10-K

UNITED STATES

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, 2012
	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 0-16867

	UTG, INC.
	(Exact name of registrant as specified in its charter)
Delaware		20-2907892
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

5250 South Sixth Street, Springfield, IL	62703
(Address of principal executive offices)	(Zip code)

Registrant's telephone number, including area code: (217) 241-6300

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Name of each exchange on which registered
None	None

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

Title of class

Common Stock, stated value $.001 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [ ]  No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes [ ]  No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X]  No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X]    No [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant'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. [  ]

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

Large Accelerated Filer	[  ]	Accelerated Filer	[  ]
Non Accelerated Filer	[  ]	Smaller Reporting Company	[X]

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act).   Yes [  ]    No [X]

As of June 30, 2012, shares of the Registrant's common stock held by non-affiliates (based upon the price of the last sale of $13.25 per share), had an aggregate market value of approximately $18,154,912.

At February 1, 2013 the Registrant had 3,797,391 outstanding shares of Common Stock, stated value $.001 per share.

Documents incorporated by reference:  None

UTG, Inc.

Form 10-K

Year Ended December 31, 2012

TABLE OF CONTENTS

PART I	4
Item 1.   Business	4
Item 1A. Risk Factors	9
Item 1B. Unresolved Staff Comments	9
Item 2.   Properties	9
Item 3.   Legal Proceedings	9
Item 4.   Mine Safety Disclosures	9
PART II	10
Item 5.  Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	10
Item 6.   Selected Financial Data	11
Item 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations	11
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	19
Item 8.   Financial Statements and Supplementary Data	19
Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	47
Item 9A. Controls and Procedures	47
Item 9B. Other Information	48
PART III	49
Item 10.  Directors, Executive Officers and Corporate Governance	49
Item 11.  Executive Compensation	53
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	56
Item 13.  Certain Relationships and Related Transactions, and Director Independence	58
Item 14.  Principal Accounting Fees and Services	59
PART IV	60
Item 15.  Exhibits and Financial Statement Schedules	60

Forward-Looking Statements

This report on Form 10-K contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created by those laws. We have based our forward-looking statements on our current expectations and projections about future events. Our forward-looking statements include information about possible or assumed future results of operations. All statements, other than statements of historical facts, included or incorporated by reference in this report that address activities, events or developments that we expect or anticipate may occur in the future, including such things as the growth of our business and operations, our business strategy, competitive strengths, goals, plans, future capital expenditures and references to future successes may be considered forward-looking statements. Also, when we use words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "probably," or similar expressions, we are making forward-looking statements.

Numerous risks and uncertainties may impact the matters addressed by our forward-looking statements, any of which could negatively and materially affect our future financial results and performance.

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and, therefore, the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements that are included in this report, our inclusion of this information is not a representation by us or any other person that our objectives and plans will be achieved. In light of these risks, uncertainties and assumptions, any forward-looking event discussed in this report may not occur.  Our forward-looking statements speak only as of the date made, and we undertake no obligation to update or review any forward-looking statement, whether as a result of new information, future events or other developments, unless the securities laws require us to do so.

PART I

Item 1.  Business

Business Overview

UTG, Inc. (the "Registrant", "Company" or "UTG") is an insurance holding company incorporated in the state of Delaware in 2005. Its primary direct subsidiary is Universal Guaranty Life Insurance Company ("UG"). The Registrant and its primary subsidiary have only one significant segment, insurance.  The Company's dominant business is individual life insurance, which includes the servicing of existing insurance business in force, the acquisition of other companies in the insurance business, and the administration processing of life insurance business for other entities.

The holding company has no significant business operations of its own and relies on fees, dividends and other distributions from its operating subsidiary as the principal source of cash flows to meet its obligations.  Additional information regarding the cash flow and liquidity needs of the holding company can be found in the Liquidity and Capital Resources section of the Management's Discussion and Analysis of Financial Conditions and Results of Operations.

UG has several wholly-owned and majority-owned subsidiaries.  The subsidiaries were formed to hold certain real estate investments.  The real estate investments were placed into the limited liability companies and partnerships to provide additional protection to the policyholders and to UG.

This document at times will refer to the Registrant's largest shareholder, Mr. Jesse T. Correll and certain companies controlled by Mr. Correll.  Mr. Correll holds a majority ownership of First Southern Funding LLC, a Kentucky corporation, ("FSF") and First Southern Bancorp, Inc. ("FSBI"), a financial services holding company.  FSBI operates through its 100% owned subsidiary bank, First Southern National Bank ("FSNB").  Banking activities are conducted through multiple locations within south-central and western Kentucky.  Mr. Correll is Chief Executive Officer and Chairman of the Board of Directors of UTG and is currently UTG's largest shareholder through his ownership control of FSF, FSBI and affiliates.  At December 31, 2012, Mr. Correll owns or controls directly and indirectly approximately 55.66% of UTG's outstanding stock.

UTG's website is: www.utgins.com. Information regarding the Company, including recent filings with the Securities and Exchange Commission, are accessible via this website.

Insurance

UG's product portfolio consists of a limited number of life insurance product offerings. All of the products are individual life insurance products, with design variations from each other to provide choices to the customer. These variations generally center around the length of the premium paying period, length of the coverage period and whether the product accumulates cash value or not.

While the Company does not actively sell any new policies today, it has the following products available for issue:

Ten Pay Whole Life – This traditional insurance product has a level face amount and level premium is payable for the first ten policy years. This product is available for issue ages 0-65, and has a minimum face amount of $10,000. This policy can be used in conversion situations, where it is available up to age 75 at a minimum face amount of $5,000. There is no policy fee associated with this product.

Tradition – The Tradition policy is a fixed premium whole life insurance policy. Premiums are level and payable for life.  Issue ages are 0-80. The minimum face amount is the greater of $10,000 or the amount of coverage provided by a $100 annual premium. There is a $30 annual policy fee associated with this product.

Kid Kare – The Kid Kare product is a single premium level term policy to age 21.  The product is sold in units, with one unit equal to a face amount of $5,000 for a single premium of $250. The policy is issued from ages 0-15 and has conversion privileges at age 21. There is no policy fee associated with this product.

Full Circle – The Full Circle product is a decreasing term product available in 10, 15, 20, 25, or 30 year terms.  The product is generally issued to ages 20-65, with a minimum face amount of $10,000.

Sentinel – The Sentinel product is a 10 year level term product.  The product is generally issued to ages 18-65, with a minimum face amount of $25,000.

Reinsurance

As is customary in the insurance industry, the insurance subsidiary cedes insurance to, and assumes insurance from, other insurance companies under reinsurance agreements.  Reinsurance agreements are intended to limit a life insurer's maximum loss on a large or unusually hazardous risk or to obtain a greater diversification of risk.  The ceding insurance company remains primarily liable with respect to ceded insurance should any reinsurer be unable to meet the obligations assumed by it.  However, it is the practice of insurers to reduce their exposure to loss to the extent that they have been reinsured with other insurance companies.  The Company sets a limit on the amount of insurance retained on the life of any one person.  The Company will not retain more than $125,000, including accidental death benefits, on any one life.

The Company's reinsured business is ceded to numerous reinsurers.  The Company monitors the solvency of its reinsurers in seeking to minimize the risk of loss in the event of a failure by one of the parties.  The Company is primarily liable to the insureds even if the reinsurers are unable to meet their obligations.  The primary reinsurers of the Company are large, well-capitalized entities.  See Note 4 – Reinsurance in the Notes to the Consolidated Financial Statements for additional information regarding the Company's reinsurance activities.

Underwriting

The underwriting procedures of the insurance subsidiary are established by Management.  Insurance policies are issued by the Company based upon underwriting practices established for each market in which the Company operates.  Most policies are individually underwritten.  Applications for insurance are reviewed to determine additional information required to make an underwriting decision, which depends on the amount of insurance applied for and the applicant's age and medical history.  Additional information may include inspection reports, medical examinations, and statements from doctors who have treated the applicant in the past and, where indicated, special medical tests.  After reviewing the information collected, the Company either issues the policy as applied for, issues with an extra premium charge because of unfavorable factors, or rejects the application.  Substandard risks may be referred to reinsurers for full or partial reinsurance of the substandard risk.

Reserves

The applicable insurance laws under which the insurance subsidiary operates require that the insurance company report policy reserves as liabilities to meet future obligations on the policies in force.  These reserves are the amounts which, with the additional premiums to be received and interest thereon compounded annually at certain assumed rates, are calculated in accordance with applicable laws to be sufficient to meet the various policy and contract obligations as they mature.  These laws specify that the reserves shall not be less than reserves calculated using certain mortality tables and interest rates.

The liabilities for traditional life insurance and accident and health insurance policy benefits are computed using a net level method.  These liabilities include assumptions as to investment yields, mortality, withdrawals, and other assumptions based on the life insurance subsidiary's experience adjusted to reflect anticipated trends and to include provisions for possible unfavorable deviations.  The Company makes these assumptions at the time the contract is issued or, in the case of contracts acquired by purchase, at the purchase date.  Future policy benefits for individual life insurance and annuity policies are computed using interest rates ranging from 2% to 6% for life insurance and 2.5% to 9.25% for annuities.  Benefit reserves for traditional life insurance policies include certain deferred profits on limited-payment policies that are being recognized in income over the policy term.  Policy benefit claims are charged to expense in the period that the claims are incurred.  Current mortality rate assumptions are based on 1975-80 select and ultimate tables.  Withdrawal rate assumptions are based upon Linton B or Linton C, which are industry standard actuarial tables for forecasting assumed policy lapse rates.

Benefit reserves for universal life insurance and interest sensitive life insurance products are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges.  Policy benefits and claims that are charged to expense include benefit claims in excess of related policy account balances.

Investments

Investments are subject to applicable state insurance laws and regulations, which limit the concentration of investments in any one category or class and further limit the investment in any one issuer.  Generally, these limitations are imposed as a percentage of statutory assets or percentage of statutory capital and surplus of each company.

The following table summarizes the Company's fixed maturities distribution at December 31, 2012 and 2011 by ratings category as issued by Standard and Poor's, a leading ratings analyst.

Fixed Maturities
	% of Portfolio
Rating	2012	2011
Investment Grade
AAA	1%	27%
AA	25%	57%
A	17%	3%
BBB	47%	11%
Below Investment Grade	10%	2%
	100%	100%

The following table shows the composition, average maturity and yield of the Company's investment portfolio at December 31, 2012.

		Average
		Carrying	Average	Average
Investments		Value	Maturity	Yield
Fixed maturities held for sale	$	155,955,231	8.5 years	4.80%
Equity securities		23,902,271	Not applicable	5.92%
Trading securities		11,268,762	Not applicable	3.20%
Mortgage loans		13,472,237	1 year	7.59%
Discounted mortgage loans		26,902,436	3 years	15.56%
Investment real estate		65,433,194	Not applicable	2.16%
Policy loans		12,951,901	Not applicable	6.25%
Short-term investments and Cash and cash equivalents		6,268,320	On demand	0.12%
Total Investments and Cash and cash equivalents	$	316,154,352		6.01%

The Company, from time to time, acquires mortgage loans through participation agreements with FSNB.  FSNB has been able to provide the Company with additional expertise and experience in underwriting commercial and residential mortgage loans, which provide more attractive yields than the traditional bond market.  The Company is able to receive participations from FSNB for three primary reasons:  1) FSNB has already reached its maximum lending limit to a single borrower, but the borrower is still considered a suitable risk; 2) the interest rate on a particular loan may be fixed for a long period that is more suitable for UG given its asset-liability structure; and 3) FSNB's loan growth might at times outpace its deposit growth, resulting in FSNB participating such excess loan growth rather than turning customers away.  For originated loans, the Company's Management is responsible for the final approval of such loans after evaluation.  Before a new loan is issued, the applicant is subject to certain criteria set forth by Company Management to ensure quality control.  These criteria include, but are not limited to, a credit report, personal financial information such as outstanding debt, sources of income, and personal equity.  Once the loan is approved, the Company directly funds the loan to the borrower.  The Company bears all risk of loss associated with the terms of the mortgage with the borrower.

The Company began purchasing discounted commercial mortgage loans in 2009.  Management has extensive background and experience in the analysis and valuation of commercial real estate. The discounted loans are available through the FDIC's sale of assets of closed banks and from banks wanting to reduce their loan portfolios.  The loans are available on a loan by loan bid process.  Once a loan has been acquired, contact is made with the appropriate individuals to begin a dialog with a goal of determining the borrower's willingness to work together.  There are generally three paths a discounted loan will take:  the borrowers pay as required; a settlement is reached with the loan being paid off at a discounted value; or the loan is foreclosed.

During 2012 and 2011, the Company acquired approximately $22.2 million and $11.2 million in mortgage loans, respectively, including both regular participation mortgage loans as well as discounted mortgage loans.  FSNB services the mortgage loan portfolio of the Company.  The Company pays FSNB a .25% servicing fee on these loans and a one-time fee at loan origination of .50% of the original loan amount to cover costs incurred by FSNB relating to the processing and establishment of the loan.

Most mortgage loans are first position loans.  Loans issued are generally limited to no more than 80% of the appraised value of the property.

The Company has in place a monitoring system to provide Management with information regarding potential troubled loans.  Letters are sent to each mortgagee when the loan becomes 30 days or more delinquent.  Management is provided with a monthly listing of loans that are 60 days or more past due along with a brief description of what steps are being taken to resolve the delinquency.  All loans 90 days or more past due are placed on a non-performing status and classified as delinquent loans.  Quarterly, coinciding with external financial reporting, the Company reviews each delinquent loan and determines how each delinquent loan should be classified.  Management believes the current internal controls surrounding the mortgage loan selection process provide a quality portfolio with minimal risk of foreclosure and/or negative financial impact.

Management has conservatively decided to place the loans in the discounted mortgage loan portfolio on a non-accrual status, due to the instability of the borrowers.  The Company additionally only recognizes any discount once the Company's entire basis in a loan has been recovered.

On the remainder of the mortgage loan portfolio, interest accruals are analyzed based on the likelihood of repayment.  In no event will interest continue to accrue when accrued interest along with the outstanding principal exceeds the net realizable value of the property.  The Company does not utilize a specified number of days delinquent to cause an automatic non-accrual status.

A mortgage loan reserve is established and adjusted based on Management's quarterly analysis of the portfolio and any deterioration in value of the underlying property which would reduce the net realizable value of the property below its current carrying value.  The Company acquired the discounted mortgage loans at below fair value, therefore no reserve for delinquent loans is deemed necessary.  The loan portfolio since purchase is performing very well with a majority of the loans currently paying.  Those not currently paying are being vigorously worked by Management.The current discounted commercial mortgage loan portfolio has an average price of 36.1% of face value and Management has determined that this deep discount provides a financial cushion or built in allowance for any of the loans that are not currently performing within the portfolio of loans purchased.  The mortgage loan reserve was $0 at December 31, 2012 and 2011.

The following table shows a distribution of the Company's mortgage loans and discounted mortgage loans by type:

Mortgage Loans		Amount	% of Total
Commercial – all other	$	42,956,851	98%
Residential – all other		1,051,656	2%
Total	$	44,008,507	100%

The following table shows a geographic distribution of the Company's mortgage loan portfolio including discounted mortgage loans and investment real estate:

	Mortgage Loans	Real Estate
Alabama	2%	0%
Arizona	19%	8%
California	2%	1%
Colorado	0%	4%
Florida	21%	23%
Georgia	13%	8%
Indiana	0%	1%
Kentucky	19%	15%
Maryland	1%	0%
Minnesota	4%	0%
Nevada	4%	0%
North Carolina	2%	0%
Ohio	3%	1%
Pennsylvania	1%	0%
South Carolina	1%	3%
Tennessee	1%	6%
Texas	3%	26%
Utah	0%	1%
West Virginia	4%	3%
Total	100%	100%

See Note 2 – Investments in the Notes to the Consolidated Financial Statements and Management's Discussion and Analysis for additional information regarding the Company's investments.

Competition

The insurance business is a highly competitive industry and there are a number of other companies, both stock and mutual, doing business in areas where the Company operates.  Many of these competing insurers are larger, have more diversified and established lines of insurance coverage, have substantially greater financial resources and brand recognition, as well as a greater number of agents.  Other significant competitive factors in the insurance industry include policyholder benefits, service to policyholders, and premium rates.

In recent years, the Company has not placed an emphasis on new business production.  Costs associated with supporting new business can be significant.  Current sales primarily represent sales to existing customers through additional insurance needs or conservation efforts.  The Company currently encourages policy retention as opposed to new sales in an attempt to maintain or improve current persistency levels.

The Company performs administrative work as a third party administrator (TPA) for unaffiliated life insurance companies.  The Company intends to continue to pursue other TPA arrangements. The Company provides TPA services to insurance companies seeking business process outsourcing solutions.  Management believes the Company is positioned to generate additional revenues by utilizing the Company's current excess capacity and administrative services.

Regulation

Holding Company - States have enacted legislation requiring registration and periodic reporting by insurance companies domiciled within their respective jurisdictions that control or are controlled by other corporations so as to constitute a holding company system. Insurance holding company system statutes and regulations impose various limitations on investments in subsidiaries, and may require prior regulatory approval for material transactions between insurers and affiliates and for the payment of certain dividends and other distributions.

Insurance - Insurance companies are subject to regulation and supervision in the states in which they do business.  Generally the state supervisory agencies have broad administrative powers relating to granting and revoking licenses to transact business, licensing agents, approving policy forms, regulating trade practices, approving certain premium rates, setting minimum reserve and loss ratio requirements, determining the form and content of required financial statements, and prescribing the type and amount of investments permitted.  Insurance companies are also required to file detailed annual reports with supervisory agencies, and records of their business are subject to examination at any time.  Under the rules of the National Association of Insurance Commissioners ("NAIC"), insurance companies are examined periodically by one or more of the supervisory agencies.

Risk-Based Capital - The NAIC requires a risk-based capital formula be applied to all life and health insurers. The risk-based capital formula is a threshold formula rather than a target capital formula. It is designed only to identify companies that require regulatory attention and is not to be used to rate or rank companies that are adequately capitalized. UTG's insurance subsidiary, UG, is more than adequately capitalized under the risk-based capital formula.

Guaranty Assessments – State guaranty laws provide for assessments from insurance companies to be placed into a fund which is used, in the event of failure or insolvency of an insurance company, to fulfill the obligations of that company to its policyholders.  The amount which a company is assessed is determined according to the extent of these unsatisfied obligations in each state.  Assessments are recoverable to a great extent as offsets against state premium taxes.

Personnel

At December 31, 2012, UTG and its subsidiaries had 67 full-time employees.  UTG's operations are headquartered in Springfield, Illinois.

Item 1A. Risk Factors

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and Item 10(f)(1) of Regulation S-K, the Company has elected to comply with certain scaled disclosure reporting obligations, and therefore does not have to provide the information required by this item.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties

The Company owns an office complex in Springfield, Illinois, which houses the primary insurance operations.  The office buildings in this complex contain 57,000 square feet of office and warehouse space.

Item 3. Legal Proceedings

In the normal course of business the Company is involved, from time to time, in various legal actions and other state and federal proceedings.  Management is of the opinion that the ultimate disposition of these matters will not have a material adverse effect on the Company's results of operations or financial position.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Registrant is a public company whose common stock is traded in the over-the-counter market.  Over-the-counter quotations can be obtained using the UTGN.OB stock symbol.

The following table shows the high and low closing prices for each quarterly period during the past two years, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.  The quotations below were acquired from the NASDAQ web site, which also provides quotes for over-the-counter traded securities such as UTG.

	2012		2011
Period	High	Low	High	Low
First quarter	12.75	12.00	10.75	9.00
Second quarter	12.94	12.45	11.75	10.75
Third quarter	14.00	12.50	12.50	11.40
Fourth quarter	13.50	13.05	13.10	11.80

UTG has not declared or paid any dividends on its common stock in the past two fiscal years, and has no current plans to pay dividends on its common stock as it intends to retain all earnings for investment in and growth of the Company's business.  See Note 9 – Shareholders' Equity in the Notes to the Consolidated Financial Statements for information regarding dividend restrictions, including applicable restrictions on the ability of the Company's life insurance subsidiary to pay dividends.

As of February 1, 2013 there were 7,068 record holders of UTG common stock.

Purchases of Equity Securities

The following table provides information with respect to purchases we made of our common stock during the three months ended December 31, 2012 and total repurchases:

	Total Number of Shares Purchased		Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Program	Maximum Number of Shares That May Yet Be Purchased Under the Program		Approximate Dollar Value That May Yet Be Purchased Under the Program
Oct. 1 through Oct. 31, 2012	2,834	$	13.47	2,834	N/A	$	1,497,916
Nov. 1 through Nov. 30, 2012	1,826	$	13.18	1,826	N/A	$	1,473,848
Dec. 1 through Dec. 31, 2012	6,456	$	13.25	6,456	N/A	$	1,388,304
Total	11,116			11,116

The Board of Directors of UTG authorized the repurchase in the open market or in privately negotiated transactions of UTG's common stock. During September 2012, the Board of Directors approved a resolution to increase the repurchase amount by $1 million, for a total repurchase of $6 million.  Repurchased shares are available for future issuance for general corporate purposes.  This program can be terminated at any time.  Open market purchases are made based on the last available market price and are generally limited to a maximum per share price of the most recent reported per share GAAP equity book value of the Company.   Through December 31, 2012, UTG has spent $4,611,696 in the acquisition of 562,690 shares under this program.

Stock Performance Graph

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and Item 10(f)(1) of Regulation S-K, the Company has elected to comply with certain scaled disclosure reporting obligations, and therefore does not have to provide the information required by this item.

Item 6. Selected Financial Data

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and Item 10(f)(1) of Regulation S-K, the Company has elected to comply with certain scaled disclosure reporting obligations, and therefore does not have to provide the information required by this item.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is Management's discussion and analysis of the financial condition and results of operations of UTG, Inc. and its subsidiaries (collectively with the Parent, the "Company") for the years ended December 31, 2012 and 2011. This discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this report.

Cautionary Statement Regarding Forward-Looking Statements

This report on Form 10-K contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created by those laws. We have based our forward-looking statements on our current expectations and projections about future events. Our forward-looking statements include information about possible or assumed future results of operations. All statements, other than statements of historical facts, included or incorporated by reference in this report that address activities, events or developments that we expect or anticipate may occur in the future, including such things as the growth of our business and operations, our business strategy, competitive strengths, goals, plans, future capital expenditures and references to future successes may be considered forward-looking statements. Also, when we use words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "probably," or similar expressions, we are making forward-looking statements.

Numerous risks and uncertainties may impact the matters addressed by our forward-looking statements, any of which could negatively and materially affect our future financial results and performance.

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions, and, therefore, the forward-looking statements based on these assumptions, could themselves prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements that are included in this report, our inclusion of this information is not a representation by us or any other person that our objectives and plans will be achieved. In light of these risks, uncertainties and assumptions, any forward-looking event discussed in this report may not occur.  Our forward-looking statements speak only as of the date made, and we undertake no obligation to update or review any forward-looking statement, whether as a result of new information, future events or other developments, unless the securities laws require us to do so.

