable.

                           4. Upon payment by the Trust as provided in the Stock
                  Purchase Agreement,  the Company will convey to the Trust good
                  and valid title to the Preferred  Shares free and clear of any
                  liens, claims,  security interests,  and encumbrances,  except
                  for beneficial  interests  accruing to Plan  participants  and
                  their beneficiaries.

                           5. As of the date hereof, the Plan and the ESOP Trust
                  in  form  meet in all  material  respects  (a) the  applicable
                  requirements of Section 401(a) of the Internal Revenue Code of
                  1986, as amended (the "Code"), (b) the requirements applicable
                  to an employee  stock  ownership  plan for purposes of Section
                  4975(e)(7)  of  the  Code  and  the  regulations   promulgated
                  thereunder,  and (c) the  requirements  for exemption from tax
                  under Section 501(a) of the Code.

                           6. The shares of  Preferred  Stock to be purchased by
                  the ESOP Trust  constitute  "employer  securities"  within the
                  meaning of Section 409(1) of the Code and "qualifying employer
                  securities" within the meaning of Section 407(d)(5) of ERISA.

                           7. The shares of  Preferred  Stock to be purchased by
                  the ESOP Trust have  voting  rights  equivalent  to the common
                  stock into which such  shares may be  converted,  and the Plan
                  meets the voting rights  requirements of Section  409(e)(2) of
                  the Code with respect to such shares.


                                       92
<PAGE>

         In rendering the foregoing opinions and any other opinions expressed in
this letter, I have relied on the following assumptions:

                                            a.  Except as to  matters  expressly
                           opined on herein,  the Plan and ESOP Trust have been,
                           and will continue to be, administered and operated at
                           all times strictly in accordance with their terms and
                           with all  requirements  of applicable  law including,
                           but  not   limited   to,  all  of  the   requirements
                           applicable to a qualified plan under Section  401(a);
                           the  requirements  applicable  to an "employee  stock
                           ownership   plan"  (within  the  meaning  of  Section
                           4975(e)(7))  under  Section 4975 and 409 of the Code;
                           and the requirements applicable to a tax-exempt trust
                           under  Section  501(a);  and with the  provisions  of
                           ERISA and all regulations thereunder.

                                            b. The conversion price at which the
                           shares of Preferred  Stock may be converted to common
                           stock of the Company is  reasonable as of the date of
                           acquisition  of  such  Preferred  Stock  by the  ESOP
                           Trust.

                                            c.  No  fiduciary  of the  Plan  has
                           received any  consideration  of the type described in
                           Section   4975(c)(1)(F)   of  the  Code  and  Section
                           406(b)(3)   of   ERISA   in   connection   with   the
                           transactions described herein.

                                            d. The  fiduciaries  of the Plan and
                           the  ESOP  Trust  have  acted  prudently  and in good
                           faith,  and have given  appropriate  consideration to
                           those facts and  circumstances  that are  relevant to
                           the  transactions  in  accordance  with the fiduciary
                           requirements of part 4 of Title I of ERISA.

In connection  with the  assumptions  made in paragraph (b) above,  I understand
that the Trustee has received an opinion from  Houlihan  Lokey Howard & Zukin to
the  effect  that  (i) the  price  to be paid by the  ESOP  Trust  per  share of
Preferred Stock is not in excess of fair market value or adequate consideration,
as defined under Title I of the Employee Retirement Income Security Act of 1974,
as amended,  including the regulations thereunder ("ERISA");  and (ii) the terms
and conditions of the proposed  transaction,  including the terms  governing the
right to convert the Preferred Stock into Common Stock of the Company,  are fair
and reasonable to the ESOP Trust from a financial point of view.

These  opinions  are  rendered  solely to the  Trustee  in  connection  with the
transactions  of the Trustee  contemplated by the Stock Purchase  Agreement.  No
other person,  firm, or corporation may rely upon these opinions for any purpose
without my prior written consent.

Yours very truly,

Katherine E. Schmidt
Associate Corporate Counsel


                                       93