Overview

UTG, Inc., a Delaware corporation, is a life insurance holding company.  The Company's dominant business is individual life insurance, which includes the servicing of existing insurance policies in force, the acquisition of other companies in the life insurance business and the administration and processing of life insurance business for other entities.  The Company's focus for the future includes growing the administrative portion of the business.

Critical Accounting Policies

We have identified the accounting policies below as critical to the understanding of our results of operations and our financial condition.  The application of these critical accounting policies in preparing our consolidated financial statements requires Management to use significant judgments and estimates concerning future results or other developments including the likelihood, timing or amount of one or more future transactions or amounts.  Actual results may differ from these estimates under different assumptions or conditions.  On an on-going basis, we evaluate our estimates, assumptions and judgments based upon historical experience and various other information that we believe to be reasonable under the circumstances.  For a detailed discussion of other significant accounting policies, see Note 1 – Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements.

Future Policy Benefits – Because of the long-term nature of insurance contracts, the insurance company is liable for policy benefit payments that will be made in the future.  The liability for future policy benefits is determined by standard actuarial procedures common to the life insurance industry.  The accounting policies for determining this liability are disclosed in Note 1 – Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements.

DAC and Cost of Insurance Acquired – Deferred acquisition costs are commissions, premium taxes and other costs that vary with and are primarily related to the acquisition of new and renewal business and are generally deferred and amortized.  The deferred amounts are recorded as an asset and amortized to expense in a systematic manner. Additionally, the costs of acquiring blocks of insurance from other companies or through the acquisition of other companies are also deferred and recorded as deferred acquisition costs as indicated in Note 1 – Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements.

Valuation of Securities – The Company's investment portfolio consists of fixed maturities, equity securities, trading securities, mortgage loans and real estate to provide funding of future policy contractual obligations.  The Company's fixed maturities and equity securities are classified as available-for-sale.  Available-for-sale investments are carried at fair value with unrealized gains and losses reported in accumulated other comprehensive income in the Consolidated Balance Sheets.

The Company's trading securities are carried at fair value with unrealized gains and losses reported in income in the Consolidated Statements of Operations. Fair value is the price that the Company would expect to receive upon sale of the asset in an orderly transaction.

Mortgage loans on real estate are carried at their unpaid principal balances, adjusted for amortization of premium or discount and valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected.

Discounted mortgage loans consist of non-performing loans that were purchased at a deep discount through an auction process led by the Federal Government.  In general, the discounted mortgage loans are non-performing and there is a significant amount of uncertainty surrounding the timing and amount of cash flows to be received by the Company.  Accordingly, the Company records its investment in the discounted mortgage loans at its original purchase price.

Investment real estate held for sale is reported at the lower of cost or fair value less cost to sell. Expenses to maintain the property are expensed as incurred.

While the available-for-sale securities are generally expected to be held to maturity, they are classified as available-for-sale and are sold periodically to manage risk. Although a majority of the investment portfolio is classified as available-for-sale, the Company has the ability and intent to hold the securities until maturity. See Note 2 – Investments in the Notes to the Consolidated Financial Statements for detailed disclosures regarding the Company's investment portfolio.

Impairment of Investments – The Company continually monitors the investment portfolio for investments that have become impaired in value, where fair value has declined below carrying value.  While the value of the investments in the Company's portfolio continuously fluctuate due to market conditions, an other-than-temporary impairment charge is recorded only when a security has experienced a decline in fair market value which is deemed to be other than temporary.  The policies and procedures the Company uses to evaluate and account for impairments of investments are disclosed in Note 1 – Summary of Significant Accounting Policies and Note 2 – Investments in the Notes to the Consolidated Financial Statements. The Company makes every effort to appropriately assess the status and value of the securities with the information available regarding an other-than-temporary impairment. However, it is difficult to predict the future prospects of a distressed or impaired security.

Deferred Income Taxes – The provision for deferred income taxes is based on the asset and liability method of accounting for income taxes. Under this method, deferred income taxes are recognized by applying enacted statutory tax rates to temporary differences between amounts reported in the Consolidated Financial Statements and the tax basis of existing assets and liabilities. A valuation allowance is recognized for the portion of deferred tax assets that, in Management's judgment, is not likely to be realized. The effect on deferred income taxes of a change in tax rates or laws is recognized in income tax expense in the period that includes the enactment date.

Refer to Note 1 – Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements for detailed information regarding the Company's significant accounting policies.

Results of Operations

On a consolidated basis, the Company had net income attributable to common shareholders of $9.3 and $6.3 million in 2012 and 2011, respectively.  In 2012, income before income taxes was $15.4 million compared to $7.8 million in 2011.  The increase in income during 2012 was primarily attributable to an increase in investment income.

One-time events, primarily reflected in realized gains, comprise a substantial portion of net income of the Company during 2012 and 2011.  Future earnings will be significantly negatively impacted should earnings from these one-time items not be realizable in a future period.  While Management believes there remain additional investments with such one-time earnings, when or if realized remains uncertain.

Total revenue was $44.8 million in 2012 and $35 million in 2011. The increase in revenues is primarily attributable to an increase in net investment income and realized gains on investments.  The magnitude of realized investment gains and losses in a given year is a function of the timing of trades of investments relative to the markets themselves as well as the recognition of any impairments on investments.

Total benefits and other expenses paid in 2012 were $29.4 million compared to $27.2 million in 2011.

Revenues

Premiums and policy fee revenues, net of reinsurance premiums and policy fees, decreased approximately 2% when comparing 2012 to 2011.  The Company writes very little new business. Unless the Company acquires a new company or a block of in-force business, Management expects premium revenue to continue to decline on the existing block of business at a rate consistent with prior experience. The Company's average persistency rate for all policies in-force for 2012 and 2011 was approximately 96.2% and 95.8%, respectively.  Persistency is a measure of insurance in-force retained in relation to the previous year.

The following table reflects net investment income of the Company for the years ended December 31:

		2012		2011
Fixed maturities available for sale	$	7,490,812	$	4,277,019
Equity securities		1,745,375		971,008
Trading securities		2,565,518		(2,342,085)
Mortgage loans		1,022,895		645,838
Discounted mortgage loans		4,186,155		8,231,832
Real estate		8,384,417		6,820,847
Policy loans		809,885		807,389
Short-term investments		0		156,527
Cash and cash equivalents		7,647		8,396
Total consolidated investment income		26,212,704		19,576,771
Investment expenses		(7,693,447)		(8,378,606)
Consolidated net investment income	$	18,519,257	$	11,198,165

Net investment income increased approximately 65% in 2012 compared to 2011. The increase in the current year net investment income, in comparison to the prior year results, is attributable to favorable results in the fixed maturities, trading securities and real estate investment portfolios.

Income from the fixed maturities portfolio increased approximately 75% or $3.2 million when comparing 2012 and 2011 results.  In the first half of 2012, the Company invested a significant portion of its excess cash balances in fixed maturity investments, mainly BB and BBB rated corporate securities, which produced higher yields. Interest spreads on these investments are higher than historic trends and Management believes this is an opportunity to enhance yield and provide more recurring investment income.  Lower rated bonds are viewed by the marketplace to inherently hold more default risk.  The trade-off on this risk is a higher interest yield.  Each investment is analyzed prior to acquisition to determine if Management is comfortable with the increased risk relative to the yield.  Management believes there are opportunities currently available in this area where certain corporate bond issues have been more harshly impacted by the marketplace than may really be justified.

The fixed maturity portfolio was also impacted by a reinsurance agreement that was fully recaptured during the third quarter of 2012. At the time the reinsurance was repaid, the reserves were recaptured through the elimination of reinsurance recoverable in exchange for assets received equal to the recaptured reserves. The Company received approximately $27.7 million of investment grade debt securities. See Note 12 – Other Cash Flow Disclosures in the Notes to the Consolidated Financial Statements for further information regarding the repayment of the reinsurance.  The receipt of the debt securities increased the fixed maturities balance, therefore enhancing investment yields.

During 2012, the Company reported income of approximately $2.6 million in the trading securities portfolio compared to a loss of approximately $2.3 million during 2011.  The 2011 losses primarily resulted from holdings relating to market volatility and options relating to U.S. Treasury securities. The losses mainly occurred during the third quarter 2011 when the investment market took a sudden sharp decline as a result of the U.S. debt rating being lowered and concerns of the European nations' debt and potential defaults.  During 2012, the Company has seen a positive turn in earnings from the trading securities portfolio. Volatility as well as possible losses should be expected in the trading securities portfolio.  Management's target return on the trading securities portfolio is 6% to 8%.

Income from the discounted mortgage loan portfolio decreased approximately 49% when comparing 2012 and 2011 results. Income from discounted mortgage loans represented 16% of the consolidated investment income reported by the Company during 2012. The income from the discounted mortgage loan portfolio is mainly the result of one-time events.

Discounted mortgage loans have become more difficult to purchase as result of an increase in market competition. Management expects the discounted mortgage loan portfolio to continue to shrink as a result of the market competition and mortgage loan pay offs.  While Management believes the discounted loans will continue to have favorable earnings and outcomes as they are worked through, there can be no assurance this will remain true in future periods.  Changes in the current economy could have a negative impact on the loans, including the financial stability of the borrowers, the borrowers' ability to pay or refinance, the value of the property held as collateral and the ability to find purchasers at favorable prices.

During 2012, income from real estate investing activities represented 32% of the consolidated investment income reported by the Company.  Income from real estate investing activities increased approximately 23% when comparing 2012 to 2011 results.  Income generated by HPG Acquisitions, LLC ("HPG"), a majority owned subsidiary of UG, represents 82% or approximately $6.9 million of the real estate income reported. HPG's income increased approximately 11% in comparison to the prior year. HPG owns office buildings in Midland, Texas. The increase in income is a result of increased building occupancy and an increase in rent charged.

The following table reflects net realized investment gains (losses) for the years ended December 31:

		2012		2011
Fixed maturities available for sale	$	9,406,270	$	8,913,987
Equity securities		566,894		(126,193)
Real estate		4,519,553		7,321,059
Mortgage loans		0		(203,440)
Fixed maturities available for sale – OTTI		(12,680)		0
Real estate – OTTI		(174,725)		(3,360,430)
Mortgage loans – OTTI		0		(982,354)
Consolidated net realized investment gains	$	14,305,312	$	11,562,629

The Company's net realized investment gains increased approximately 24% when comparing 2012 to 2011.  The increase in net investment gains is mainly attributable to realized gains from fixed maturities and a decrease in other-than-temporary impairments recognized in the current year.  Realized gains from fixed maturities increased approximately 6% in comparison to the prior year. The gains are mainly attributable to the Company selling a portion of its U.S. Treasury holdings to take advantage of the unusually high price spreads.  The majority of the gains from the real estate portfolio are attributable to the sale of three pieces of real estate and are considered one-time events.

Realized gains from real estate decreased approximately 38% or $2.8 million when comparing 2012 and 2011 results.  Real estate gains are the result of one-time events and are expected to vary from year to year based upon the Company's real estate sales.  The 2011 real estate gains are mainly attributable to the sale of timber from Cumberland Woodlands, LLC, a wholly owned subsidiary of UG.

During 2012, realized gains were offset by other-than-temporary impairments of $187,405.  The other-than-temporary impairments were taken as a result of Management's assessment and consideration of the length of time the securities have remained in an unrealized loss position.  During 2011, other-than-temporary impairments of $4.3 million were taken as a result of appraisal valuations and Management's analysis of discounted mortgage loans and real estate. The mortgage loans and real estate were written down to better reflect current expected market values.

Other Income

In recent periods, Management's focus has been directed towards promoting and growing TPA services to unaffiliated life insurance companies.  The Company receives monthly fees based on policy in force counts and certain other activity indicators, such as number of premium collections performed, or services performed.  For the years ended 2012 and 2011, the Company received $2.1 million and $2 million for this work, respectively.  These TPA revenue fees are included in the line item "other income" on the Company's consolidated statements of operations.  During 2010, the Company obtained an additional contract for these services, which provides approximately $300,000 of additional revenues annually.  Administration for this block of business began in the first quarter of 2011.  The Company intends to continue to pursue other TPA arrangements as well. The Company provides TPA services to insurance companies seeking business process outsourcing solutions.  Management believes the Company is positioned to generate additional revenues by utilizing the Company's current excess capacity and administrative services.

In summary, the Company's basis for future revenue growth is expected to come from the following primary sources: expansion of TPA revenues, conservation of business currently in force, the maximization of investment earnings and the acquisition of other companies or policy blocks in the life insurance business.  Management has placed a significant emphasis on the development of these revenue sources to enhance these opportunities.

Expenses

Benefits, claims and settlement expenses, net of reinsurance benefits, increased approximately 3% in 2012 compared to 2011.  The increase primarily relates to changes in the Company's death claim experience.  Policy claims vary from year to year and therefore, fluctuations in mortality are to be expected and are not considered unusual by Management.

Changes in policyholder reserves, or future policy benefits, also impact this line item.  Reserves are calculated on an individual policy basis and generally increase over the life of the policy as a result of additional premium payments and acknowledgement of increased risk as the insured continues to age.

The short-term impact of policy surrenders is negligible since a reserve for future policy benefits payable is held which is, at a minimum, equal to and generally greater than the cash surrender value of a policy.  The benefit of fewer policy surrenders is primarily received over a longer time period through the retention of the Company's asset base.

Net amortization of cost of insurance acquired decreased approximately 7% in 2012 compared to 2011.  Cost of insurance acquired is established when an insurance company is acquired or when the Company acquires a block of in-force business.  The Company assigns a portion of its cost to the right to receive future profits from insurance contracts existing at the date of the acquisition.  Cost of insurance acquired is amortized with interest in relation to expected future profits, including direct charge-offs for any excess of the unamortized asset over the projected future profits. The interest rates may vary due to risk analysis performed at the time of acquisition on the business acquired. The Company utilizes a 12% discount rate on the remaining unamortized business.  The amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised.  Amortization of cost of insurance acquired is particularly sensitive to changes in interest rate spreads and persistency of certain blocks of insurance in-force.  This expense is expected to decrease, unless the Company acquires a new block of business.

Operating expenses increased approximately 14% in 2012 compared to 2011.  The increase in 2012 expenses, in comparison to 2011, is primarily attributable to an increase in legal expenses, charitable contributions and information technology expenses.

The Company's legal expenses increased approximately 73% or $125,000 when comparing 2012 to 2011. The increase in legal expenses is primarily attributable to the merger of American Capitol and the ACAP dissenters' lawsuit.  See Note 8 – Commitments and Contingencies in the Notes to the Consolidated Financial Statements for additional information regarding the ACAP dissenters' lawsuit.

The Company's charitable contributions increased approximately 50% or $322,000 when comparing 2012 to 2011.  Charitable contributions are expected to vary from year to year depending on the earnings of the Company.

The Company's information technology expenses increased approximately 33% or $283,000 when comparing 2012 to 2011.  During 2012, the Company invested in new software to assist in increasing operating efficiencies and to meet regulatory requirements.

Management continues to place significant emphasis on expense monitoring and cost containment. Maintaining administrative efficiencies directly impacts net income.

Financial Condition

Investment Information

Investments are the largest asset group of the Company.  The Company's insurance subsidiary is regulated by insurance statutes and regulations as to the type of investments they are permitted to make, and the amount of funds that may be used for any one type of investment.

The following table reflects, by investment category, the investments held by the Company as of December 31:

		2012	As a % of Total Investments		As a % of Total Assets
Fixed maturities	$	187,327,285	52	%	42	%
Equity securities		30,504,914	8	%	7	%
Trading securities		14,018,460	4	%	3	%
Mortgage loans		17,671,554	5	%	4	%
Discounted mortgage loans		26,336,953	7	%	6	%
Real estate		68,165,013	19	%	15	%
Policy loans		12,591,572	3	%	3	%
Short term investments		6,268,320	2	%	1	%
Total investments	$	362,884,071	100	%	81	%

		2011	As a % of Total Investments		As a % of Total Assets
Fixed maturities	$	124,583,177	47	%	29	%
Equity securities		17,299,628	7	%	4	%
Trading securities		8,519,064	3	%	2	%
Mortgage loans		9,272,919	4	%	2	%
Discounted mortgage loans		27,467,920	10	%	6	%
Real estate		62,701,375	24	%	14	%
Policy loans		13,312,229	5	%	3	%
Total investments	$	263,156,312	100	%	60	%

The Company's investments are generally managed to match related insurance and policyholder liabilities.  The comparison of investment return with insurance or investment product crediting rates establishes an interest spread.  Interest crediting rates on adjustable rate policies have been reduced to their guaranteed minimum rates, and as such, cannot be lowered any further.  Policy interest crediting rate changes and expense load changes become effective on an individual policy basis on the next policy anniversary.  Therefore, it takes a full year from the time the change was determined for the full impact of such change to be realized.  If interest rates decline in the future, the Company will not be able to lower rates and both net investment income and net income will be impacted negatively.

Management continues to view the Company's investment portfolio with utmost priority. Significant time has been spent internally researching the Company's risk and communicating with outside investment advisors about the current investment environment and ways to ensure preservation of capital and mitigate losses.  Management has put extensive efforts into evaluating the investment holdings.  Additionally, members of the Company's board of directors and investment committee have been solicited for advice and provided with information.  Management reviews the Company's entire portfolio on a security level basis to be sure all understand our holdings, potential risks and underlying credit supporting the investments.  Management intends to continue its close monitoring of its bond holdings and other investments for additional deterioration or market condition changes.  Future events may result in Management's determination that certain current investment holdings may need to be sold which could result in gains or losses in future periods.  Such future events could also result in other than temporary declines in value that could result in future period impairment losses.

There are a number of significant risks and uncertainties inherent in the process of monitoring impairments and determining if impairment is other-than-temporary. These risks and uncertainties related to Management's assessment of other-than-temporary declines in value include but are not limited to: the risk that Company's assessment of an issuer's ability to meet all of its contractual obligations will change based on changes in the credit characteristics of that issuer; the risk that the economic outlook will be worse than expected or have more of an impact on the issuer than anticipated; the risk that fraudulent information could be provided to the Company's investment professionals who determine the fair value estimates.

Liquidity

Liquidity provides the Company with the ability to meet on demand the cash commitments required by its business operations and financial obligations.  The Company's liquidity is primarily derived from positive cash flows from operations, a portfolio of marketable securities and line of credit facilities.  The primary cash needs of the Company are for the payment of claims and operating expenses, maintaining adequate statutory capital and surplus levels and meeting debt service requirements.

Parent Company Liquidity

UTG is a holding company that has no day-to-day operations of its own.  Cash flows from UTG's insurance subsidiary, UG, are used to pay costs associated with maintaining the Company in good standing with states in which it does business and the servicing of its debt.  UTG's cash flow is dependent on management fees received from its insurance subsidiary, stockholder dividends from its subsidiary and earnings received on cash balances.  As of December 31, 2012 and 2011, substantially all of the consolidated shareholders equity represents net assets of its subsidiaries.  In 2012, the Parent received $3.3 million in dividends from its insurance subsidiary and $3.5 million in 2011.  The dividends were mainly used to pay debt obligations of the Parent company.  Certain restrictions exist on the payment of dividends from the insurance subsidiary to the Parent company.  For further information regarding the restrictions on the payment of dividends by the insurance subsidiary, see Note 9 – Shareholders' Equity in the Notes to the Consolidated Financial Statements.  Although these restrictions exist, dividend availability from the insurance subsidiary has historically been sufficient to meet the cash flow needs of the Parent company.

Insurance Subsidiary Liquidity

Sources of cash flows for the insurance subsidiary primarily consist of premium and investment income.  Cash outflows from operations include policy benefit payments, commissions, administrative expenses, taxes and dividends to the Parent company.

Short-Term Borrowings

An additional source of liquidity to the Parent company and its subsidiaries is the line of credit facilities extended to them that allow borrowings of up to $28 million. As of December 31, 2012, the Company and its subsidiaries had available $21.3 million in line of credit facilities. As of December 31, 2011, the Company and its subsidiaries had available $14 million in line of credit facilities.  For additional information regarding the line of credit facilities, see Note 7 – Credit Arrangements in the Notes to the Consolidated Financial Statements.

The Company expects to have readily available funds for 2013 and the foreseeable future to conduct its operations and to maintain target capital ratios in the insurance subsidiary through internally generated cash flow and the credit facility.  In the unlikely event that more liquidity is needed, the Company could generate additional funds through such sources as a short-term credit facility and intercompany borrowing.

Consolidated Liquidity

Cash used in operating activities was $10.6 million and $10.5 million in 2012 and 2011, respectively.  Sources of operating cash flows of the Company, as with most insurance entities, is comprised primarily of premiums received on life insurance products and income earned on investments.  Uses of operating cash flows consist primarily of payments of benefits to policyholders and beneficiaries and operating expenses.  The Company has not marketed any significant new products for several years.  As such, premium revenues continue to decline.  Management anticipates future cash flows from operations to remain similar to historic trends.

During 2012, the Company used net cash of $56 million for investing activities.  During 2011, the investing activities provided net cash of $78.9 million.  Proceeds from investments sold decreased approximately 42% or $109 million when comparing 2012 to 2011. Investment purchases increased approximately 15% or $26.5 million. The net cash provided by and used in investing activities is expected to vary from year to year depending on market conditions and management's ability to find and negotiate favorable investment contracts.

Net cash provided by financing activities was $7 million during 2012 and net cash used by financing activities was $3.9 million during 2011. Proceeds from notes payable increased by approximately $8.4 million in 2012 compared to 2011. During 2012, a majority owned subsidiary of UG, HPG Acquisitions, LLC ("HPG") obtained a $12 million note, which represents a substantial portion of the proceeds from notes payable reported by the Company.  Net cash provided by financing activities was further enhanced in 2012 by $2.5 million in cash received from the reinsurance recapture.  See Note 12 – Other Cash Flow Disclosures in the Notes to the Consolidated Financial Statements for further information regarding the reinsurance recapture.

The Company had cash and cash equivalents of $23.3 million and $83 million as of December 31, 2012 and 2011, respectively.  The Company has a portfolio of marketable fixed and equity securities that are available for sale, if an unexpected event were to occur.  These securities had a fair value of approximately $218 million at December 31, 2012. However, the strong cash flows from investing activities, investment maturities and the availability of the line of credit facilities make it unlikely that the Company would need to sell securities for liquidity purposes.  See Note 2 – Investments in the Notes to the Consolidated Financial Statements for detailed disclosures regarding the Company's investment portfolio.

Management believes the overall sources of liquidity available will be sufficient to satisfy its financial obligations.

Capital Resources

The Company's capital structure consists of short-term debt, long-term debt and shareholders' equity. A complete analysis and description of the short-term and long-term debt issues outstanding as of December 31, 2012 and 2011 are presented in Note 7 – Credit Arrangements in the Notes to the Consolidated Financial Statements.

The Company had outstanding debt of $18.9 million as of December 31, 2012.  Approximately $1.6 million of this debt is related to the acquisition of ACAP Corporation.  Approximately $12.2 million of this debt is related to a note extended to a majority owned subsidiary of UTG, HPG Acquisitions, LLC ("HPG"), during 2012.  HPG borrowed money to return capital to its investors.  UTG Avalon, LLC, a wholly owned subsidiary of UG, has an outstanding line of credit in the amount of $5 million. See Note 7 – Credit Arrangements in the Notes to the Consolidated Financial Statements for detailed disclosures regarding the Company's notes payable.

The NAIC's risk-based capital requirements require insurance companies to calculate and report information under a risk-based capital formula.  The risk-based capital (RBC) formula measures the adequacy of statutory capital and surplus in relation to investment and insurance risks such as asset quality, mortality and morbidity, asset and liability matching and other business factors.  The RBC formula is used by state insurance regulators as an early warning tool to identify, for the purpose of initiating regulatory action, insurance companies that potentially are inadequately capitalized.

At December 31, 2012, UG has a ratio of approximately 3.41, which is 341% of the authorized control level.  Accordingly, the Company meets the RBC requirements.

The Board of Directors of UTG authorized the repurchase in the open market or in privately negotiated transactions of UTG's common stock. During September 2012, the Board of Directors approved a resolution to increase the repurchase amount by $1 million, for a total repurchase of $6 million.  Repurchased shares are available for future issuance for general corporate purposes.  This program can be terminated at any time.  Open market purchases are made based on the last available market price and are generally limited to a maximum per share price of the most recent reported per share GAAP equity book value of the Company.   Through December 31, 2012, UTG has spent $4,611,696 in the acquisition of 562,690 shares under this program.

Shareholders' equity was $79.7 million and $75.8 million as of December 31, 2012 and 2011, respectively. Total shareholders' equity increased approximately 5% in 2012 compared to 2011.  This increase is primarily due to the Company's current year earnings of $9.3 million.

The Company's investments are predominantly in fixed maturity investments such as bonds, which provide sufficient return to cover future obligations. The Company carries all of its fixed maturity holdings as available for sale which are reported in the consolidated financial statements at their market value.

Other Items

During 2012, the Company received approval from the states of Ohio and Texas to merge its two insurance companies. Effective January 1, 2012, American Capitol Insurance Company was merged into Universal Guaranty Life Insurance Company.

New Accounting Pronouncements

See Note 1 – Summary of Significant Account Policies in the Notes to the Consolidated Financial Statements for information regarding new accounting pronouncements.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements, financing activities or other relationships with unconsolidated entities or other persons.

Contractual Obligations

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and Item 10(f)(1) of Regulation S-K, the Company has elected to comply with certain scaled disclosure reporting obligations, and therefore does not have to provide the information required by this item.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and Item 10(f)(1) of Regulation S-K, the Company has elected to comply with certain scaled disclosure reporting obligations, and therefore does not have to provide the information required by this item.

Item 8. Financial Statements and Supplementary Data

Index to Financial Statements

	Page No.
UTG, Inc. and Consolidated Subsidiaries
Report of Independent Registered Public Accounting Firm	20
Consolidated Balance Sheets	21
Consolidated Statements of Operations	22
Consolidated Statements of Comprehensive Income	23
Consolidated Statements of Shareholders' Equity	24
Consolidated Statements of Cash Flows	25
Notes to Consolidated Financial Statements	26

Report of Independent Registered Public Accounting Firm

To the Board of Directors and

Shareholders of UTG, Inc. and Subsidiaries

Springfield, Illinois

We have audited the accompanying consolidated balance sheets of UTG, Inc. (a Delaware corporation, the "Company") and subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income, shareholders' equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, 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 a reasonable basis for our opinion.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of UTG, Inc. and subsidiaries as of December 31, 2012 and 2011, and the consolidated results of their operations and their consolidated cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Brown Smith Wallace, LLC

St. Louis, Missouri

March 22, 2013

UTG, Inc.
Consolidated Balance Sheets
As of December 31, 2012 and 2011
ASSETS
				2012		2011
Investments:
	Investments available for sale:
	Fixed maturities, at fair value (amortized cost $173,526,717 and $107,514,400)		$	187,327,285	$	124,583,177
	Equity securities, at fair value (cost $29,497,001 and $16,200,043)			30,504,914		17,299,628
	Trading securities, at fair value (cost $14,714,333and $9,147,237)			14,018,460		8,519,064
	Mortgage loans on real estate at amortized cost			17,671,554		9,272,919
	Discounted mortgage loans on real estate at amortized cost			26,336,953		27,467,920
	Investment real estate			68,165,013		62,701,375
	Policy loans			12,591,572		13,312,229
	Short-term investments			6,268,320		0
		Total investments		362,884,071		263,156,312
Cash and cash equivalents				23,321,246		82,925,675
Accrued investment income				2,444,790		1,136,741
Reinsurance receivables:
	Future policy benefits			29,318,018		64,693,384
	Policy claims and other benefits			4,492,430		4,029,412
Cost of insurance acquired				11,700,765		12,846,266
Deferred policy acquisition costs				426,218		488,266
Property and equipment, net of accumulated depreciation				1,344,851		1,527,285
Income taxes receivable				20,035		281,636
Other assets				5,381,969		2,636,280
		Total assets	$	441,334,393	$	433,721,257
LIABILITIES AND SHAREHOLDERS' EQUITY
Policy liabilities and accruals:
	Future policy benefits		$	293,800,162	$	301,393,689
	Policy claims and benefits payable			3,371,767		3,016,866
	Other policyholder funds			477,948		636,319
	Dividend and endowment accumulations			14,072,513		14,176,151
Income taxes payable				2,042,786		0
Deferred income taxes				12,301,577		13,745,751
Notes payable				18,857,954		9,531,645
Trading securities, at fair value (proceeds $8,094,787and $6,288,562)				7,552,704		5,471,475
Other liabilities				9,202,354		9,964,313
		Total liabilities		361,679,765		357,936,209
Shareholders' equity:
Common stock - no par value, stated value $.001 per share.
	Authorized 7,000,000 shares - 3,798,871 and 3,854,610 shares issued
	and outstanding			3,799		3,855
Additional paid-in capital				44,337,743		45,051,608
Retained earnings				21,917,318		12,651,687
Accumulated other comprehensive income				9,664,466		11,792,214
Total UTG shareholders' equity				75,923,326		69,499,364
Noncontrolling interest				3,731,302		6,285,684
		Total shareholders' equity		79,654,628		75,785,048
		Total liabilities and shareholders' equity	$	441,334,393	$	433,721,257

See accompanying notes.

UTG, Inc.
Consolidated Statements of Operations
For the Years Ended December 31, 2012 and 2011
				2012		2011
Revenues:
	Premiums and policy fees		$	13,276,880	$	14,082,400
	Reinsurance premiums and policy fees			(3,365,796)		(3,935,191)
	Net investment income			18,519,257		11,198,165
	Other income			2,098,642		2,055,502
		Revenues before realized gains (losses)		30,528,983		23,400,876
	Realized investment gains (losses), net:
	Other-than-temporary impairments			(187,405)		(4,342,784)
		Other realized investment gains, net		14,492,717		15,905,413
		Total realized investment gains, net		14,305,312		11,562,629
		Total revenues		44,834,295		34,963,505
Benefits and other expenses:
	Benefits, claims and settlement expenses:
		Life		21,436,471		20,539,432
		Reinsurance benefits and claims		(4,223,621)		(3,843,351)
		Annuity		1,074,622		1,044,455
		Dividends to policyholders		501,070		514,268
	Commissions and amortization of deferred
		policy acquisition costs		(443,102)		(941,581)
	Amortization of cost of insurance acquired			1,145,501		1,231,015
	Operating expenses			9,604,668		8,389,781
	Interest expense			296,868		260,540
		Total benefits and other expenses		29,392,477		27,194,559
Income before income taxes				15,441,818		7,768,946
Income tax expense				(5,494,382)		(1,265,662)
Net income				9,947,436		6,503,284
Net income attributable to noncontrolling interest				(681,805)		(186,669)
Net income attributable to common shareholders			$	9,265,631	$	6,316,615
Amounts attributable to common shareholders:
	Basic income per share		$	2.43	$	1.65
	Diluted income per share		$	2.43	$	1.65
	Basic weighted average shares outstanding			3,809,639		3,824,444
	Diluted weighted average shares outstanding			3,809,639		3,824,444

See accompanying notes.

UTG, Inc.
Consolidated Statements of Comprehensive Income
For the Years Ended December 31, 2012 and 2011
			2012		2011
Net Income		$	9,947,436	$	6,503,284
Other comprehensive income (loss), net of tax:
	Unrealized holding gains arising during period		3,978,086		14,578,037
	Less reclassification adjustment for gains included in net income		(6,105,834)		(5,794,092)
	Subtotal:  Other comprehensive income (loss), net of tax		(2,127,748)		8,783,945
Comprehensive income			7,819,688		15,287,229
Less comprehensive income attributable to noncontrolling interests			(681,805)		(858,084)
Comprehensive income attributable to UTG, Inc.		$	7,137,883	$	14,429,145

See accompanying notes.

UTG, Inc.
Consolidated Statements of Shareholders' Equity
Year ended December 31, 2012		Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Noncontrolling Interest		Total Shareholders' Equity
Balance at January 1, 2012	$	3,855	$	45,051,608	$	12,651,687	$	11,792,214	$	6,285,684	$	75,785,048
Common stock issued during year		16		214,965		0		0		0		214,981
Treasury shares acquired and retired		(72)		(928,830)		0		0		0		(928,902)
Net income attributable to common shareholders		0		0		9,265,631		0		0		9,265,631
Unrealized holding loss on securities net of noncontrolling interest and reclassification adjustment and taxes		0		0		0		(2,127,748)		0		(2,127,748)
Distributions		0		0		0		0		(3,236,187)		(3,236,187)
Gain attributable to noncontrolling interest		0		0		0		0		681,805		681,805
Balance at December 31, 2012	$	3,799	$	44,337,743	$	21,917,318	$	9,664,466	$	3,731,302	$	79,654,628
Year ended December 31, 2011
Balance at January 1, 2011	$	3,848	$	41,432,636	$	6,335,072	$	3,679,684	$	13,676,517	$	65,127,757
Common stock issued during year		50		4,094,476		0		0		0		4,094,526
Treasury shares acquired and retired		(43)		(475,504)		0		0		0		(475,547)
Net income attributable to common shareholders		0		0		6,316,615		0		0		6,316,615
Unrealized holding income on securities net of noncontrolling interest and reclassification adjustment and taxes		0		0		0		8,112,530		0		8,112,530
Distributions		0		0		0		0		(3,131,271)		(3,131,271)
Mergers		0		0		0		0		(6,895,546)		(6,895,546)
Acquisitions		0		0		0		0		1,777,900		1,777,900
Gain attributable to noncontrolling interest		0		0		0		0		858,084		858,084
Balance at December 31, 2011	$	3,855	$	45,051,608	$	12,651,687	$	11,792,214	$	6,285,684	$	75,785,048

See accompanying notes.

UTG, INC.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2012 and 2011
			2012		2011
Cash flows from operating activities:
Net income attributable to common shares		$	9,265,631	$	6,316,615
Adjustments to reconcile net income to net cash
used in operating activities net of changes in assets and liabilities
resulting from the sales and purchases of subsidiaries:
	Accretion of investments		(998,853)		(3,964,398)
	Realized investment gains, net		(14,305,312)		(11,562,629)
	Unrealized trading losses included in income		352,761		1,604,757
	Realized trading (gains) losses included in income		(2,462,205)		3,714,513
	Amortization of deferred policy acquisition costs		62,048		68,692
	Amortization of cost of insurance acquired		1,145,501		1,231,015
	Depreciation		1,242,149		1,412,661
	Net income attributable to noncontrolling interest		681,805		186,669
	Charges for mortality and administration
	of universal life and annuity products		(7,067,717)		(7,353,389)
	Interest credited to account balances		5,192,370		5,152,218
	Change in accrued investment income		(1,308,049)		472,684
	Change in reinsurance receivables		3,756,502		2,757,683
	Change in policy liabilities and accruals		(4,987,472)		(5,037,087)
	Change in income taxes payable		2,082,289		(4,535,859)
	Change in other assets and liabilities, net		(3,292,668)		(951,349)
Net cash used in operating activities			(10,641,220)		(10,487,204)
Cash flows from investing activities:
Proceeds from investments sold and matured:
	Fixed maturities available for sale		98,640,115		173,221,329
	Equity securities available for sale		1,953,434		3,572,456
	Trading securities		15,299,053		29,733,306
	Mortgage loans		7,546,798		3,139,903
	Discounted mortgage loans		6,533,313		15,032,186
	Real estate		16,411,306		29,621,068
	Policy loans		3,678,795		4,299,197
Total proceeds from investments sold and matured			150,062,814		258,619,445
Cost of investments acquired:
	Fixed maturities available for sale		(128,314,307)		(128,598,767)
	Equity securities available for sale		(13,834,829)		(727,258)
	Trading securities		(16,597,713)		(19,626,789)
	Mortgage loans		(15,945,433)		(1,235)
	Discounted mortgage loans		(6,299,298)		(11,122,151)
	Real estate		(15,829,535)		(15,842,681)
	Policy loans		(2,958,138)		(3,635,407)
	Short-term investments		(6,268,320)		0
Total cost of investments acquired			(206,047,573)		(179,554,288)
Disposal (purchase) of property and equipment			17,440		(214,475)
Net cash provided by (used in) investing activities			(55,967,319)		78,850,682
Cash flows from financing activities:
	Policyholder contract deposits		6,006,858		6,213,174
	Policyholder contract withdrawals		(6,644,674)		(5,851,344)
	Proceeds from notes payable/line of credit		16,321,035		7,943,000
	Payments of principal on notes payable/line of credit		(6,994,726)		(8,783,594)
	Purchase of treasury stock		(928,902)		(475,547)
	Proceeds from sale of subsidiary		0		164,327
	Non controlling distributions of consolidated subsidiary		(3,236,187)		(3,131,271)
	Cash received in reinsurance recapture		2,480,706		0
Net cash provided by (used in) financing activities			7,004,110		(3,921,255)
Net increase (decrease) in cash and cash equivalents			(59,604,429)		64,442,223
Cash and cash equivalents at beginning of year			82,925,675		18,483,452
Cash and cash equivalents at end of year		$	23,321,246	$	82,925,675

See accompanying notes.

UTG, Inc.

Notes to Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies

Business – UTG, Inc. is an insurance holding company. The Company's dominant business is individual life insurance, which includes the servicing of existing insurance in-force and the acquisition of other companies in the life insurance business. UTG and its subsidiaries are collectively referred to as the "Company".

This document at times will refer to the Registrant's largest shareholder, Mr. Jesse T. Correll and certain companies controlled by Mr. Correll.  Mr. Correll holds a majority ownership of First Southern Funding LLC, a Kentucky corporation, ("FSF") and First Southern Bancorp, Inc. ("FSBI"), a financial services holding company.  FSBI operates through its 100% owned subsidiary bank, First Southern National Bank ("FSNB").  Banking activities are conducted through multiple locations within south-central and western Kentucky.  Mr. Correll is Chief Executive Officer and Chairman of the Board of Directors of UTG and is currently UTG's largest shareholder through his ownership control of FSF, FSBI and affiliates.  At December 31, 2012, Mr. Correll owns or controls directly and indirectly approximately 55.66% of UTG's outstanding stock.

UTG's life insurance subsidiary has several wholly-owned and majority-owned subsidiaries.  The subsidiaries were formed to hold certain real estate investments.  The real estate investments were placed into the limited liability companies and partnerships to provided additional protection to the policyholders and to UG.

Basis of Presentation – The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"), under guidance issued by the Financial Accounting Standards Board ("FASB").  The preparation of financial statements in accordance with GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Principles of Consolidation – The accompanying consolidated financial statements include the accounts of the Registrant and its wholly and majority-owned subsidiaries.  All significant intercompany accounts and transactions have been eliminated during consolidation.

Business Segments – The Company has only one business segment – life insurance.

Investments – The Company reports its investments as follows:

Fixed Maturity Investments – The Company classifies its fixed maturity investments, which include bonds, as available for sale. Investments classified as available for sale are carried at fair value with unrealized gains and losses, net of deferred taxes, reflected directly in accumulated other comprehensive income.  Premiums and discounts on debt securities purchased at other than par value are amortized and accreted, respectively, to interest income in the Consolidated Statements of Operations, using the constant yield method over the period to maturity.  Net realized gains and losses on sales of available for sale securities, and unrealized losses considered to be other-than-temporary, are recorded to net realized investment gains (losses) in the Consolidated Statements of Operations.

Equity Securities – Investments in equity securities, which include common and preferred stocks, are reported at fair value with unrealized gains and losses, net of deferred taxes, reflected directly in accumulated other comprehensive income.

Trading Securities – Trading security investments are reported at fair value with gains and losses resulting from changes in fair value recognized in earnings. Trading securities include bonds, exchange traded equities, exchange traded options and exchange traded futures.

Mortgage Loans on Real Estate – Mortgage loans on real estate are reported at their unpaid principal balances, adjusted for amortization of premium or discount and valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected.

Discounted Mortgage Loans on Real Estate – Discounted mortgage loans on real estate are non-performing loans that the Company purchased at a deep discount through an auction process led by the Federal Government.  In general, the discounted loans are non-performing and there is a significant amount of uncertainty surrounding the timing and amount of cash flows to be received by the Company.  Accordingly, the Company records its investment in the discounted loans at its original purchase price.  Management works with the borrower to reach a settlement on the loan or they foreclose on the underlying collateral which is primarily commercial real estate.  For cash payments received during the work out process, the Company records these payments to interest income on a cash basis.  For loan settlements reached, the Company records the amount in excess of the carrying amount of the loan as a discount accretion to investment income at the closing date.  Management reviews the discount loan portfolio regularly for impairment.  If an impairment is identified (after consideration of the underlying collateral), the Company records an impairment to earnings in the period the information becomes known.

Investment Real Estate – Investment real estate held for sale is reported at the lower of cost or fair value less cost to sell. Expenses to maintain the property are expensed as incurred.

Policy Loans – Policy loans are reported at their unpaid balances, including accumulated interest, but not in excess of the cash surrender value of the related policy.

Short-Term Investments – Short-term investments are reported at amortized cost, which approximates fair value.

Gains and Losses – Realized gains and losses include sales of investments and investment impairments.  If any, other-than-temporary impairments in fair value are recognized in net income on the specific identification basis.

Fair Value – Fair values for cash, short-term investments, short-term debt, receivables and payables approximate carrying value. Fair values for fixed maturities, equity securities and certain other assets are determined in accordance with specific accounting guidance.  Fair values are based on quoted market prices, where available.  Otherwise, fair values are based on quoted market prices of comparable instruments in active markets, quotes in inactive markets, or other observable criteria. Mortgage loans on real estate are valued using discounted cash flow analyses. Discounted mortgage loans on real estate are reported at original purchase price, which Management believes reflects fair value.  For more specific information regarding the Company's measurements and procedures in valuing financial instruments, see Note 3 – Fair Value Measurements.

Impairment of Investments – The Company evaluates its investment portfolio for other-than-temporary impairments as described in Note 2 – Investments.  If a security is deemed to be other-than-temporarily impaired, the cost basis of the security is written down to fair value and is treated as a realized loss.

Current accounting guidance states that if an entity intends to sell or if it is more likely than not that it will be required to sell an impaired security prior to recovery of its cost basis, the security is to be considered other-than-temporarily impaired and the full amount of impairment must be charged to earnings.  Otherwise, losses on fixed maturities which are other-than-temporarily impaired are separated into two categories, the portion of the loss which is considered credit loss and the portion of the loss which is due to other factors.  The credit loss portion is charged to earnings while the loss due to other factors is charged to other comprehensive income.

Cash Equivalents – The Company considers certificates of deposit and other short-term instruments with an original purchased maturity of three months or less to be cash equivalents.

Cash – Cash consists of balances on hand and on deposit in banks and financial institutions.

Reinsurance - In the normal course of business, the Company seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding reinsurance to other insurance enterprises or reinsurers under excess coverage and coinsurance contracts.  The Company retains a maximum of $125,000 of coverage per individual life.

Reinsurance receivables are recognized in a manner consistent with the liabilities relating to the underlying reinsured contracts.  The cost of reinsurance related to long-duration contracts is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies.

Cost of Insurance Acquired - When an insurance company is acquired, the Company assigns a portion of its cost to the right to receive future cash flows from insurance contracts existing at the date of the acquisition.  The cost of policies purchased represents the actuarially determined present value of the projected future profits from the acquired policies.  Cost of insurance acquired is amortized with interest in relation to expected future profits, including direct charge-offs for any excess of the unamortized asset over the projected future profits.  The amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised.

Deferred Policy Acquisitions Costs - Commissions and other costs (salaries of certain employees involved in the underwriting and policy issue functions and medical and inspection fees) of acquiring life insurance products that vary with and are primarily related to the production of new business have been deferred. Deferred acquisition costs are amortized in a systematic manner which matches these costs with the associated revenues.

Property and Equipment - Company-occupied property, data processing equipment and furniture and office equipment are stated at cost less accumulated depreciation of $3,399,309 and $3,235,642 at December 31, 2012 and 2011, respectively.  Depreciation is computed on a straight-line basis for financial reporting purposes using estimated useful lives of three to thirty years.  Depreciation expense was $168,442 and $162,941 for the years ended December 31, 2012 and 2011, respectively.

Future Policy Benefits and Expenses - The liabilities for traditional life insurance and accident and health insurance policy benefits are computed using a net level method. These liabilities include assumptions as to investment yields, mortality, withdrawals, and other assumptions based on the life insurance subsidiary's experience adjusted to reflect anticipated trends and to include provisions for possible unfavorable deviations. The Company makes these assumptions at the time the contract is issued or, in the case of contracts acquired by purchase, at the purchase date.  Future policy benefits for individual life insurance and annuity policies are computed using interest rates ranging from 2% to 6% for life insurance and 2.5% to 9.25% for annuities. Benefit reserves for traditional life insurance policies include certain deferred profits on limited-payment policies that are being recognized in income over the policy term. Policy benefit claims are charged to expense in the period that the claims are incurred. Current mortality rate assumptions are based on 1975-80 select and ultimate tables. Withdrawal rate assumptions are based upon Linton B or C, which are industry standard actuarial tables for forecasting assumed policy lapse rates.

Benefit reserves for universal life insurance and interest sensitive life insurance products are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges.  Policy benefits and claims that are charged to expense include benefit claims in excess of related policy account balances.  Interest crediting rates for universal life and interest sensitive products range from 4.0% to 5.5% as of December 31, 2012 and 2011.

Policy Claims and Benefits Payable - Policy and contract claims include provisions for reported claims in process of settlement, valued in accordance with the terms of the policies and contracts, as well as provisions for claims incurred and unreported. The estimate of incurred and unreported claims is based on prior experience. The Company makes an estimate after careful evaluation of all information available to the Company.  There is no certainty the stated liability for policy claims and benefits payable, including the estimate for incurred but unreported claims, will be the Company's ultimate obligation.

Income Taxes – Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement book values and tax bases of assets and liabilities.  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.  More information concerning income taxes is provided in Note 6 – Income Taxes.

Earnings Per Share – The objective of both basic earnings per share ("EPS") and diluted EPS is to measure the performance of an entity over the reporting period.  The Company presents basic and diluted EPS on the face of the Consolidated Statements of Operations. Basic EPS is computed by dividing income available to common shareholders by the weighted average common shares outstanding for the period.  Diluted EPS is calculated by adding to shares outstanding the additional net effect of potentially dilutive securities or contracts, such as stock options, which could be exercised or converted into common shares.

Recognition of Revenues and Related Expenses - Premiums for traditional life insurance products, which include those products with fixed and guaranteed premiums and benefits, consist principally of whole life insurance policies, and certain annuities with life contingencies are recognized as revenues when due. Limited payment life insurance policies defer gross premiums received in excess of net premiums, which is then recognized in income in a constant relationship with insurance in force. Accident and health insurance premiums are recognized as revenue pro rata over the terms of the policies. Benefits and related expenses associated with the premiums earned are charged to expense proportionately over the lives of the policies through a provision for future policy benefit liabilities and through deferral and amortization of deferred policy acquisition costs. For universal life and investment products, generally there is no requirement for payment of premium other than to maintain account values at a level sufficient to pay mortality and expense charges. Consequently, premiums for universal life policies and investment products are not reported as revenue, but as deposits. Policy fee revenue for universal life policies and investment products consists of charges for the cost of insurance and policy administration fees assessed during the period. Expenses include interest credited to policy account balances and benefit claims incurred in excess of policy account balances.

Recently Issued Accounting Standards

Intangibles-Goodwill and Other – In July 2012, the Financial Accounting Standards Board ("FASB") issued guidance on the testing of indefinite-lived intangible assets for impairment, which is intended to reduce the cost and complexity of the impairment test for indefinite-lived intangible assets by providing an entity with the option to first assess qualitatively whether it is necessary to perform the impairment test that is currently in place. An entity would not be required to quantitatively calculate the fair value of an indefinite-lived intangible asset unless the entity determines that it is more likely than not that its fair value is less than its carrying value. This guidance is effective for interim and annual impairment tests beginning after September 15, 2012, with early adoption permitted. The adoption of this guidance did not have a material effect on the Company's consolidated financial statements.

Comprehensive Income - In June and December 2011, the FASB issued guidance that requires all non-owner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. For public entities, the amendments were effective for fiscal years and interim periods within those years, beginning after December 15, 2011 and should be applied retrospectively. This standard only affected the Company's presentation of comprehensive income.

Fair Value Measurement - In May 2011, the FASB issued guidance to achieve common fair value measurement and disclosure requirements in U.S. GAAP and IFRS. Some of the amendments in this update clarify the FASB's intent about the application of certain existing fair value measurement requirements and other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. None of the amendments in this update require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting. For public entities, this guidance was effective during interim and annual periods beginning after December 15, 2011. The adoption of this guidance, effective January 1, 2012, did not have a material effect on the Company's consolidated financial statements.

Note 2 – Investments

Available for Sale Securities – Fixed Maturity and Equity Securities

The following tables provide a summary of fixed maturities available for sale and equity securities by original or amortized cost and estimated fair value:

December 31, 2012		Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Investments available for sale:
Fixed maturities
U.S. Government and govt. agencies and authorities	$	33,430,165	$	5,457,009	$	0	$	38,887,174
States, municipalities and political subdivisions		160,000		6,637		0		166,637
U.S. special revenue and assessments		2,150,070		153,545		0		2,303,615
Collateralized mortgage obligations		2,241,384		183,409		(8)		2,424,785
Public utilities		399,900		63,662		0		463,562
All other corporate bonds		135,145,198		9,747,565		(1,811,251)		143,081,512
		173,526,717		15,611,827		(1,811,259)		187,327,285
Equity securities		29,497,001		1,303,328		(295,415)		30,504,914
Total	$	203,023,718	$	16,915,155	$	(2,106,674)	$	217,832,199

December 31, 2011		Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Investments available for sale:
Fixed maturities
U.S. Government and govt. agencies and authorities	$	56,794,363	$	13,805,565	$	0	$	70,599,928
States, municipalities and political subdivisions		235,000		6,317		0		241,317
Collateralized mortgage obligations		750,944		11,756		(2,973)		759,727
Public utilities		399,887		62,188		0		462,075
All other corporate bonds		49,334,206		4,901,684		(1,715,760)		52,520,130
		107,514,400		18,787,510		(1,718,733)		124,583,177
Equity securities		16,200,043		1,216,286		(116,701)		17,299,628
Total	$	123,714,443	$	20,003,796	$	(1,835,434)	$	141,882,805

The following table provides a summary of fixed maturities by contractual maturity as of December 31, 2012.  Actual maturities could differ from contractual maturities due to call or prepayment provisions:

Fixed Maturities Available for Sale December 31, 2012		Amortized Cost		Estimated Fair Value
Due in one year or less	$	4,067,722	$	4,116,580
Due after one year through five years		22,420,385		24,718,707
Due after five years through ten years		105,150,475		113,890,802
Due after ten years		39,643,584		42,173,173
Collateralized mortgage obligations		2,244,551		2,428,023
Total	$	173,526,717	$	187,327,285

By insurance statute, the majority of the Company's investment portfolio is invested in investment grade securities to provide ample protection for policyholders.

Below investment grade debt securities generally provide higher yields and involve greater risks than investment grade debt securities because their issuers typically are more highly leveraged and more vulnerable to adverse economic conditions than investment grade issuers.  In addition, the trading market for these securities is usually more limited than for investment grade debt securities.  Debt securities classified as below-investment grade are those that receive a Standard & Poor's rating of BB or below.

The Company held, below investment grade investments with an amortized cost of $19,080,167 and $1,843,314 as of December 31, 2012 and 2011, respectively.  The investments are all classified as "All other corporate bonds".

The fair value of investments with sustained gross unrealized losses at December 31, 2012 and 2011 are as follows:

December 31, 2012		Less than 12 months			12 months or longer			Total
		Fair value	Unrealized losses		Fair value	Unrealized losses		Fair value	Unrealized losses
Collateralized mortgage obligations	$	4,513	(8)	$	0	0	$	4,513	(8)
All other corporate bonds		13,776,705	(245,846)		385,823	(1,565,405)		14,162,528	(1,811,251)
Total fixed maturities	$	13,781,218	(245,854)	$	385,823	(1,565,405)	$	14,167,041	(1,811,259)
Equity securities	$	594,081	(295,415)	$	0	0	$	594,081	(295,415)

December 31, 2011		Less than 12 months			12 months or longer			Total
		Fair value	Unrealized losses		Fair value	Unrealized losses		Fair value	Unrealized losses
Collateralized mortgage obligations	$	7,008	(36)	$	97,868	(2,937)	$	104,876	(2,973)
All other corporate bonds		3,915,393	(17,574)		1,268,583	(1,698,186)		5,183,976	(1,715,760)
Total fixed maturities	$	3,922,401	(17,610)	$	1,366,451	(1,701,123)	$	5,288,852	(1,718,733)
Equity securities	$	848,032	(55,141)	$	292,441	(61,560)	$	1,140,473	(116,701)

The following table provides additional information regarding the number of securities that were in an unrealized loss position for greater than or less than twelve months:

	Less than 12  months	12 months or  longer	Total
As of December 31, 2012
Fixed maturities	8	3	11
Equity securities	9	0	9
As of December 31, 2011
Fixed maturities	5	6	11
Equity securities	2	1	3

Substantially all of the unrealized losses on fixed maturities available for sale at December 31, 2012 and 2011 are attributable to changes in market interest rates and general disruptions in the credit market subsequent to purchase.  The unrealized losses on equity investments were primarily attributable to normal market fluctuations.  The Company does not currently intend to sell nor does it expect to be required to sell any of the securities in an unrealized loss position.  Based upon the Company's expected continuation of receipt of contractually required principal and interest payments and its intent and ability to retain the securities until price recovery, as well as the Company's evaluation of other relevant factors, the Company deems these securities to be temporarily impaired as of December 31, 2012 and 2011.

Trading Securities

Securities designated as trading securities are reported at fair value, with gains or losses resulting from changes in fair value recognized in net investment income on the Consolidated Statements of Operations.  Trading securities include bonds, exchange traded equities, exchange traded options and exchange traded futures.  Trading securities carried as liabilities are securities sold short. A gain, limited to the price at which the security was sold short, or a loss, potentially unlimited in size, will be recognized upon the termination of the short sale.  The fair value of derivatives included in trading security assets and trading security liabilities as of December 31, 2012 was $6,745,528 and ($6,050,344), respectively. The fair value of derivatives included in trading security assets and trading security liabilities as of December 31, 2011 was $3,217,420 and $(4,187,885), respectively.  The derivatives held by the Company are for income generation purposes only.

Earnings from trading securities are classified in cash flows from operating activities.

The following table reflects trading securities revenue charged to net investment income for the periods ended December 31:

		2012		2011
Net unrealized gains (losses)	$	(352,761)	$	(1,604,757)
Net realized gains (losses)		2,918,279		(737,328)
Net unrealized and realized gains (losses)	$	2,565,518	$	(2,342,085)

Mortgage Loans and Discounted Mortgage Loans on Real Estate

The Company, from time to time, acquires mortgage loans through participation agreements with FSNB.  FSNB has been able to provide the Company with additional expertise and experience in underwriting commercial and residential mortgage loans, which provide more attractive yields than the traditional bond market.  The Company is able to receive participations from FSNB for three primary reasons:  1) FSNB has already reached its maximum lending limit to a single borrower, but the borrower is still considered a suitable risk; 2) the interest rate on a particular loan may be fixed for a long period that is more suitable for UG given its asset-liability structure; and 3) FSNB's loan growth might at times outpace its deposit growth, resulting in FSNB participating such excess loan growth rather than turning customers away.  For originated loans, the Company's Management is responsible for the final approval of such loans after evaluation.  Before a new loan is issued, the applicant is subject to certain criteria set forth by Company Management to ensure quality control.  These criteria include, but are not limited to, a credit report, personal financial information such as outstanding debt, sources of income, and personal equity.  Once the loan is approved, the Company directly funds the loan to the borrower.  The Company bears all risk of loss associated with the terms of the mortgage with the borrower.

The Company began purchasing discounted commercial mortgage loans in 2009.  Management has extensive background and experience in the analysis and valuation of commercial real estate. The discounted loans are available through the FDIC's sale of assets of closed banks and from banks wanting to reduce their loan portfolios.  The loans are available on a loan by loan bid process.  Once a loan has been acquired, contact is made with the appropriate individuals to begin a dialog with a goal of determining the borrower's willingness to work together.  There are generally three paths a discounted loan will take:  the borrowers pay as required; a settlement is reached with the loan being paid off at a discounted value; or the loan is foreclosed.

During 2012 and 2011, the Company acquired $22,244,731 and $11,123,386 in mortgage loans, respectively, including both regular participation mortgage loans as well as discounted mortgage loans.  FSNB services the mortgage loan portfolio of the Company.  The Company pays FSNB a .25% servicing fee on these loans and a one-time fee at loan origination of .50% of the original loan amount to cover costs incurred by FSNB relating to the processing and establishment of the loan.

During 2012 and 2011, the maximum and minimum lending rates for mortgage loans were:

	2012		2011
	Maximum rate	Minimum rate	Maximum rate	Minimum rate
Commercial Loans	10.00%	3.21%	18.00%	3.24%
Residential Loans	8.00%	6.00%	8.00%	7.00%

Most mortgage loans are first position loans.  Loans issued are generally limited to no more than 80% of the appraised value of the property.

The Company has in place a monitoring system to provide Management with information regarding potential troubled loans.  Letters are sent to each mortgagee when the loan becomes 30 days or more delinquent.  Management is provided with a monthly listing of loans that are 60 days or more past due along with a brief description of what steps are being taken to resolve the delinquency.  All loans 90 days or more past due are placed on a non-performing status and classified as delinquent loans.  Quarterly, coinciding with external financial reporting, the Company reviews each delinquent loan and determines how each delinquent loan should be classified.  Management believes the current internal controls surrounding the mortgage loan selection process provide a quality portfolio with minimal risk of foreclosure and/or negative financial impact.

Management has conservatively decided to place the loans in the discounted mortgage loan portfolio on a non-accrual status, due to the instability of the borrowers.  The Company additionally only recognizes any discount once the Company's entire basis in a loan has been recovered.

On the remainder of the mortgage loan portfolio, interest accruals are analyzed based on the likelihood of repayment.  In no event will interest continue to accrue when accrued interest along with the outstanding principal exceeds the net realizable value of the property.  The Company does not utilize a specified number of days delinquent to cause an automatic non-accrual status.

A mortgage loan reserve is established and adjusted based on Management's quarterly analysis of the portfolio and any deterioration in value of the underlying property which would reduce the net realizable value of the property below its current carrying value.  The Company acquired the discounted mortgage loans at below fair value, therefore no reserve for delinquent loans is deemed necessary.  Those not currently paying are being vigorously worked by Management.The current discounted commercial mortgage loan portfolio has an average price of 36.1% of face value and Management has determined that this deep discount provides a financial cushion or built in allowance for any of the loans that are not currently performing within the portfolio of loans purchased.  The mortgage loan reserve was $0 at December 31, 2012 and 2011.

The following table summarizes the number loans held in the discounted mortgage loan portfolio and the carrying value of the loans as of December 31, 2012:

Payment Frequency	Number of Loans		Carrying Value
No payments received	13	$	5,558,962
One-time payment received	3		0
Irregular payments received	17		7,681,387
Regular payments received	23		13,096,604
Total	56	$	26,336,953

The following table summarizes discounted mortgage loan holdings of the Company for the periods ended December 31:

		2012		2011
In good standing	$	3,945,701	$	6,657,971
Overdue interest over 90 days		3,368,750		5,907,192
Restructured		7,685,690		7,726,156
In process of foreclosure		11,336,812		7,176,601
Total discounted mortgage loans	$	26,336,953	$	27,467,920
Total foreclosed discounted mortgage loans during the year	$	2,603,017	$	21,059,386

Investment Real Estate

Real estate acquired through foreclosure, consisting of properties obtained through foreclosure proceedings or acceptance of a deed in lieu of foreclosure, is reported on an individual asset basis at the lower of cost or fair value, less disposal costs. Fair value is determined on the basis of current appraisals, comparable sales, and other estimates of value obtained principally from independent sources. When properties are acquired through foreclosure, any excess of the loan balance at the time of foreclosure over the fair value of the real estate held as collateral is recognized and charged to the income statement. Based upon Management's evaluation of the real estate acquired through foreclosure, additional expense is recorded when necessary in an amount sufficient to reflect any declines in estimated fair value. Gains and losses recognized on the disposition of the properties are recorded as realized gains and losses in the consolidated statements of income.

Analysis of Investment Operations

The following table reflects the Company's net investment income for the periods ended December 31:

		2012		2011
Fixed maturities	$	7,490,812	$	4,277,019
Equity securities		1,745,375		971,008
Trading securities		2,565,518		(2,342,085)
Mortgage loans		1,022,895		645,838
Discounted mortgage loans		4,186,155		8,231,832
Real estate		8,384,417		6,820,847
Policy loans		809,885		807,389
Short-term investments		0		156,527
Cash and cash equivalents		7,647		8,396
Total consolidated investment income		26,212,704		19,576,771
Investment expenses		(7,693,447)		(8,378,606)
Consolidated net investment income	$	18,519,257	$	11,198,165

The following table reflects the Company's net realized investments gains and losses for the periods ended December 31:

2012		Gross Realized Gains		Gross Realized (Losses)		Net Realized Gains (Losses)
Fixed maturities	$	9,816,015	$	(409,745)	$	9,406,270
Real estate		4,533,747		(14,194)		4,519,553
Common stock		566,894		0		566,894
Fixed maturities – OTTI		0		(12,680)		(12,680)
Common stock – OTTI		0		(174,725)		(174,725)
Total realized gains (losses)	$	14,916,656	$	(611,344)	$	14,305,312

2011		Gross Realized Gains		Gross Realized (Losses)		Net Realized Gains (Losses)
Fixed maturities	$	9,290,554	$	(376,567)	$	8,913,987
Equity securities		0		(126,193)		(126,193)
Real estate		7,371,693		(50,634)		7,321,059
Mortgage loans		0		(203,440)		(203,440)
Real estate – OTTI		0		(3,360,430)		(3,360,430)
Mortgage loans – OTTI		0		(982,354)		(982,354)
Total realized gains (losses)	$	16,662,247	$	(5,099,618)	$	11,562,629

Other-Than-Temporary Impairments

The Company regularly reviews its investment securities for factors that may indicate that a decline in fair value of an investment is other than temporary.  The factors considered by Management in its regular review to identify and recognize other-than-temporary impairment losses on fixed maturities include, but are not limited to: the length of time and extent to which the fair value has been less than cost; the Company's intent to sell, or be required to sell, the debt security before the anticipated recovery of its remaining amortized cost basis; the financial condition and near-term prospects of the issuer; adverse changes in ratings announced by one or more rating agencies; subordinated credit support, whether the issuer of a debt security has remained current on principal and interest payments; current expected cash flows; whether the decline in fair value appears to be issuer specific or, alternatively, a reflection of general market or industry conditions, including the effect of changes in market interest rates.  If the Company intends to sell a debt security, or it is more likely than not that it would be required to sell a debt security before the recovery of its amortized cost basis, the entire difference between the security's amortized cost basis and its fair value at the balance sheet date would be recognized by a charge to other-than-temporary losses in the Consolidated Statements of Operations.

Equity securities may experience other-than-temporary impairments in the future based on the prospects for full recovery in value in a reasonable period of time and the Company's ability and intent to hold the security to recovery.  If a decline in fair value is judged by Management to be other-than-temporary or Management does not have the intent or ability to hold a security, a loss is recognized by a charge to other-than-temporary impairment losses in the Consolidated Statements of Operations.

Based on Management's review of the investment portfolio, the Company recorded the following losses for other-than-temporary impairments in the Consolidated Statements of Operations for the periods ended December 31:

		2012		2011
Other than temporary impairments:
Common stock	$	174,725	$	0
Discounted mortgage loans		0		982,354
Real estate		0		3,360,430
States, municipalities and political subdivisions		12,680		0
Total other than temporary impairments	$	187,405	$	4,342,784

The other-than-temporary impairments recognized during 2012 were due to Management's assessment and consideration of the length of time the securities have remained in an unrealized loss position.

The other-than-temporary impairments recognized during 2011 were due to appraisal valuations and Management's analysis of discounted mortgage loans and real estate. The mortgage loans and real estate were written down to better reflect current expected market values.

Investments on Deposit

The Company had investments with a fair value of $11,660,630 and $10,998,036 on deposit with various state insurance departments as of December 31, 2012 and 2011, respectively.

Note 3 – Fair Value Measurements

The Company measures its assets and liabilities recorded at fair value in the Consolidated Balance Sheets based on the framework set forth in the GAAP fair value accounting guidance.  The framework establishes a fair value hierarchy of three levels based upon the transparency of information used in measuring the fair value of assets or liabilities as of the measurement date.  The fair value hierarchy prioritizes the inputs in the valuation techniques used to measure fair value into three categories.

Level 1 – Valuation is based upon quoted prices for identical assets or liabilities in active markets that the Company is able to access.  Level 1 fair value is not subject to valuation adjustments.

Level 2 – Valuation is based upon quoted prices for similar assets and liabilities in active markets or quoted prices for identical or similar instruments in markets that are not active. In addition, the Company may use various valuation techniques or pricing models that use observable inputs to measure fair value.

Level 3 – Valuation is based upon unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs reflect the Company's own assumptions about the inputs that market participants would use in pricing the asset or liability.

The Company determines the existence of an active market for an asset or liability based on its judgment as to whether transactions for the asset or liability occur in such markets with sufficient frequency and volume to provide reliable pricing information.  If the Company concludes that there has been a significant decrease in the volume and level of activity for an investment in relation to normal market activity for such investment, adjustments to transactions and quoted prices are made to estimate fair value.

The inputs used in the valuation techniques employed by the Company are provided by nationally recognized pricing services, external investment managers and internal resources.  To assess these inputs, the Company's review process includes, but is not limited to, quantitative analysis including benchmarking, initial and ongoing evaluations of methodologies used by external parties to calculate fair value, and ongoing evaluations of fair value estimates based on the Company's knowledge and monitoring of market conditions.

The Company periodically reviews the pricing service provider's policies and procedures for valuing securities.  The assumptions underlying the valuations from external service providers, including unobservable inputs, are generally not readily available as this information is often deemed proprietary.  Accordingly, the Company is unable to obtain comprehensive information regarding these assumptions and methodologies.

The Company's investments in fixed maturity securities available for sale, equity securities available for sale and trading securities assets and liabilities are carried at fair value.  The following are the Company's methodologies and valuation techniques for assets and liabilities measured at fair value.

Fixed maturities available for sale mainly consist of U.S. treasury securities and corporate debt securities. The Company employs a market approach to the valuation of securities where there are sufficient market transactions involving identical or comparable assets. If sufficient market data is not available for identical or comparable assets, the Company uses an income approach to valuation. The majority of the financial instruments included in fixed maturity securities available for sale are evaluated utilizing observable inputs; accordingly, they are categorized in either Level 1 or Level 2 of the fair value hierarchy. However, in instances where significant inputs utilized in valuation of the securities are unobservable, the securities are categorized in Level 3 of the fair value hierarchy.

Corporate securities primarily include fixed rate corporate bonds. Inputs utilized in connection with the Company's valuation techniques relating to this class of securities include recently executed transactions, market price quotations, benchmark yields and issuer spreads. Corporate securities are categorized in Level 2 of the fair value hierarchy.

U.S. treasury securities are based on quoted prices in active markets and are generally categorized in Level 1 of the fair value hierarchy.

Equity securities available for sale consist of common and preferred stocks mainly in private equity investments, financial institutions and insurance companies. Equity securities for which there is sufficient market data are categorized as Level 2 in the fair value hierarchy.  For the equity securities in which quoted market prices are not available, the transaction price is used as the best estimate of fair value at inception.  When evidence is believed to support a change to the carrying value from the transaction price, adjustments are made to reflect the expected exit values. The Company performs ongoing reviews of the underlying investments. The reviews consist of the evaluations of expected cash flows, material events and market data. These investments are included in Level 3 of the fair value hierarchy.

Securities designated as trading securities consist of bonds, exchange traded equities, exchange traded options and exchange traded futures.  These securities are primarily valued at quoted active market prices, and are therefore categorized as Level 1 in the fair value hierarchy. The exchange-traded bonds consist of corporate bonds and are classified as Level 2, consistent with the classification of the fixed maturity corporate bonds.

The following table presents the Company's assets and liabilities measured at fair value in the consolidated balance sheet on a recurring basis as of December 31, 2012.

		Level 1		Level 2		Level 3		Total
Assets
Fixed Maturities, available for sale	$	20,993,398	$	166,060,160	$	273,727	$	187,327,285
Equity Securities, available for sale		1,448,585		6,092,614		22,963,715		30,504,914
Trading Securities		13,903,148		115,312		0		14,018,460
Total	$	36,345,131	$	172,268,086	$	23,237,442	$	231,850,659
Liabilities
Trading Securities	$	7,552,704	$	0	$	0	$	7,552,704

The following table presents the Company's assets and liabilities measured at fair value in the consolidated balance sheet on a recurring basis as of December 31, 2011.

		Level 1		Level 2		Level 3		Total
Assets
Fixed Maturities, available for sale	$	59,735,100	$	64,632,760	$	215,317	$	124,583,177
Equity Securities, available for sale		0		7,344,260		9,955,368		17,299,628
Trading Securities		8,519,064		0		0		8,519,064
Total	$	68,254,164	$	71,977,020	$	10,170,685	$	150,401,869
Liabilities
Trading Securities	$	5,471,475	$	0	$	0	$	5,471,475

The following table provides reconciliations for Level 3 assets measured at fair value on a recurring basis. Transfers into and out of Level 3 are recognized as of the end of the quarter in which they occur.

		Fixed Maturities, Available for Sale		Equity Securities, Available for Sale		Total
Balance at December 31, 2011	$	215,317	$	9,955,368	$	10,170,685
Transfers in to Level 3		0		1,424,117		1,424,117
Total unrealized gain or losses:
Included in other comprehensive income		58,410		61,945		120,355
Purchases		0		11,522,285		11,522,285
Balance at December 31, 2012	$	273,727	$	22,963,715	$	23,237,442

The Level 3 securities include collateralized debt obligations of trust preferred securities issued by banks and insurance companies and certain equity securities with unobservable inputs. None of the collateral is subprime or Alt-A mortgages (loans for which the typical documentation was not provided by the borrower).

The following table presents transfers in and out of each of the valuation levels of fair value.

		2012
		In		Out		Net
Level 1	$	0	$	0	$	0
Level 2		0		(1,424,117)		(1,424,117)
Level 3		1,424,117		0		1,424,117

Transfers into Level 3 occur when there is a lack of observable market information.  The transfers occurred at December 31, 2012.

Certain assets are not carried at fair value on a recurring basis, including investments such as mortgage loans and policy loans. Accordingly such investments are only included in the fair value hierarchy disclosure when the investment is subject to re-measurement at fair value after initial recognition and the resulting re-measurement is reflected in the consolidated financial statements.

The carrying values and estimated fair values of certain of the Company's financial instruments not recorded at fair value in the Consolidated Balance Sheets are shown below. Because the fair value for all consolidated balance sheet items are not required to be disclosed, the aggregate fair value amounts presented below are not reflective of the underlying value of the Company.

		December 31, 2012				December 31, 2011
Assets		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Mortgage loans on real estate	$	17,671,554	$	17,803,159	$	9,272,919	$	9,116,148
Discounted mortgage loans		26,336,953		26,336,953		27,467,920		27,467,920
Investment real estate		68,165,013		68,165,013		62,701,375		62,701,375
Policy loans		12,591,572		12,591,572		13,312,229		13,312,229
Cash and cash equivalents		23,321,246		23,321,246		82,925,675		82,925,675
Short term investments		6,268,320		6,268,320		0		0
Liabilities
Notes payable		18,857,954		18,857,954		9,531,645		9,519,300

The above estimated fair value amounts have been determined based upon the following valuation methodologies. Considerable judgment was required to interpret market data in order to develop these estimates. Accordingly, the estimates are not necessarily indicative of the amounts which could be realized in a current market exchange.  The use of different market assumptions or estimation methodologies may have a material effect on the fair value amounts.

The fair values of mortgage loans on real estate are estimated using discounted cash flow analyses and interest rates being offered for similar loans to borrowers with similar credit ratings.

The Company has been purchasing non-performing discounted mortgage loans at a deep discount through an auction process led by the Federal Government.  In general, the discounted loans are non-performing and there is a significant amount of uncertainty surrounding the timing and amount of cash flows to be received by the Company.  Accordingly, the Company records its investment in the discounted loans at its original purchase price, which Management believes approximates fair value.

Investment real estate is recorded at the lower of the net investment in the real estate or the fair value of the real estate less costs to sell.  The determination of fair value assessments are performed on a periodic, non-recurring basis by external appraisal and assessment of property values by Management.

Policy loans are carried at the aggregate unpaid principal balances in the consolidated balance sheets which approximates fair value, and earn interest at rates ranging from 4% to 8%.  Individual policy liabilities in all cases equal or exceed outstanding policy loan balances.

The carrying amount of short term investments in the financial statements approximates fair value.

The carrying amount of cash and cash equivalents in the financial statements approximates fair value given the highly liquid nature of the instruments.

The carrying value is a reasonable estimate of fair value for notes payable subject to floating rates of interest.  The fair value of notes payable with fixed rate borrowings is determined based on the borrowing rates currently available to the Company for loans with similar terms and average maturities.

Note 4 - Reinsurance

As is customary in the insurance industry, the insurance subsidiary cedes insurance to, and assumes insurance from, other insurance companies under reinsurance agreements.  Reinsurance agreements are intended to limit a life insurer's maximum loss on a large or unusually hazardous risk or to obtain a greater diversification of risk.  The ceding insurance company remains primarily liable with respect to ceded insurance should any reinsurer be unable to meet the obligations assumed by it.  However, it is the practice of insurers to reduce their exposure to loss to the extent that they have been reinsured with other insurance companies.  The Company sets a limit on the amount of insurance retained on the life of any one person.  The Company will not retain more than $125,000, including accidental death benefits, on any one life.  At December 31, 2012, the Company had gross insurance in force of $1.6 billion of which approximately $335 million was ceded to reinsurers.  At December 31, 2011, the Company had gross insurance in force of $1.7 billion of which approximately $401 million was ceded to reinsurers.

The Company's reinsured business is ceded to numerous reinsurers.  The Company monitors the solvency of its reinsurers in seeking to minimize the risk of loss in the event of a failure by one of the parties.  The Company is primarily liable to the insureds even if the reinsurers are unable to meet their obligations.  The primary reinsurers of the Company are large, well-capitalized entities.

Most recently, UG utilized reinsurance agreements with Optimum Re Insurance Company ("Optimum"), and Swiss Re Life and Health America Incorporated ("SWISS RE").  Optimum and SWISS RE currently hold an "A-" (Excellent) and "A+" (Superior) rating, respectively, from A.M. Best, an industry rating company.  The reinsurance agreements were effective December 1, 1993, and covered most new business of UG.  Under the terms of the agreements, UG cedes risk amounts above its retention limit of $100,000 with a minimum cession of $25,000.  Ceded amounts are shared equally between the two reinsurers on a yearly renewable term ("YRT") basis, a common industry method.  The treaty is self-administered; meaning the Company records the reinsurance results and reports them to the reinsurers.

Also, Optimum is the reinsurer of 100% of the accidental death benefits ("ADB") in force of UG.  This coverage is renewable annually at the Company's option.  Optimum specializes in reinsurance agreements with small to mid-size carriers such as UG.

UG entered into a coinsurance agreement with Park Avenue Life Insurance Company ("PALIC") effective September 30, 1996.  Under the terms of the agreement, UG ceded to PALIC substantially all of its then in-force paid-up life insurance policies.  Paid-up life insurance generally refers to non-premium paying life insurance policies.  Under the terms of the agreement, UG sold 100% of the future results of this block of business to PALIC through a coinsurance agreement.  UG continues to administer the business for PALIC and receives a servicing fee through a commission allowance based on the remaining in-force policies each month.  PALIC has the right to assumption reinsure the business, at its option, and transfer the administration.  The Company is not aware of any such plans.  PALIC and its ultimate parent, The Guardian Life Insurance Company of America ("Guardian"), currently hold an "A" (Excellent) and "A++" (Superior) rating, respectively, from A.M. Best.  The PALIC agreement accounts for approximately 63% and 64% of UG's reinsurance reserve credit, as of December 31, 2012 and 2011, respectively.

At December 31, 1992, UG (formerly American Capitol) entered into a reinsurance agreement with Canada Life Assurance Company ("the Canada Life agreement") that fully reinsured virtually all of its traditional life insurance policies. The reinsurer's obligations under the Canada Life agreement were secured by assets withheld by UG representing policy loans and deferred and uncollected premiums related to the reinsured policies. UG continues to administer the reinsured policies. At December 31, 2012, the Canada Life agreement has insurance in-force of approximately $7,433,000, with no reserves being held on that amount.  At December 31, 2011, the Canada Life agreement has insurance in-force of approximately $52,560,000, with reserves being held on that amount of approximately $34,193,000.

On September 30, 1998, UG entered into a coinsurance agreement with The Independent Order of Vikings, (IOV) an Illinois fraternal benefit society.  Under the terms of the agreement, UG agreed to assume, on a coinsurance basis, 25% of the reserves and liabilities arising from all in-force insurance contracts issued by the IOV to its members.  At December 31, 2012, the IOV insurance in-force assumed by UG was approximately $1,579,000, with reserves being held on that amount of approximately $358,000.  At December 31, 2011, the IOV insurance in-force assumed by UG was approximately $1,582,000, with reserves being held on that amount of approximately $365,000.

The Canada Life agreement was fully repaid in August 2012. With the reinsurance recaptured by the Company, a 15% profit share will continue to be paid to the reinsurer going forward relative to the block of business.  As a result of the reinsurance being repaid, the Company recognized assets in exchange for reducing its reinsurance recoverable.  See Note 12 – Other Cash Flow Disclosures for additional information regarding the reinsurance recapture.

The Company does not have any short-duration reinsurance contracts.  The effect of the Company's long-duration reinsurance contracts on premiums earned in 2012 and 2011 were as follows:

		2012 Premiums Earned		2011 Premiums Earned
Direct	$	13,242,000	$	14,049,000
Assumed		35,000		33,000
Ceded		(3,366,000)		(3,935,000)
Net Premiums	$	9,911,000	$	10,147,000

Note 5 – Cost of Insurance Acquired

When an insurance company is acquired, the Company assigns a portion of its cost to the right to receive future cash flows from insurance contracts existing at the date of the acquisition.  The cost of policies purchased represents the actuarially determined present value of the projected future profits from the acquired policies.  Cost of insurance acquired is amortized with interest in relation to expected future profits, including direct charge-offs for any excess of the unamortized asset over the projected future profits.  The interest rates utilized may vary due to differences in the blocks of business.  The interest rate utilized in the amortization calculation of the remaining cost of insurance acquired is 12%.  The amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised.

		2012		2011
Cost of insurance acquired, beginning of year	$	12,846,266	$	14,077,281
Interest accretion		1,564,162		1,711,885
Amortization		(2,709,663)		(2,942,900)
Net amortization		(1,145,501)		(1,231,015)
Cost of insurance acquired, end of year	$	11,700,765	$	12,846,266

Estimated net amortization expense of cost of insurance acquired for the next five years is as follows:

	Interest Accretion	Amortization	Net Amortization
2013	1,427,000	2,491,000	1,064,000
2014	1,299,000	2,285,000	986,000
2015	1,181,000	2,088,000	907,000
2016	1,072,000	1,945,000	873,000
2017	967,000	1,806,000	839,000

Note 6 – Income Taxes

UTG and UG file separate federal income tax returns.

Income tax expense (benefit) consists of the following components:

		2012		2011
Current tax	$	5,716,480	$	5,296,407
Deferred tax		(222,098)		(4,030,745)
	$	5,494,382	$	1,265,662

The expense for income differed from the amounts computed by applying the applicable United States statutory rate of 35% before income taxes as a result of the following differences:

		2012		2011
Tax computed at statutory rate	$	5,404,636	$	2,719,131
Changes in taxes due to:
Non-controlling interest		(238,632)		(65,334)
Small company deduction		0		(623,767)
Other		328,378		(764,368)
Income tax expense (benefit)	$	5,494,382	$	1,265,662

The following table summarizes the major components that comprise the deferred tax liability as reflected in the balance sheets:

		2012		2011
Investments	$	4,644,740	$	5,519,570
Cost of insurance acquired		4,095,268		4,496,193
Deferred policy acquisition costs		149,176		170,893
Management/consulting fees		(66,344)		(70,554)
Future policy benefits		2,137,835		2,447,327
Deferred gain on sale of subsidiary		2,312,483		2,312,483
Other liabilities		(63,967)		(120,039)
Federal tax DAC		(907,614)		(1,010,122)
Deferred tax liability	$	12,301,577	$	13,745,751

At December 31, 2012 and 2011, respectively, the Company had gross deferred tax assets of $2,793,932 and $2,879,079, and gross deferred tax liabilities of $15,095,508 and $16,624,830, resulting from temporary differences primarily related to the life insurance subsidiary.  A valuation allowance is to be provided when it is more likely than not that deferred tax assets will not be realized by the Company. No valuation allowance has been recorded relating to the Company's deferred tax assets since, in Management's judgment, the Company will more likely than not have sufficient taxable income in future periods to fully realize its existing deferred tax assets.

The Company's Federal income tax returns are periodically audited by the Internal Revenue Service ("IRS").  In February 2011, the IRS audited UTG's 2009 federal income tax return.  The examination was closed with no adjustments to the return.  There are currently no examinations in process, nor is Management aware of any pending examination by the IRS.  The statutes of limitation for the assessments of additional tax are closed for all tax years prior to 2009.  Management believes that adequate provision has been made in the consolidated financial statements for any potential assessments that may result from future tax examinations and other tax-related matters for all open tax years.

The Company classifies interest and penalties on underpayment of income taxes as income tax expense.  No interest or penalties were included in the reported income taxes for the years presented.  The Company is not aware of any potential or proposed changes to any of its tax filings.

Note 7 – Credit Arrangements

At December 31, 2012 and 2011, the Company had the following outstanding debt:

				Outstanding Principal Balance
Instrument	Issue Date	Maturity Date		December 31, 2012		December 31, 2011
Promissory Note:
UTG	2006-12-08	2012-12-07	$	0	$	3,291,411
HPG Acquisitions	2007-02-07	2017-11-07		202,919		240,234
HPG Acquisitions	2012-12-27	2018-03-04		12,000,000		0

Instrument	Issue Date	Maturity Date		Revolving Credit Limit		December 31, 2011	Borrowings	Repayments		December 31, 2012
Lines of Credit:
UTG	2011-07-14	2012-12-07	$	5,000,000	$	1,000,000	1,411,000	2,411,000	$	0
UTG	2012-11-20	2013-11-20		8,000,000		0	2,910,035	1,255,000		1,655,035
UTG Avalon	2011-12-28	2013-01-03		5,000,000		5,000,000	0	0		5,000,000
UG	2010-12-28	2013-12-06		15,000,000		0	0	0		0

The UTG promissory note was secured by the pledge of 100% of the common stock of UG.  The promissory note carried a variable rate of interest based on the 3 month LIBOR rate plus 180 basis points.  Interest was payable quarterly and principal was payable annually beginning at the end of the second year. During the fourth quarter 2012, UTG repaid the outstanding principal balance of this note.

The HPG Acquisitions promissory note issued on February 7, 2007 bears interest at a fixed rate of 5%.

The HPG Acquisitions promissory note issued on December 27, 2012 is secured by real estate owned by HPG. The promissory note bears interest at a fixed rate of 4%. Interest is payable monthly. Principal is payable monthly beginning in the third year of the note.

UTG's line of credit issued on July 14, 2011 had a variable rate of interest based on the 90 day LIBOR rate plus 2.75 percentage points, but at no time would the rate be less than 3.25%. The collateral held on the above promissory note also secured this line of credit.  This line of credit expired on December 7, 2012 and was replaced by a new line of credit.

UTG's line of credit issued November 20, 2012 replaced the line of credit that expired on December 7, 2012.  The line of credit carries interest at a fixed rate of 3.75% and is payable monthly.  As collateral, UTG has pledged 100% of the common voting stock of its wholly owned subsidiary, UG.

The UTG Avalon line of credit carries interest at a rate of 4.0% and is payable in two semi-annual payments.  The UTG Avalon promissory note was renewed on January 3, 2013 and matures on January 3, 2014.

UG is a member of the Federal Home Loan Bank ("FHLB").  This membership allows the Company access to additional credit up to a maximum of 50% of the total assets of UG.  To be a member of the FHLB, the Company was required to purchase shares of common stock of FHLB.  Borrowing capacity is based on 50 times each dollar of stock acquired in FHLB above the "base membership" amount.

The consolidated scheduled principal reductions on the notes payable for the next five years are as follows:

Year		Amount
2013	$	1,686,621
2014		5,034,154
2015		382,395
2016		518,134
2017		542,470

Note 8 – Commitments and Contingencies

The insurance industry has experienced a number of civil jury verdicts which have been returned against life and health insurers in the jurisdictions in which the Company does business involving the insurers' sales practices, alleged agent misconduct, failure to properly supervise agents, and other matters.  Some of the lawsuits have resulted in the award of substantial judgments against the insurer, including material amounts of punitive damages.  In some states, juries have substantial discretion in awarding punitive damages in these circumstances.  In the normal course of business the Company is involved from time to time in various legal actions and other state and federal proceedings. Management is of the opinion that the ultimate disposition of the matters will not have a material adverse effect on the Company's results of operations or financial position.

Under the insurance guaranty fund laws in most states, insurance companies doing business in a participating state can be assessed up to prescribed limits for policyholder losses incurred by insolvent or failed insurance companies.  Although the Company cannot predict the amount of any future assessments, most insurance guaranty fund laws currently provide that an assessment may be excused or deferred if it would threaten an insurer's financial strength.  Mandatory assessments may be partially recovered through a reduction in future premium tax in some states. The Company does not believe such assessments will be materially different from amounts already provided for in the financial statements, though the Company has no control over such assessments.

As part of the Texas Imperial Life Insurance Company sale, the Company remains contingently liable for certain costs pending the outcome of an ongoing race-based audit on Texas Imperial Life Insurance Company by the Texas Department of Insurance.  Under the agreement, the Company is responsible for 100% of the first $50,000 of costs, 90% of the next $50,000, 75% of the third $50,000 and 50% of the costs above $150,000.  Management had conservatively estimated the Company's exposure and other costs at $50,000 based on information provided to date from the examination team and has established a contingent liability of $47,727 in its financial statements.  This contingency expires on December 30, 2013.

Within the Company's trading accounts, certain trading securities carried as liabilities represent securities sold short.  A gain, limited to the price at which the security was sold short, or a loss, potentially unlimited in size, will be recognized upon the termination of the short sale.

On November 9, 2011, ACAP shareholders approved a proposed merger with UTG whereby ACAP shareholders received 233 shares of UTG for each share previously held of ACAP.  On November 14, 2011, the merger was completed.  Certain of the ACAP shareholders dissented to the merger requesting the courts determine the value of the ACAP shares.  The legal case is currently in the discovery phase.  The Company has established a contingent liability of $2,550,822 as of December 31, 2012 and 2011 to cover the anticipated proceeds due to the dissenting shareholders and associated legal and other costs.

The following table represents the total funding commitments and the unfunded commitment as of December 31, 2012 related to certain investments:

		Total Funding		Unfunded
		Commitment		Commitment
RLF III, LLC	$	4,000,000	$	398,120
Llano Music, LLC		2,000,000		571,000
MM-Marcellus III, LP		1,250,000		393,750
Dew Learning, LLC		1,000,000		725,445
MM-Marcellus HBPI, LP		1,800,000		1,113,300
PBEX, LLC		5,625,000		2,818,750
Sovereign's Capital, LP		500,000		250,000

During 2006, the Company committed to invest in RLF III, LLC ("RLF"), which makes land-based investment in undervalued assets. RLF does capital calls as funds are needed for continued land purchases.

During 2010, the Company made a commitment to invest in Llano Music, LLC ("Llano"), which invests in music royalties. Llano does capital calls to its investors as funds are needed to acquire the royalty rights.

During 2011, the Company committed to invest in MM-Marcellus III, LP, which purchases land for leasing opportunities to those looking to harvest natural resources. Marcellus III, LP does capital calls to its investors as funds are needed for continued land purchases.

During 2012, the Company made a commitment to invest in Dew Learning, LLC ("Dew"), which is involved in the marketing and distribution of an electronic education based classroom model. Dew does capital calls to investors as funds are needed for continued development of the program.

During 2012, the Company committed to invest in MM-Marcellus HBPI, LP, which purchases land for leasing opportunities to those looking to harvest natural resources. Marcellus HPBI, LP does capital calls to investors as funds are needed for continued land purchases.

During 2012, the Company committed to invest in PBEX, LLC, which purchases land and mineral rights for leasing opportunities to those looking to harvest natural resources. PBEX, LLC does capital calls to investors as funds are needed for continued land purchases.

During 2012, the Company committed to invest in Sovereign's Capital, LP ("Sovereign's"), which invests in companies in emerging markets. Sovereign's is expected to call the remaining unfunded commitment during 2013.

Note 9 – Shareholders' Equity

Stock Repurchase Program – The Board of Directors of UTG authorized the repurchase in the open market or in privately negotiated transactions of UTG's common stock. During September 2012, the Board of Directors approved a resolution to increase the repurchase amount by $1 million, for a total repurchase of $6 million.  Repurchased shares are available for future issuance for general corporate purposes.  This program can be terminated at any time.  Open market purchases are made based on the last available market price and are generally limited to a maximum per share price of the most recent reported per share GAAP equity book value of the Company.  During the current year, the Company repurchased 71,964 common shares through the stock repurchase program for $928,902.   Through December 31, 2012, UTG has spent $4,611,696 in the acquisition of 562,690 shares under this program.

ACAP Merger - On November 14, 2011, ACAP was merged into UTG.  The merger was a share exchange with ACAP shareholders receiving 233 UTG shares for each ACAP share held.  UTG issued 50,328 shares of common stock under this transaction.

Executive Compensation – In December 2012, the Company issued 16,225 shares of its common stock to certain members of management as part of year-end bonuses based on 2012 operating results.  The shares were valued at $13.25 per share, the market value at the date of issue.  The Company recorded $214,981 in operating expenses related to this stock issuance.

Earnings Per Share - The following is a reconciliation of basic and diluted weighted average shares outstanding used in the computation of basic and diluted earnings per share:

	2012	2011
Basic weighted average shares outstanding	3,809,639	3,824,444
Weighted average dilutive options outstanding	0	0
Diluted weighted average shares outstanding	3,809,639	3,824,444

The computation of diluted earnings per share is the same as basic earnings per share for the years ending December 31, 2012 and 2011, as there were no outstanding securities, options or other offers that give the right to receive or acquire common shares of UTG.

Statutory Restrictions – Restrictions exist on the flow of funds to UTG from its insurance subsidiary.  Statutory regulations require life insurance subsidiaries to maintain certain minimum amounts of capital and surplus. UG is required to maintain minimum statutory surplus of $2,500,000. At December 31, 2012, substantially all of the consolidated shareholders' equity represents net assets of UTG's subsidiaries.

UG is domiciled in the state of Ohio. Ohio requires notification within five business days to the insurance commissioner following the declaration of any ordinary dividend and at least ten calendar days prior to payment of such dividend.  Ordinary dividends are defined as the greater of: a) prior year statutory net income or b) 10% of statutory capital and surplus.  Extraordinary dividends (amounts in excess of ordinary dividend limitations) require prior approval of the insurance commissioner and are not restricted to a specific calculation.  UG paid ordinary dividends of $3,316,722 and $3,530,000 to UTG in 2012 and 2011, respectively. No extraordinary dividends were paid during the two year period.

Note 10 - Statutory Accounting

The insurance subsidiary prepares its statutory-based financial statements in accordance with accounting practices prescribed or permitted by the Ohio Department of Insurance.  These principles differ significantly from accounting principles generally accepted in the United States of America.  "Prescribed" statutory accounting practices include state laws, regulations, and general administrative rules, as well as a variety of publications of the National Association of Insurance Commissioners (NAIC).  "Permitted" statutory accounting practices encompass all accounting practices that are not prescribed; such practices may differ from state to state, from company to company within a state, and may change in the future.

The following table reflects UG's statutory basis net income and capital and surplus (shareholders' equity) as of December 31:

		2012		2011
Net income (loss)	$	6,868,111	$	(184,213)
Capital and surplus		32,243,089		33,167,222

Note 11 – Related Party Transactions

On February 20, 2003, UG purchased $4,000,000 of a trust preferred security offering issued by First Southern Bancorp, Inc. ("FSBI").  The security has a mandatory redemption after 30 years with a call provision after 5 years.  The security pays a quarterly dividend at a fixed rate of 6.515%.  The Company received dividends of $264,943 and $264,219 during 2012 and 2011, respectively.  On March 30, 2009, UG purchased $1,000,000 of FSBI common stock.  The sale and transfer of this security is restricted by the provisions of a stock restriction and buy-sell agreement.

On November 14, 2011, UTG, Inc. merged with ACAP. Shareholders of ACAP received shares of UTG in exchange for their ACAP shares. ACAP was a 73% owned subsidiary of UG. The merger reduced the corporate structure and provided certain efficiencies and economies to the Companies.  All ACAP shareholders, other than UTG or UG, have the right to receive 233 shares of UTG common stock for each share of ACAP common stock they owned at closing.  Under the terms of the exchange ratio, UTG issued 50,328 shares to former ACAP shareholders.  An additional 129,548 UTG shares were not issued due to dissenting ACAP shareholders.  See Note 8 - Commitments and Contingencies for additional information regarding the ACAP dissenting shareholders.

On September 28, 2011 UTG entered a joint ownership agreement with Bandyco, LLC and First Southern National Bank, for an 8.08% interest in an aircraft. Bandyco, LLC is affiliated with Ward F Correll, who is a director of the Company. The Company was responsible for an initial payment of $150,000 on September 30, 2011, along with a $125,000 payment on October 30, 2011. The Company pays a monthly operational fee of $25,000 starting in November 2011 and lasting through July 2016. The aircraft is issued for business related travel by various officers and employees of the Company. For years 2012 and 2011 UTG paid $573,393 and $392,227 for costs associated with the aircraft.

Effective January 1, 2007, UTG entered into administrative services and cost sharing agreements with its subsidiary.  Under this arrangement, the subsidiary pays its proportionate share of expenses, based on an allocation formula.  During 2012 and 2011, UG paid $8,843,596 and $7,185,037, respectively, in expenses. The Ohio Department of Insurance has approved the cost sharing agreement and it is Management's opinion that where applicable, costs have been allocated fairly and such allocations are based upon accounting principles generally accepted in the United States of America.

The Company from time to time acquires mortgage loans through participation agreements with FSNB.  FSNB services the Company's mortgage loans including those covered by the participation agreements.  The Company pays a .25% servicing fee on these loans and a one-time fee at loan origination of .50% of the original loan amount to cover costs incurred by FSNB relating to the processing and establishment of the loan.  The Company paid $102,447 and $136,457 in servicing fees and $81,851 and $89,651 in origination fees to FSNB during 2012 and 2011, respectively.

The Company reimbursed expenses incurred by employees of FSNB relating to travel and other costs incurred on behalf of or relating to the Company.  The Company paid $90,939 and $15,392 in 2012 and 2011, respectively to FSNB in reimbursement of such costs.  In addition, the Company began reimbursing FSNB a portion of salaries and pension costs for Mr. Correll, Mr. Ditto and a third employee.  The reimbursement was approved by the UTG Board of Directors and totaled $462,819 and $348,610 in 2012 and 2011, respectively, which included salaries and other benefits.

Note 12 – Other Cash Flow Disclosures

On a cash basis, the Company paid the following expenses for the periods ended December 31:

		2012		2011
Interest expense	$	215,255	$	251,791
Federal income tax		3,413,081		5,801,521

At the end of August 2012, the reinsurance agreement with Canada Life Assurance Company was fully repaid.  At that time, the reserves were recaptured through elimination of reinsurance recoverable in exchange for assets received equal to the recaptured reserves.  The following table reflects the breakdown of the assets received.

		Assets Received
Bonds	$	27,651,746
Common Stock		1,023,394
Cash		2,480,706
Total	$	31,155,846

The non-cash acquisitions of bonds and common stock resulting from the recapture of reinsurance have been excluded from the accompanying statements of cash flows.

During 2011, the Company closed on an ACAP share for UTG share transaction. All ACAP shareholders, other than UTG or UG, have the right to receive 233 shares of UTG common stock for each share of ACAP common stock they owned at closing.  Accordingly, the Company no longer reports a non-controlling interest component of equity for the minority ownership in ACAP. The difference between the carrying value of the non-controlling interest and the consideration received was recorded as a non-cash flow increase to additional paid-in capital of $4,100,000.

Note 13 - Concentrations

The Company maintains cash balances in financial institutions that at times may exceed federally insured limits.  The Company maintains its primary operating cash accounts with First Southern National Bank, an affiliate of the largest shareholder of UTG, Mr. Jesse T. Correll, the Company's CEO and Chairman.  The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Because UTG serves primarily individuals located in four states, the ability of our customers to pay their insurance premiums is impacted by the economic conditions in these areas.  As of December 31, 2012, approximately 55% of the Company's total direct premium was collected from Illinois, Ohio, Texas and West Virginia. As of December 31, 2011, approximately 52% of the Company's total direct premium was collected from Illinois, Louisiana, Ohio and Texas.  Thus, results of operations are heavily dependent upon the strength of these economies.

The Company reinsures that portion of insurance risk which is in excess of its retention limits.  Retention limits range up to $125,000 per life.  Life insurance ceded represented 21% and 24% of total life insurance in force at December 31, 2012 and 2011, respectively.  Insurance ceded represented 25% and 28% of premium income for 2012 and 2011, respectively.  The Company would be liable for the reinsured risks ceded to other companies to the extent that such reinsuring companies are unable to meet their obligations.

Note 14 – Selected Quarterly Financial Data

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and Item 10(f)(1) of Regulation S-K, the Company has elected to comply with certain scaled disclosure reporting obligations, and therefore does not have to provide the information required by this item.

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

None

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) that are designed to ensure that the information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.  Our disclosure controls and procedures are also designed to ensure that information required to be disclosed in our Exchange Act reports is accumulated and communicated to Management, including our Principal Executive Officer and Principal Financial Officers, to allow timely decisions regarding required disclosures.  In designing and evaluating the disclosure controls and procedures, Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and Management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our Management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of the Company's disclosure controls and procedures as of December 3, 2012 and, based on this evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures were effective at a reasonable assurance level.

Management's Report on Internal Controls Over Financial Reporting

Our Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

The Company's Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2012.In making the assessment, Management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework.  Based on Management's assessment, Management concluded that, as of December 31, 2012, the Company's internal control over financial reporting was effective.

This annual report does not include an attestation report of the Company's independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only Management's report in this Annual Report.

Changes in Internal Controls

There have been no changes in the Company's internal control over financial reporting since December 31, 2012, in connection with the evaluation required by paragraph (d) of Exchange Act Rule 13a-15(e) and 15d-15(e), that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. The Company's process for evaluating controls and procedures is continuous and encompasses constant improvement of the design and effectiveness of established controls and procedures and the remediation of any deficiencies, which may be identified during this process.

Item 9B. Other Information

None

PART III

Item 10.  Directors, Executive Officers and Corporate Governance

The Board of Directors

In accordance with the laws of Delaware and the Certificate of Incorporation and Bylaws of UTG, as amended, UTG is managed by its executive officers under the direction of the Board of Directors.  The Board elects executive officers, evaluates their performance, works with Management in establishing business objectives and considers other fundamental corporate matters, such as the issuance of stock or other securities, the purchase or sale of a business and other significant corporate business transactions.  In the fiscal year ended December 31, 2012, the Board met four times.  All directors attended at least 75% of all meetings of the board except Messrs. John Albin and Ward Correll.

The Board of Directors has an Audit Committee consisting of Messrs. Perry, Albin, and Brinck. The Audit Committee performs such duties as outlined in the Company's Audit Committee Charter.  The Audit Committee reviews and acts or reports to the Board with respect to various auditing and accounting matters, the scope of the audit procedures and the results thereof, internal accounting and control systems of UTG, the nature of services performed for UTG and the fees to be paid to the independent auditors, the performance of UTG's independent and internal auditors and the accounting practices of UTG.  The Audit Committee also recommends to the full Board of Directors the auditors to be appointed by the Board.  The Audit Committee met three timesin 2012.

The Board has reviewed the qualifications of each member of the audit committee and determined no member of the committee meets the definition of a "financial expert".  The Board concluded however, that each member of the committee has a proven track record as a successful businessman, each operating their own company and their experience as businessmen provide a knowledge base and experience adequate for participation as a member of the committee.

The Board of Directors has a Compensation Committee consisting of Messrs. Dayton and Brinck.  The Compensation Committee performs such duties as outlined in the Company's Compensation Committee Charter.  The Compensation Committee reviews and acts or reports to the Board with respect to various compensation matters relative to the Company's executive officers.

Under UTG's By-Laws, the Board of Directors should be comprised of at least six and no more than eleven directors.  At December 31, 2012, the Board consisted of eleven directors.Shareholders elect Directors to serve for a period of one year at UTG's Annual Shareholders' meeting.

The Board of Directors does not have a formal nominating committee, or a committee that performs similar functions, and does not have a nominating committee charter.  The Board has concluded that the nominating process should not be limited to certain members so that a comprehensive selection of candidates can be considered.  Therefore, the nomination process is conducted by the full Board of Directors.  The Board of Directors has not adopted a formal policy with regard to the consideration of director candidates recommended by shareholders.  The Board of Directors will, however, consider nominees recommended by shareholders.  Shareholders wishing to recommend candidates for Board membership must submit the recommendations in writing to the Secretary of the Company at least 90 days prior to a date corresponding to the previous year's Annual Meeting, with the submitting shareholder's name and address and pertinent information about the proposed nominee similar to that set forth for nominees named herein.  Proposed nominees will be considered in light of their potential contributions to the Board, their backgrounds, their independence and such other factors as the Board considers appropriate.

Section 16(a) Beneficial Ownership Reporting Compliance

Directors and officers of UTG file periodic reports regarding ownership of Company securities with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934 as amended, and the rules promulgated there under.  UTG is not aware of any individuals who filed late with the Securities and ExchangeCommission during 2012.  SEC filings may be viewed from the Company's Web site www.utgins.com.

The Board of Directors has provided a process for shareholders to send communications directly to the Board.  These communications can be sent to James Rousey, President and Director of UTG at the corporate headquarters at 5250 South Sixth Street, Springfield, IL  62703.

Audit Committee Report to Shareholders

In connection with the December 31, 2012 financial statements, the audit committee: (1) reviewed and discussed the audited financial statements with Management; (2) discussed with the independent auditors the matters required by Statement on Auditing Standards No. 61, Communications with Audit Committees, as amended, promulgated by the Auditing Standards Board of the American Institute of Certified Public Accountants and Rule 2-07 or Regulation S-X; and (3) received and discussed with the auditors the matters required by Independence Standards Board Statement No.1.  Based upon these reviews and discussions, the audit committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report on Form 10-K filed with the SEC.

The following are the members of the Company's Audit Committee:

William W. Perry    -	Committee Chairman
John S. Albin
Joseph A. Brinck, II

The following information with respect to business experience of the Board of Directors has been furnished by the respective directors or obtained from the records of UTG.

Directors

Name, Age	Position with the Company, Business Experience and Other Directorships
John S. Albin, 84	Director of UTG since 1984; farmer in Douglas and Edgar counties, Illinois, since 1951; Chairman of the Board of Longview State Bank from 1978 to 2005; President of the Longview Capitol Corporation, a bank holding company, since 1978; Chairman of First National Bank of Ogden, Illinois, from 1987 to 2005; Chairman of the State Bank of Chrisman from 1988 to 2005; Chairman of First National Bank in Georgetown from 1994 to 2005; Director of Illini Community Development Corporation since 1990; Commissioner of Illinois Student Assistance Commission from 1996 to 2002.
Randall L. Attkisson, 65	Director of UTG since 1999; Director of First Southern Bancorp, Inc., a bank holding company, since 1986; Board Chairman of Young Life Raceway Region (Kentucky/Indiana) from 2008 to 2011; Partner of Bluegrass Financial Holdings Subs/Affiliates since 2008; Advisory Director of Kentucky Christian Foundation since 2002; Board Chairman of Isaiah House from 2012 to present; Director of The River Foundation, Inc. from 1990 to 2011; President of Randall L. Attkisson & Associates from 1982 to 1986; Commissioner of Kentucky Department of Banking & Securities from 1980 to 1982; Self-employed Banking Consultant in Miami, FL from 1978 to 1980.
Joseph A. Brinck, II, 57	Director of UTG since 2003; CEO of Stelter & Brinck, LTD, a full service combustion engineering and manufacturing company from 1983 to present; Salesman at Stelter & Brinck, LTD from 1979 to 1983; President of Superior Thermal, LTD from 1990 to present; President of Sanctity of Life Foundation since 2001 and Vice President Woods of Ruah Ministry since 2011.  Currently holds Professional Engineering Licenses in Kentucky.
Jesse T. Correll, 56	Chairman and CEO of UTG and Universal Guaranty Life Insurance Company since 2000; Director of UTG since 1999; Chairman, President, Director of First Southern Bancorp, Inc. since 1983; Manager of First Southern Funding, LLC since 1992; President, Director of The River Foundation since 1990; Director of Dew Learning since 2012; Board member of Crown Financial Ministries from 2004 to 2009; Friends of the Good Samaritans since 2005; Generous Giving from 2006 to 2009 and the National Christian Foundation since 2006.  Mr. Correll and his wife Angela have 3 children and 4 grandchildren.  Jesse Correll is the son of Ward and Regina Correll.
Ward F. Correll, 84	Director of UTG since 2000; President, Director of Tradeway, Inc. of Somerset, KY since 1973; President, Director of Cumberland Lake Shell, Inc. of Somerset, KY since 1971; President, Director of Tradewind Shopping Center, Inc. of Somerset, KY since 1966; Director of First Southern Bancorp since 1987; Director of First Southern Funding, LLC since 1991; Director of The River Foundation since 1990; and Director of First Southern Insurance Agency since 1987.  Ward Correll is the father of Jesse Correll.
Thomas F. Darden,II, 58	Mr. Darden is the Chief Executive Officer of Cherokee Investment Partners, a private equity fund that invests in brownfields and environmental technologies.  Cherokee made its first brownfield investment in 1990 and has since raised five funds with aggregate initial commitments of $2.2 billion.  Beginning in 1984, Mr. Darden served for 16 years as the Chairman of Cherokee Sanford Group, a brick manufacturing and soil remediation company.  From 1981 to 1983, he was a consultant with Bain & Company in Boston.  From 1977 to 1978, he worked as an environmental planner for the Korea Institute of Science and Technology in Seoul, where he was a Henry Luce Foundation Scholar.  Mr. Darden is on the Boards of Shaw University, the Institute for the Environment at the University of North Carolina and the Research Triangle Institute.  Mr. Darden earned a Masters in Regional Planning from the University of North Carolina, a Juris Doctor from Yale Law School and a Bachelor of Arts from the University of North Carolina, where he was a Morehead Scholar.  He and his wife, Jody, have three children.
Howard L. Dayton, Jr., 69	In 1985, Mr. Dayton founded Crown Ministries in Longwood, Florida.  Crown Ministries merged with Christian Financial Concepts in September 2000 to form Crown Financial Ministries, the world's largest financial ministry.  He served as Chief Executive Officer from 1985 to 2007 and in 2009 founded Compass - Finances God's Way.  Mr. Dayton is a graduate of Cornell University.  He developed The Caboose, a successful railroad-themed restaurant in Orlando, FL in 1969. In 1972 he began his commercial real estate development career, specializing in office development in the Central Florida area.  He also is the author of five books, Your Money: Frustration or Freedom, Your Money Counts, Free and Clear, Your Money Map, Money and Marriage God's Way.  He also has authored five popular small group studies including Crown's Small Group Studies and produced several video series.  Mr. Dayton became a director of UTG, Inc. in December 2005.
Daryl J. Heald, 48	Mr. Heald started in commercial real estate with the Allen Morris Company and then spent four years at Triaxia Partners Consulting Firm, both in Atlanta, Georgia.  He later began serving as an associate trustee and executive committee member of the Maclellan Foundation and Senior Vice President from 2008 to 2010.  In 2000, Daryl helped launch Generous Giving, Inc. and served as its President until January 2008.  Mr. Heald founded Giving Wisely in 2008.  Giving Wisely seeks to serve families on their journey of generosity by helping to connect their needs and passions with knowledge, experiences, opportunities, and relationships.  Daryl also serves on the boards of Crown Financial Ministries, ProVision Foundation, the Haggai Institute, Chattanooga Football Club, Dew Learning and is an elder at Lookout Mountain Presbyterian Church.  Mr. Heald became a director of UTG, Inc. in September 2008.  He holds a B.S. degree in economics from Westmont College.  Daryl and his wife, Cathy, live in Lookout Mountain, Georgia with their six children.
Peter L. Ochs, 61	Mr. Ochs is founder of Capital III, a private equity investment firm located in Wichita, Kansas.  Capital III provides impact investment capital and management with investments in manufacturing, real estate, energy, and education with a geographical focus on the US and Latin America.   Prior to founding Capital III, Mr. Ochs spent 8 years in the commercial banking industry.  Mr. Ochs graduated from the University of Kansas with a degree in business and finance.  He currently serves on the boards of UTG, Inc., the American Independence Funds, and Trinity Academy.  Mr. Ochs is married to Deborah and they have 2 children and 5 grandchildren.
William W. Perry, 56	W. Wesley Perry is the owner of S.E.S. Investments, Ltd., an oil & gas investments company and President of S.E.S. Energy, LLC.  He has a BS degree in Engineering from University of Oklahoma and graduated in 1978.  He and his wife, Roni, reside in Midland, Texas and have 3 children and 5 grandchildren.  He is in his second term as the mayor of Midland elected in November 2007 after having served on the city council since 2002.  He is a board member of the Abel-Hangar Foundation and President of the Milagros Foundation.  He is also CEO of EGL Resources, Inc., an oil and gas company and a Director of Genie Energy (GNE on the NYSE).  He has been a Director of UTG since 2001.
James P. Rousey, 54	President since September 2006, Director of UTG and Universal Guaranty Life Insurance Company since September 2001; Regional CEO and Director of First Southern National Bank from 1988 to 2001. Board Member with the Illinois Fellowship of Christian Athletes from 2001-2005; Board Member with Contact Ministries from 2007-2011; Board Member with Amigos En Cristo, Inc. from 2007-2009.

Executive Officers of UTG

More detailed information on the following executive officers of UTG appears under "Directors":

Jesse T. Correll	Chairman of the Board and Chief Executive Officer
James P. Rousey	President

Other executive officers of UTG are set forth below:

Name, Age	Position with UTG and Business Experience
Theodore C. Miller, 50	Corporate Secretary since December 2000, Senior Vice President and Chief Financial Officer since July 1997; Vice President since October 1992 and Treasurer from October 1992 to December 2003; Vice President and Controller of certain affiliated companies from 1984 to 1992.  Vice President and Treasurer of certain affiliated companies from 1992 to 1997; Senior Vice President and Chief Financial Officer of subsidiary companies since 1997; Corporate Secretary of subsidiary companies since 2000.
Douglas P. Ditto, 57	Vice President since June 2009; Chief Investment Officer from 2009 to 2012; Assistant Vice President from June 2003 to June 2009; Chief Executive Officer, and Executive Vice President of First Southern Bancorp since March 1985.

Code of Ethics

The Company has adopted a Code of Business Conduct and Ethics for our directors, officers (including our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions) and employees. The Code of Business Conduct and Ethics is available to our stockholders by requesting a free copy of the Code of Business Conduct and Ethics by writing to us at UTG, Inc, 5250 South Sixth Street, Springfield, Illinois 62703.

Item 11. Executive Compensation

Executive Compensation Table

The following table sets forth certain information regarding compensation paid to or earned by UTG's Chief Executive Officer and President, and each of the executive officers of UTG whose salary plus bonus exceeded $100,000 during UTG's last fiscal year:

Name and Principal position	Year	Salary	Bonus	Stock Awards (7)	All Other Comp (1)		Total
Jesse T. Correll Chief Executive Officer	2012	161,752	75,000	74,995	6,740	(1)	318,487
	2011	150,000	50,000	0	6,000	(1)	206,000
James P. Rousey President	2012	155,000	50,000	49,992	9,585	(2)	264,577
	2011	145,000	35,000	0	7,615	(2)	187,615
Theodore C. Miller Secretary/Senior Vice President	2012	117,500	30,000	29,998	1,658	(3)	179,156
	2011	110,000	25,000	0	720	(3)	135,720
Douglas P. Ditto Vice President	2012	109,466	60,000	59,996	4,379	(6)	233,841
	2011	100,050	50,000	0	3,951	(6)	154,001
Douglas A. Dockter    (5) Vice President	2012	100,000	12,000	0	2,820	(4)	114,820
	2011	100,000	6,500	0	2,820	(4)	109,320

(1)	All Other Compensation consists of matching contributions to an Employee Savings Trust 401(k) Plan.
(2)	All Other Compensation consists of matching contributions to an Employee Savings Trust 401(k) Plan of $1,890 and $1,269, group life insurance premiums of $720 and $720, and country club membership fees of $6,975 and $5,626 during 2012 and 2011, respectively.
(3)	All Other Compensation consists of matching contributions to an Employee Savings Trust 401(k) Plan of $938 and $0, group life insurance premiums of $720 and $720 during 2012 and 2011, respectively.
(4)	All Other Compensation consists of matching contributions to an Employee Savings Trust 401(k) Plan of $2,100 and $2,100 and group life insurance premiums of $720 and $720 during 2012 and 2011, respectively.
(5)	Mr. Douglas A. Dockter is not considered an executive officer of UTG, but is included in this table pursuant to compensation disclosure requirements.
(6)	All Other Compensation consists of matching contributions to an Employee Savings Trust 401(k) Plan  during 2012 and 2011, respectively.
(7)	Stock Awards were issued on December 27, 2012 at a price per share of $13.25, the current market value reported.  The awards were issued based on 2012 results.

Outstanding Equity Awards at Fiscal Year End

As of December 31, 2012, there were no unexercised options, stock that has not vested or equity inventive plan awards outstanding for any of the above named executive officers.

Compensation of Directors

UTG's standard arrangement for the compensation of directors provides that each director shall receive an annual retainer of $2,400, plus $300 for each meeting attended and reimbursement for reasonable travel expenses.  UTG's director compensation policy also provides that directors who are employees of UTG or its affiliates do not receive any compensation for their services as directors except for reimbursement for reasonable travel expenses for attending each meeting.

Name	Fees Earned or Paid in Cash	All Other Compensation	Total
Jesse Thomas Correll Chief Executive Officer	0		0
Randall Lanier Attkisson Director	3,300		3,300
James Patrick Rousey President	0		0
John Sanford Albin Director	2,700		2,700
Joseph Anthony Brinck, II Director	3,300		3,300
Ward Forrest Correll Director	2,700		2,700
William Wesley Perry Director (1)	3,600		3,600
Thomas Francis Darden, II Director (1)	3,600		3,600
Peter Loyd Ochs Director	3,600		3,600
Howard Lape Dayton Director	3,600	(2)                          5,000	8,600
Daryl Jack Heald Director	3,000		3,000

(1)  Messrs. Darden and Perry have their fees donated to various charitable organizations.

(2)  Other Compensation represents consulting performed relative to management enrichment.

Report on Executive Compensation

Introduction

The Compensation Committee of the Board of Directors is responsible for determining and recommending to the full Board of Directors the compensation of the Company's executive officers.  The Compensation Committee strongly believes that UTG's executive officers directly impact the short-term and long-term performance of UTG.  With this belief and the corresponding objective of making decisions that are in the best interest of UTG's shareholders, the Compensation Committee places significant emphasis on the design and administration of UTG's executive compensation plans.

Company Management may be requested by the Compensation Committee to provide support such as to attend portions of meetings, make recommendations to the Compensation Committee and perform various day-to-day administrative functions on behalf of the committee.  The Committee further has the authority to engage outside advisors, experts and other professionals to assist it.  No such outside persons were engaged during 2012 or 2011.

The Company's philosophy regarding compensation of executive officers is generally one of executive officers qualify for the same benefits and opportunities as provided to all of the employees of the Company.  Special or unique perquisites to executive officers not provided to all employees amount to less than $10,000 to any one individual.  The Company maintains a membership to a local country club that can only be utilized by the President.  During2012 and 2011 the Company paid $6,975 and $5,626, respectively, to maintain this membership.

The Compensation Committee periodically reviews the Company's compensation philosophy.  From time to time, as necessary, the committee may modify the compensation philosophy, principles or goals.  The compensation program is applied to our named executive officers in a fashion similar to its application to the Chief Executive Officer.  Any differences are due to difference in job scope and market compensation for various positions.

The Company maintains employee benefits such as paid time off, 401(k) plan, health insurance, dental insurance, group life insurance and long term disability insurance.  These benefits are generally competitive to other entities located in the Midwest where the Company must compete for employees.  Executive officers are entitled to these benefits on the same basis and terms as other employees of the Company.

Executive Compensation Elements

The total compensation package for the executive officers of UTG consists of multiple elements.  The Compensation Committee considers market compensation comparisons as it determines the elements, appropriate levels and mix of compensation to be paid to the executive officers in order to retain the executives necessary to the successful operation of the Company.  The committee does not operate with rigid standards, rather, it works using a competitive market range.  Many factors are considered in determining compensation, including the responsibilities assumed by the executive, the scope of the executive's position, experience, length of service, individual performance and internal equity considerations.In addition to a base salary, increased compensation of current and future executive officers of the Company will be determined using a "performance based" philosophy.  UTG's financial results are analyzed and future increases to compensation will be proportionately based on the profitability of the Company.

Base Salary - The Board of Directors through recommendations from the Compensation Committee establishes base salaries at a level intended to be within the competitive market range of comparable companies.

Incentive Awards - The Board of Directors, from time to time, may approve incentive awards for the executive officers.  These incentive awards are generally in the form of a one-time cash bonus payment.  Incentive awards are determined based on the overall operations of the Company as well as individual performance considerations.  The Company does not utilize a specific set formula in the determination of incentive awards.

Stock Options - Stock options are granted at the discretion of the Board of Directors. There were no options granted to the named executive officers during the last two fiscal years.

Employment Contracts - There are no employment agreements or understandings in effect with any executive officers of the Company.

Deferred Compensation - The Company has no deferred compensation arrangements with any of its executive officers.

Tax and Accounting Implications of Compensation - As one of the factors considered in performing its duties, the Board of Directors evaluates the anticipated tax treatment to the Company and its subsidiaries, as well as to the executives, of various payments and benefits.  The deductibility of some types of compensation depends upon the timing of an executive's vesting or exercise of previously-granted rights.  Deductibility may also be affected by interpretations of and changes in tax laws.

Conclusion

The Compensation Committee believes this executive compensation plan provides a competitive and motivational compensation package to the executive officer team necessary to produce the results UTG strives to achieve.  The committee also believes theexecutive compensation plan addresses both the interests of the shareholders and the executive team.

Compensation Committee Report

The Compensation Committee of the Board of Directors of UTG has reviewed and discussed the Compensation Disclosure and Analysis required by Item 402(b) of SEC Regulation S-K with Company Management.  Based on these reviews and discussions, the Compensation Committee recommended to the Board of Directors that this report on executive compensation be included with this filing.

Executive Compensation Committee

Howard L. Dayton Joseph A. Brinck, II

Compensation Committee Interlocks and Insider Participation

The UTG Compensation Committee may make recommendations to the full Board of Directors on decisions regarding executive officer compensation.  The following persons served as directors of UTG during 2012 and were officers or employees of UTG or its affiliates during 2012: Jesse T. Correll and James P. Rousey.  Accordingly, these individuals have participated in decisions related to compensation of executive officers of UTG and its subsidiaries.

During 2012, Jesse T. Correll and James P. Rousey, executive officers of UTG and UG, were also members of the Board of Directors of UG.

Jesse T. Correll is a director and executive officer of FSBI and participates in compensation decisions of FSBI.  FSBI owns or controls directly and indirectly approximately 37% of the outstanding common stock of UTG.

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Principal Holders of Securities

The following tabulation sets forth the name and address of the entity known to be the beneficial owners of more than 5% of UTG's common stock and shows:  (i) the total number of shares of common stock beneficially owned by such person as of February 1, 2013 and the nature of such ownership; and (ii) the percent of the issued and outstanding shares of common stock so owned as of the same date.

Title		Amount	Percent
of	Name and Address	and Nature of	Of
Class	of Beneficial Owner (2)	Beneficial Ownership	Class (1)

Common	Jesse T. Correll	107,773	(3)	2.8%
Stock, no	First Southern Bancorp, Inc.	1,406,785	(3)(4)	37.0%
par value	First Southern Funding, LLC	341,997	(3)(4)	9.0%
	First Southern Holdings, LLC	1,201,876	(3)(4)	31.7%
	Ward F. Correll	268,906	(5)	7.1%
	WCorrell, Limited Partnership	72,750	(3)	1.9%
	Bluegrass Farms  & Woodlands, LLC	11,055	(3)	0.3%
	Cumberland Lake Shell, Inc.	257,501	(5)	6.8%
	Eric L. Oliver	300,000	(7)	7.9%
	Total (6)	2,425,461		63%

(1)	The percentage of outstanding shares is based on 3,797,391 shares of common stock outstanding as of February 1, 2013.
(2)	The address for each of Jesse Correll, First Southern Bancorp, Inc. ("FSBI"), First Southern Funding, LLC ("FSF"), First Southern Holdings, LLC ("FSH"), Bluegrass Farms & Woodlands, LLC ("BGFW") and WCorrell, Limited Partnership ("WCorrell LP"), is P.O. Box 328, 99 Lancaster Street, Stanford, Kentucky 40484.  The address for each of Ward Correll and Cumberland Lake Shell, Inc. ("CLS") is P.O. Box 430, 150 Railroad Drive, Somerset, Kentucky 42502.
(3)	The share ownership of Jesse Correll listed includes 23,968 shares of common stock owned by him individually.  The share ownership of Mr. Correll also includes 72,750 shares of Common Stock held by WCorrell, Limited Partnership, a limited partnership in which Jesse Correll serves as managing general partner and 11,055 shares of common stock held by Bluegrass Farms & Woodlands, LLC, a limited liability company in which Jesse Correll serves as managing member and as such, has sole voting and dispositive power over the shares held by both entities.
	In addition, by virtue of his ownership of voting securities of FSF and FSBI, and in turn, their ownership of 100% of the outstanding membership interests of FSH, Jesse Correll may be deemed to beneficially own the total number of shares of common stock owned by FSH (as well as the shares owned by FSBI directly), and may be deemed to share with FSH (as well as FSBI) the right to vote and to dispose of such shares.  Mr. Correll owns approximately 76.52% of the outstanding membership interests of FSF; he owns directly approximately 48.4%, companies he controls own approximately 13.0%, and he has the power to vote but does not own an additional 3% of the outstanding voting stock of FSBI.  FSBI and FSF in turn own 99% and 1%, respectively, of the outstanding membership interests of FSH.
(4)	The share ownership of FSBI consists of 204,909 shares of common stock held by FSBI directly and 1,201,876 shares of common stock held by FSH of which FSBI is a 99% member and FSF is a 1% member, as further described below.  As a result, FSBI may be deemed to share the voting and dispositive power over the shares held by FSH.
(5)	Includes 257,501 shares of common stock held by CLS, all of the outstanding voting shares of which are owned by Ward F. Correll.
(6)	According to the most recent Schedule 13D, as amended, filed jointly by each of the entities and persons listed above, Jesse Correll, FSBI, FSF and FSH, have agreed in principle to act together for the purpose of acquiring or holding equity securities of UTG.  In addition, the Schedule 13D indicates that because of their relationships with Jesse Correll and these other entities, Ward Correll, CLS, Bluegrass Farms & Woodlands, LLC and WCorrell, Limited Partnership may also be deemed to be members of this group.  Because the Schedule 13D indicates that for its purposes, each of these entities and persons may be deemed to have acquired beneficial ownership of the equity securities of UTG beneficially owned by the other entities and persons, each has been identified and listed in the above tabulation.
(7)	Shares held in entities controlled by Eric Oliver.

Security Ownership of Management of UTG

The following tabulation shows with respect to each of the directors of UTG, with respect to UTG's chief executive officer and President, and each of UTG's executive officers whose salary plus bonus exceeded $100,000 for fiscal 2012, and with respect to all executive officers and directors of UTG as a group:  (i) the total number of shares of all classes of stock of UTG or any of its parents or subsidiaries, beneficially owned as of February 1, 2013 and the nature of such ownership; and (ii) the percent of the issued and outstanding shares of stock so owned, and granted stock options available as of the same date.

Title	Directors, Named Executive	Amount	Percent
of	Officers, & All Directors &	and Nature of	Of
Class	Executive Officers as a Group	Ownership	Class (1)

UTG's	John S. Albin	10,503	(4)	*
Common	Randall L. Attkisson	0	(2)	*
Stock, no	Joseph A. Brinck, II	12,225		*
par value	Jesse T. Correll	1,856,555	(3)	49.0%
	Ward F. Correll	268,906	(5)	7.1%
	Thomas F. Darden, II	60,465		1.6%
	Howard L. Dayton, Jr.	4,548		*
	Douglas P. Ditto	4,528		*
	Daryl J. Heald	21,739	(6)	*
	Theodore C. Miller	10,821		*
	Peter L. Ochs	2,000	(6)	*
	William W. Perry	120,000		3.2%
	James P. Rousey	3,773		*
	All directors and executive officers as a group (thirteen in number)	2,376,063		62.6%

* Less than 1%

(1)	The percentage of outstanding shares for UTG is based on 3,797,391 shares of common stock outstanding as of February 1, 2013.
(2)	Randall L. Attkisson holds minority ownership positions in certain of the companies listed as owning UTG common stock including First Southern Bancorp, Inc.  Ownership of these shares is reflected in the ownership of Jesse T. Correll.
(3)	The share ownership of Mr. Jesse Correll includes 23,968 shares of UTG, Inc. common stock owned by him individually, 204,909 shares of UTG, Inc. common stock held by First Southern Bancorp, Inc. and 341,997 shares of UTG, Inc. common stock owned by First Southern Funding, LLC.  The share ownership of Mr. Correll also includes 72,750 shares of UTG, Inc common stock held by WCorrell, Limited Partnership, a limited partnership in which Mr. Correll serves as managing general partner and 11,055 shares of UTG, Inc. common stock held by Bluegrass Farms & Woodlands, LLC in which Mr. Correll serves as managing member.  Mr. Correll has sole voting and dispositive power over the shares held by both entities.   In addition, by virtue of his ownership of voting securities of First Southern Funding, LLC and First Southern Bancorp, Inc., and in turn, their ownership of 100% of the outstanding membership interests of First Southern Holdings, LLC (the holder of 1,201,876 shares of UTG, Inc. common stock), Mr. Correll may be deemed to beneficially own the total number of shares of UTG, Inc common stock owned by First Southern Holdings, and may be deemed to share with First Southern Holdings the right to vote and to dispose of such shares. Mr. Correll owns approximately 76.52% of the outstanding membership interests of First Southern Funding; he owns directly approximately 48.4%, companies he controls own approximately 13.0%, and he has the power to vote but does not own an additional 3% of the outstanding voting stock of First Southern Bancorp.  First Southern Bancorp and First Southern Funding in turn own 99% and 1%, respectively, of the outstanding membership interests of First Southern Holdings.
(4)	Includes 392 shares owned directly by Mr. Albin's spouse.
(5)	The share ownership of Mr. Ward Correll includes 11,405 shares of UTG, Inc. common stock owned by him individually.  Cumberland Lake Shell, Inc. owns 257,501 shares of UTG Common Stock, all of the outstanding voting shares of which are owned by Ward F. Correll.  Ward F. Correll is the father of Jesse T. Correll.  There are 72,750 shares of UTG Common Stock owned by WCorrell Limited Partnership in which Jesse T. Correll serves as managing general partner and, as such, has sole voting and dispositive power over the shares of Common Stock held by it. The aforementioned 72,750 shares are deemed to be beneficially owned by and listed under Jesse T. Correll in this section.
(6)	Shares held in a trust for benefit of named individual

Except as indicated above, the foregoing persons hold sole voting and investment power.

Item 13.  Certain Relationships and Related Transactions and Director Independence

The Board of Directors determined that eight of the eleven current directors are "independent" as defined by Rule 5605 of the NASDAQ listing standards.  The non-independent directors are Jesse T. Correll, Ward F. Correll and James P. Rousey.

On February 20, 2003, UG purchased $4,000,000 of a trust preferred security offering issued by FSBI.  The security has a mandatory redemption after 30 years with a call provision after 5 years.  The security pays a quarterly dividend at a fixed rate of 6.515%.  The Company received $264,943 and $264,219 of dividends in 2012 and 2011, respectively.  On March 30, 2009, UG purchased $1,000,000 of FSBI common stock.  The sale and transfer of this security are restricted by the provisions of a stock restriction and buy-sell agreement.

On November 14, 2011, UTG, Inc. merged with ACAP. Shareholders of ACAP received shares of UTG in exchange for their ACAP shares. ACAP was a 73% owned subsidiary of UG. The merger reduced the corporate structure and provided certain efficiencies and economies to the Companies.  All ACAP shareholders, other than UTG or UG, have the right to receive 233 shares of UTG common stock for each share of ACAP common stock they owned at closing.  Under the terms of the exchange ratio, UTG issued 50,328 shares to former ACAP shareholders.  An additional 129,548 UTG shares were not issued due to dissenting ACAP shareholders.  See Note 8 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements for additional information regarding the ACAP dissenting shareholders.

On September 28, 2011 UTG entered a joint ownership agreement with Bandyco, LLC and First Southern National Bank, for an 8.08% interest in an aircraft. Bandyco, LLC is affiliated with Ward, F Correll, who is a director of the Company. The Company was responsible for an initial payment of $150,000 on September 30, 2011, along with a $125,000 payment on October 30, 2011. The Company will pay a monthly operational fee of $25,000 starting in November 2011 and lasting through July 2013. The aircraft is issued for business related travel by various officers and employees of the Company. For years 2012 and 2011 UTG paid $573,393 and $392,227 for costs associated with the aircraft.

Effective January 1, 2007, UTG entered into administrative services and cost sharing agreements with its subsidiary.  Under this arrangement, the subsidiary pays its proportionate share of expenses of the entire group, based on an allocation formula.  During 2012 and 2011, UG paid $8,843,596 and $7,185,037, respectively, in expenses. The Ohio Department of Insurance has approved the cost sharing agreement and it is Management's opinion that where applicable, costs have been allocated fairly and such allocations are based upon accounting principles generally accepted in the United States of America.

The Company from time to time acquires mortgage loans through participation agreements with FSNB.  FSNB services the Company's mortgage loans including those covered by the participation agreements.  The Company pays a .25% servicing fee on these loans and a onetime fee at loan origination of .50% of the original loan amount to cover costs incurred by FSNB relating to the processing and establishment of the loan.  The Company paid $102,447 and $136,457 in servicing fees and $81,851 and $89,651 in origination fees to FSNB during 2012 and 2011, respectively.

The Company reimbursed expenses incurred by employees of FSNB relating to travel and other costs incurred on behalf of or relating to the Company.  The Company paid $90,939 and $15,392 in 2012 and 2011, respectively to FSNB in reimbursement of such costs.  In addition, the Company began reimbursing FSNB a portion of salaries and pension costs for Mr. Correll, Mr. Ditto and a third employee.  The reimbursement was approved by the UTG Board of Directors and totaled $462,819 and $348,610 in 2012 and 2011, respectively, which included salaries and other benefits.

UG paid ordinary dividends of $3,316,722 and $3,530,000 to UTG in 2012 and 2011, respectively. No extraordinary dividends were paid during the two year period.

Item 14.  Principal Accounting Fees and Services

The Audit Committee is required to be directly responsible for the appointment, compensation and retention of the Company's independent registered public accounting firm.  The Audit Committee appointed Brown Smith Wallace, LLC ("BSW") as the Company's independent registered public accounting firm for the fiscal years ended December 31, 2012 and 2011.

Amounts paid to, or billed by, the Company's principal accountant, during the two most recent fiscal years by category were as follows:

Audit Fees - Audit fees paid for these audit services in the fiscal years ended December 31, 2012 and 2011 totaled $135,541 and $178,250, respectively and audit fees billed for quarterly reviews of the Company's financial statements totaled $20,100 and $19,500 for the years 2012 and 2011, respectively.

Audit Related Fees - No audit related fees were incurred by the Company from BSW for the fiscal years ended December 31, 2012 and 2011.

Tax Fees - The Company paid $15,325 and $15,183 to BSW relating to certain tax advice and electronic filing of certain federal income tax returns of the Company for the years ended December 31, 2012 and 2011.

All Other Fees - The Company paid $0 and $17,345 to BSW for services relating to state insurance exams and SEC filings for the year ended December 31, 2012 and 2011, respectively.  The audit committee approved the above work and fees of BSW.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) The following documents are filed as a part of the report:

(1)	Financial Statements:
	See Item 8, Index to Financial Statements
(2)	Financial Statement Schedules
	NOTE:  The financial statement schedules have been omitted as they are deemed inapplicable or not required by Regulation S-X.

(b) Exhibits: The following are exhibits to this report, and if incorporated by reference, we have indicated the document previously filed with the SEC in which the exhibit was included:

Exhibit Number	Description
2.1	Agreement and Plan of Merger of United Trust Group, Inc., An Illinois Corporation with and into UTG, Inc., A Delaware Corporation dated as of July 1, 2005, including exhibits thereto. [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2005.]
2.2	Stock Purchase Agreement, dated August 7, 2006, between UTG, Inc. and William F. Guest and John D. Cornett [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2006].
2.3	Amendment No. 1, dated September 6, 2006, to the Stock Purchase Agreement, dated August 7, 2007, between UTG, Inc. and William F. Guest and John D. Cornett [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2006].
2.4	Amendment No. 2, dated November 22, 2006, to the Stock Purchase Agreement, dated August 7, 2006, as amended, between UTG, Inc. and William F. Guest and John D. Cornett [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2006].
3.1	Certificate of Incorporation of the Registrant and all amendments thereto [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2005].
3.2	By-Laws for the Registrant and all amendments thereto [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2005].
4.1	UTG's Agreement pursuant to Item 601(b) (4) (iii) (A) of Regulation S-K with respect to long-term debt instruments [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2010].
10.1	Promissory note dated December 8, 2006, between UTG, Inc. and First Tennessee Bank National Association [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2006].
10.2	Revolving credit note dated December 8, 2006, between UTG, Inc. and First Tennessee Bank National Association [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2006].
10.3	Change in Terms Agreement dated May 11, 2010 to the revolving credit note dated December 8, 2006, between UTG, Inc. and First Tennessee Bank National Association [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2010].
10.4	Change in Terms Agreement dated July 14, 2011 to the revolving credit note dated December 8, 2006, between UTG, Inc. and First Tennessee Bank National Association [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2011].
10.5	Loan Agreement dated December 8, 2006, between UTG, Inc. and First Tennessee Bank National Association [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2006].
10.6	Commercial pledge agreement dated December 8, 2006, between UTG, Inc. and First Tennessee Bank National Association [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2006].
10.7	Negative pledge agreement dated December 8, 2006, between UTG, Inc. and First Tennessee Bank National Association [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2006].
10.8	Line of Credit dated December 28, 2011, between UTG Avalon, LLC and First National Bank of Tennessee [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2011].
10.9	Administrative Services and Cost Sharing Agreement dated as of January 1, 2007 between UTG, Inc. and American Capitol Insurance Company [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2006].
10.10	Administrative Services and Cost Sharing Agreement dated as of January 1, 2007 between UTG, Inc. and Universal Guaranty Life Insurance Company [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2007].
10.11	Amendment to Reinsurance Agreement between Universal Guaranty Life Insurance Company and Optimum Re Insurance Company originally with Business Men's Assurance Company of America [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2010].
10.12	Reinsurance Agreement between Universal Guaranty Life Insurance Company and Swiss RE originally with Life Reassurance Corporation of America [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2010].
10.13	Assumption Reinsurance Agreement between Universal Guaranty Life Insurance Company and Park Avenue Life Insurance Company formerly known as First International Life Insurance Company [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2010].
10.14	Aircraft Lease Agreement [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2010].
10.15	Aircraft Joint Ownership Agreement [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2011].
10.16	General Agreement regarding Mortgage Loans by and between First Southern National Bank and Universal Guaranty Life Insurance Company [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2010].
10.17	Loan Participation Agreement [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2010].
10.18	StoneRiver Master Agreement [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2011].
*10.19	Promissory Note dated November 20, 2012, between UTG, Inc. and Illinois National Bank.
*10.20	Commercial pledge agreement dated November 20, 2012, between UTG, Inc. and Illinois National Bank.
*10.21	Promissory Note dated March 4, 2013, between HPG Acquisitions, LLC and First National Bank of Tennessee
14.1	Code of Ethics and Business Conduct. [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2005.]
14.2	Code of Ethical Conduct for Senior Financial Officers. [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2005.]
*21.1	List of Subsidiaries of the Registrant.
*31.1	Certificate of Jesse T. Correll, Chief Executive Officer and Chairman of the Board of UTG, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31.2	Certificate of Theodore C. Miller, Chief Financial Officer, Senior Vice President and Corporate Secretary of UTG, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*32.1	Certificate of Jesse T. Correll, Chief Executive Officer and Chairman of the Board of UTG, as required pursuant to Section 906 of the Sarbanes Oxley Act of 2002
*32.2	Certificate of Theodore C. Miller, Chief Financial Officer, Senior Vice President and Corporate Secretary of UTG, as required pursuant to Section 906 of the Sarbanes Oxley Act of 2002
99.1	Audit Committee Charter. [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2005.]
99.2	Whistleblower Policy. [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2005.]
99.3	Compensation Committee Charter [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2011].
99.4	Investment Committee Charter [Incorporated by reference to the Registrant's Form 10-K, for the year ended December 31, 2011].
101	Interactive Data File

* Filed herewith

SIGNATURES

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

	UTG, Inc.
By:	/s/ Jesse T. Correll
	Jesse T. Correll
	Chairman and Chief Executive Officer and Director
By:	/s/ Theodore C. Miller
	Theodore C. Miller
	Senior Vice President, Chief Financial Officer and Secretary
	(principal financial and accounting officer)

Date: March 28, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By: /s/ John. S. Albin	By: /s/ Daryl J. Heald
John S. Albin Director	Daryl J. Heald Director
By: /s/ Randall L. Attkisson	By: /s/ Howard L. Dayton
Randall L. Attkisson Director	Howard L. Dayton Director
By: /s/ Joseph A. Brinck	By: /s/ Peter L. Ochs
Joseph A. Brinck Director	Peter L. Ochs Director
By:  /s/ Jesse T. Correll	By: /s/ William W. Perry
Jesse T. Correll Chairman of the Board, Chief Executive Officer and Director	William W. Perry Director
By:	By:  /s/ James P. Rousey
Ward F. Correll Director	James P. Rousey President and Director
By: /s/ Thomas F. Darden	By:  /s/ Theodore C. Miller
Thomas F. Darden Director	Theodore C. Miller Corporate Secretary and Chief Financial Officer

EX-31.1

Exhibit 31.1

CERTIFICATIONS
I, Jesse T. Correll, Chairman of the Board and Chief Executive Officer of UTG, Inc., certify that:
1.	I have reviewed this annual report on Form 10-K of the registrant, UTG, Inc.;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
Date:   March 28, 2013			By	/s/ Jesse T. Correll
				Chairman of the Board and
				Chief Executive Officer

EX-21

Exhibit 21.1

LIST OF SUBSIDIARIES
Subsidiary Name	State of Incorporation
Cumberland Woodlands, LLC		Kentucky
Stanford Wilderness Road, LLC		Kentucky
UTAG, Inc.		Illinois
Universal Guaranty Life Insurance Company		Ohio
HPG Acquisitions, LLC		Texas
RLF Lexington Properties, LLC		Colorado
Imperial Plan, Inc.		Texas
Sand Lake, LLC		Florida
Collier Beach, LLC		South Carolina
Northwest Florida of Okaloosa Holding, LLC		Florida
UG Acquisitions, LLC		Delaware
UTG Avalon, LLC		Florida
Wingate of St Johns Holding, LLC		Florida
Red River Gorge Properties, LLC		Kentucky
VMA Mobile, LLC		Delaware
Dearborn County, Indiana, LLC		Indiana

EX-31.2

Exhibit 31.2

CERTIFICATIONS
I, Theodore C. Miller,  Senior Vice President, Corporate Secretary and Chief Financial Officer of UTG, Inc., certify that:
1.	I have reviewed this annual report on Form 10-K of the registrant, UTG, Inc.;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Date:   March 28, 2013	By	/s/ Theodore C. Miller
		Senior Vice President, Corporate Secretary and
		Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Annual Report on Form 10-K of UTG, Inc. (the "Company") for the period ended December 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the "Report") I, Jesse T. Correll, Chairman of the Board and Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	March 28, 2013	By:	/s/ Jesse T. Correll
			Jesse T. Correll
			Chairman of the Board and
			Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Annual Report on Form 10-K of UTG, Inc. (the "Company") for the period ended December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report") I, Theodore C. Miller, Senior Vice President, Corporate Secretary and Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	March 28, 2013	By:	/s/ Theodore C. Miller
			Theodore C. Miller
			Senior Vice President, Corporate
			Secretary and Chief Financial Officer

EX-10.20

Exhibit 10.20

COMMERCIAL PLEDGE AGREEMENT

Principal   $8,000,000.00			Loan Date	Maturity	Loan No.   72957158		Call/Coll		Account   40000	Officer   MRD	Initials
	References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. Any item above containing "***" has been omitted due to text length limitations.
Grantor:		UTG, Inc.				Lender:		Illinois National Bank
		5250 S. Sixth St.						Main Branch
		Frontage Rd. East						322 E. Capitol
		Springfield, IL  62703						Springfield, IL  612701
Company:		Universal Guaranty Life Insurance Company
		5250 S. Sixth St.
		Frontage Rd. East
		Springfield, IL  62703

THIS COMMERCIAL PLEDGE AGREEMENT dated November 20, 2012, is made and executed between UTG, Inc. ("Grantor'), Universal Guaranty Life Insurance Company ("Company"), and Illinois National Bank ("Lender").

GRANT OF SECURITY INTEREST.  For valuable consideration, Grantor grants to Lender a security interest in the Collateral to secure the indebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender may have by law.

COLLATERAL DESCRIPTION. The word "Collateral"as used in this Agreement means Grantor's present and future rights, title and interest in and to the following described investment property, together with any and all present and future additional thereto, substitutions therefore, and replacements thereof, together with any and all present and future certificates and/or instruments evidencing any stock and further together with all income and Proceeds as described herein:

400,000 shares of Universal Guaranty Life Insurance Company stock, Certificate Numbers 111

Grantor has delivered to Lender the certificates representing all of the shares of stock, together with undated stock powers executed in blank.

CROSS-COLLATERALIZATION. In addition to the Line of Credit, this Agreement secures all obligations, debts and liabilities, plus interest thereon, of Grantor to Lender, or any one or more of them, as well as all claims by Lender against Grantor or any one or more of them, whether now existing or hereafter arising, whether related or unrelated to the purpose of the Note, whether voluntary or otherwise, whether due or not due, direct or indirect, determined or undetermined, absolute or contingent, liquidated or unliquidated, whether Grantor may be liable individually or jointly with others, whether obligated as guarantor, surety, accommodation party or otherwise, and whether recovery upon such amounts may be or hereafter may become barred by any statute of limitations, and whether the obligation to repay such amounts may be or hereafter may become otherwise unenforceable.

RIGHT OF SETOFF.  To the extent permitted by applicable law, Lender reserves a right of setoff in all Grantor's accounts with Lender (whether checking, savings, or some other account).  This includes all accounts Grantor holds jointly with someone else and all accounts Grantor may open in the future.  However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Grantor authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts, and, at Lender's option, to administratively freeze all such accounts to allow Lender to protect Lender's charge and setoff rights provided in this paragraph.

REPRESENTATIONS AND WARRANTIES.  Grantor represents and warrants to Lender that:

COMMERCIAL PLEDGE AGREEMENT

Loan No.___________ (Continued) Page 2

Ownership.  Grantor is the lawful owner of the Collateral free and clear of all security interests, liens, encumbrances and claims of others except as disclosed to and accepted by Lender in writing prior to execution of this Agreement.

Right to Pledge.  Grantor has the full right, power and authority to enter into this Agreement and to pledge the Collateral.

Authority; Binding Effect.  Grantor has the full right, power and authority to enter into this Agreement and to grant a security interest in the Collateral to Lender.  This Agreement is binding upon Grantor as well as Grantor's successors and assigns, and is legally enforceable in accordance with its terms.  The foregoing representations and warranties, and all other representations and warranties contained in this Agreement are and shall be continuing in nature and shall remain in full force and effect until such time as this Agreement is terminated or cancelled as provided herein.

No Further Assignment. Grantor has not, and shall not, sell, assign, transfer, encumber or otherwise dispose of any of Grantor's rights in the Collateral except as provided in this Agreement.

No Defaults. There are no defaults existing under the Collateral, and there are no offsets or counterclaims to the same.  Grantor will strictly and promptly perform each of the terms, conditions, covenants and agreements, if any, contained in the Collateral which are to be performed by Grantor.

No Violation.  The execution and delivery or this Agreement will not violate any law or agreement governing Grantor or to which Grantor is a party.

Financing Statements.  Grantor authorizes Lender to file a UCC financing statement, or alternatively, a copy of this Agreement to perfect Lender's security interest.  At Lender's request, Grantor additionally agrees to sign all other documents that are necessary to perfect, protect, and continue Lender's security interest in the Property.  Grantor will pay such filing fees, title transfer fees, and other fees and costs involved unless prohibited by law or unless Lender is required by law to pay such fees and costs.  Grantor irrevocably appoints Lender to Grantor changes Grantor's name or address, or the name or address of any person granting a security interest under this Agreement changes, Grantor will promptly notify the Lender of such change.

Company Stock.  The Collateral is all of the issued stock of the Company, which is presently owned or controlled by Grantor.  If Grantor at any time owns or controls any other shares of stock of the Company, all such stock shall without further act or deed be subject to all of the terms and conditions of this Agreement and Grantor must immediately take such action to perfect Lender's lien and security interest as Lender may request, including executing undated blank stock powers and delivering the stock certificate(s) representing such shares.

Options. There are no options or other rights to purchase or otherwise acquire the Collateral outstanding at this time.

Issued Stock.  All of the outstanding shares of stock of the Company have been duly and validly issued by the Company, and they are fully paid and nonassessable.

Pledge.  There are no existing agreements with respect to the Collateral between Grantor and any other person or entity (other than the Lender).

No Adverse Changes.  Grantor represents and warrants that neither Grantor, nor any of its partially or wholly owned subsidiaries, have experienced any materially adverse changes in (i) its financial condition since 8/22/12, and (ii) the character of the Collateral since 8/22/12.

COMMERCIAL PLEDGE AGREEMENT

Loan No.___________ (Continued) Page 3

LENDER'S RIGHTS AND OBLIGATIONS WITH RESPECT TO THE COLLATERAL.  Lender may hold the Collateral until all indebtedness has been paid and satisfied. Thereafter Lender may deliver the Collateral to Grantor or to any other owner of the Collateral.  Lender shall have the following rights in addition to all other rights Lender may have by law:

Maintenance and Protection of Collateral. Lender may, but shall not be obligated to, take such steps as it deems necessary or desirable to protect, maintain, insure, store or care for the Collateral, including paying of any liens or claims against the Collateral.  This may include such things as hiring other people, such as attorneys, appraisers or other experts.  Lender may charge Grantor for any cost incurred in so doing.  When applicable law provides more than one method of perfection of Lender's security interest, Lender may choose the method(s) to be used.  If the Collateral consists of stock, bonds or other investment property for which no certificate has been issued, Grantor agrees, at Lender's request, either to request issuance of an appropriate certificate or to give instructions on Lender's forms to the issuer, transfer agent, mutual fund company, or broker, as the case may be, to record on its books or records Lender's security interest in the Collateral.  Grantor also agrees to execute any additional documents, including but not limited to, a control agreement, necessary to perfect Lender's security interest as Lender may desire.

Income and Proceeds from the Collateral.  Lender may receive all Income and Proceeds and add it to the Collateral.  Grantor agrees to deliver to Lender immediately upon receipt, in the exact form received and without commingling with other property, all income and Proceeds from the Collateral which may be received by, paid, or delivered to Grantor or for Grantor's account, whether as an addition to, in discharge of, in substitution of, or in exchange for any of the Collateral.

Application of Cash.  At Lender's option, Lender may apply any cash, whether included in the Collateral or received as income and Proceeds or through liquidation, sale, or retirement, of the Collateral, to the satisfaction of the Indebtedness or such portion thereof as Lender shall choose, whether or not matured.

Transactions with Others.  Lender may (1) extend time for payment or other performance, (2) grant a renewal or change in terms or conditions, or (3) compromise, compound or release any obligation, with any one or more Obligors, endorsers, or Guarantors of the Indebtedness as Lender deems advisable, without obtaining the prior written consent of Grantor, and no such act or failure to act shall affect Lender's rights against Grantor or the Collateral,

All Collateral Secures Indebtedness. All Collateral shall be security for the Indebtedness, whether the Collateral is located at one or more offices or branches of Lender, This will be the case whether or not the office or branch where Grantor obtained Grantor's loan knows about the Collateral or relies upon the Collateral as security.

Collection of Collateral.  Lender at lender's option may, but need not, collect the income and Proceeds directly from the Obligors.  Grantor authorizes and directs the Obligors, if Lender decides to collect the Income and Proceeds, to pay and deliver to Lender all Income and Proceeds from the Collateral and to accept Lender's receipt for the payments.

Power of Attorney.  Grantor irrevocably appoints Lender as Grantor's attorney-in-fact, with full power of substitution,  (a) to demand, collect, receive, receipt for, sue and recover all Income and Proceeds and other sums of money and other property which may now or hereafter become due, owing or payable from the Obligors in accordance with the terms of the Collateral;  (b) to execute, sign and endorse any and all instruments, receipts, checks, drafts and warrants issued in payment for the Collateral;  (c) to settle or compromise any and all claims arising under the Collateral, and in the place and stead of Grantor, execute and deliver Grantor's release and acquittance far Grantor;  (d) to file any claim or claims or to take any action or institute or take part in any proceedings, either in Lender's own name or in the name of Grantor, or otherwise, which in the discretion of Lender may seem to be necessary or advisable; and  (e) to execute in Grantor's name and to deliver to the Obligors on Grantor's behalf, at the time and in the manner specified by the Collateral, any necessary instruments or documents.

COMMERCIAL PLEDGE AGREEMENT

Loan No.___________ (Continued) Page 4

Perfection of Security Interest.  Upon Lender's request, Grantor will deliver to Lender any and all of the documents evidencing or constituting the Collateral.  When applicable law provides more than one method of perfection of Lender's security interest, Lender may choose the method(s) to be used.  Upon Lender's request, Grantor will sign and deliver any writings necessary to perfect Lender's security interest.  If any of the Collateral consists of securities for which no certificate has been issued, Grantor agrees, at Lender's option, either to request issuance of an appropriate certificate or to execute appropriate instructions on Lender's forms instructing the issuer, transfer agent, mutual fund company, or broker, as the case may be, to record on its books or records, by hook-entry or otherwise, Lender's security interest in the Collateral.  Grantor hereby appoints Lender as Grantor's irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect, amend, or to continue the security interest granted in this Agreement or to demand termination of filings of other secured parties.  This is a continuing Security Agreement and will continue in effect even though all or any part of the Indebtedness is paid in full and even though for a period of time Grantor may not be indebted to Lender,

LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Grantor fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Grantor's failure to discharge or pay when due any amounts Grantor is required to discharge or nay under this Agreement or any Related Documents, Lender on Grantor's behalf may (but shall not be obligated to) take any action that Larder deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Collateral and paying all costs for insuring, maintaining and preserving the Collateral.  All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Grantor.  All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand: (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity.  The Agreement also will secure payment of these amounts.  Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon Default.

LIMITATIONS ON OBLIGATIONS OF LENDER.  Lender shall use ordinary reasonable care in the physical preservation and custody of the Collateral in Lender's possession, but shall have no other obligation to protect the Collateral or its value.  In particular, but without limitation, Lender shall have no responsibility for (A) any depreciation in value of the Collateral or tar the collection or protection of any Income and Proceeds from the Collateral, (B) preservation of rights against parties to the Collateral or against third persons, (C) ascertaining any maturates, calls, conversions, exchanges, offers, tenders, or similar matters relating to any of the Collateral, or (D) informing Grantor about any of the above, whether or not Lender has or is doomed to have knowledge of such matters. Except as provided above, Lender shall have no liability for depreciation or deterioration of the Collateral.

REINSTATEMENT OF SECURITY INTEREST.  If payment is made by Grantor, whether voluntarily or otherwise, or by guarantor or by any third party, on the Indebtedness and thereafter Lender is forced to remit the amount of the: payment (A) to Grantor's trustee in bankruptcy or to any similar person under any federal or state bankruptcy law or law for the relief of debtors, (B) by reason of any judgment, decree or order of any court or administrative body having jurisdiction over Lender or any of Lender's property, or (C) by reason of any settlement or compromise of any claim made by lender with any claimant (including without limitation Grantor), the Indebtedness shall be considered unpaid for the purpose of enforcement of this Agreement and this Agreement shall continue to be effective or shall be reinstated, as the case may be, notwithstanding any cancellation of this Agreement or of any note or other instrument or agreement evidencing the indebtedness and the Collateral will continue to secure the amount repaid or recovered to the same extent as if that amount never had been originally received by Lender, and Grantor shall be bound by any judgment, decree, order, settlement or compromise relating to the Indebtedness or to this Agreement.

DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:

Payment Default.  Grantor fails to make any payment when due under the Indebtedness.

COMMERCIAL PLEDGE AGREEMENT

Loan No.___________ (Continued) Page 5

Other Defaults.  Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Grantor.

Default in Favor of Third Parties.  Any guarantor or Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of any guarantor's or Grantor's property or ability to perform their respective obligations under this Agreement or any of the Related Documents.

False Statements.  Any warranty, representation or statement made or furnished to Lender by Grantor or on Grantor's behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.

Defective Collateralization.  This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.

Creditor or Forfeiture Proceedings.  Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by a creditor of Grantor or by any governmental agency against any collateral securing the indebtedness.  This includes a garnishment of any of Grantor's accounts, including deposit accounts, with Lender.  However, this Event of Default shall not apply if there is a good faith dispute by Grantor as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Grantor gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

Events Affecting Grantor.  Any of the preceding events occurs with respect to any Guarantor of any of the indebtedness or Guarantor dies or becomes incompetent or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.

Adverse Change.  A material adverse change occurs in Grantor's financial condition, or Lender believes the prospect of payment or performance of the Indebtedness is impaired.

Insecurity.  Lender in good faith believes itself insecure.

Cure Provisions.  If any default, other than a default in payment is curable and if Grantor has not been given a notice of a breach of the same provision of this Agreement within the preceding twelve (12) months, it may be cured if Grantor, after Lender sends written notice to Grantor demanding cure of such default:  (1) cures the default within ten (10) days; or (2) if the cure requires more than ten (10) days, immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.

COMPANY OBLIGATIONS.  The following provisions are additionally binding upon Company as a part of this Agreement:

Authorized Pledge.  The Agreement constitutes an Authorized Pledge by Grantor.  As used herein, Authorized Pledge means a Pledge of Shares approved by the Company before any default in the indebtedness secured by such pledge.

Claims and Liens.  Company attests that at the time of execution of this Agreement, that there are no claims or liens against the Collateral other than to Lender to its knowledge.  The records of Company reflect no other claims or liens against the Collateral.

COMMERCIAL PLEDGE AGREEMENT

Loan No.___________ (Continued) Page 6

Debt of Grantor.  Lender shall not be liable for any indebtedness or obligations of Grantor to the Company or any other person or entity.

Information.  Upon written request by Lender from time to time, the Company will furnish information relating to the Collateral to the extent such information is generally available to Non-Voting Shareholders and may be acquired or furnished by the Company without unreasonable effort or expense.

Issued Shares.  The Company warrants and represents that 400,000 of common voting shares have been issued by the Company, which shares are fully paid and nonassessable.  Grantor holds 100% of the Company's issued common voting shares as of the date of this Agreement.  The records of the Company reflect no issued shares exist other than those issued to Grantor.  During the terms of the Line of Credit and/or this Agreement, the Company shall not issue any new shares, of any kind, to anyone, at anytime, without the prior express written agreement and approval of Lender.

Dividends and Distributions.  During the term of the Line of Credit and/or this Agreement, unless prior express written approval has been provided by Lender, the Company shall not pay a dividend or distribution of cash or other property if the fair market value thereof, together with that of other dividends or distributions made in the preceding 12 months, exceeds the greater of (1) 10% of statutory-basis policyholders' surplus as of the prior December 31, or (2) the statutory-basis net income of the Company for the prior year.  As of this date, this is defined as an "Extraordinary Dividend."

Domiciliary.  The Company's present domiciliary is the State of Ohio.  During the term of the Line of Credit and/or this Agreement, the Company shall not change its domiciliary state without the prior express written approval of Lender.

Signatures.  It is a condition precedent to the effectiveness of this Agreement that it be signed not only by the Company in the space indicated below, but also by Grantor and Lender in the spaces indicated below.

ONGOING BUSINESS OF GRANTOR AND COMPANY.  The following provisions are made a part of this Agreement:

Business Affairs of Grantor and Company. During the term of the Line of Credit and/or this Agreement, without Lender's prior approval, neither Grantor nor Company shall, or shall permit the other to:

(i)	Sell, liquidate or otherwise transfer any of the Grantor's and/or Company's assets, or transfer all or substantially all of its insurance risk, outside the ordinary course of its business;
(ii)	Merge or consolidate with another entity or entities;
(iii)	Issue, sell, grant, transfer or otherwise dispose of any shares of Company's stock; or
(iv)	Amend, repeal or otherwise modify its articles of incorporation or bylaws or Grantor and/or Company

DEBT TO EQUITY RATIO.  The following provisions are made a part of this Agreement:

Grantor Debt to Equity.  Company's debt to equity ratio shall not exceed 13.00x on a statutory basis during the term of the Line of Credit and/or this Agreement.  If Company's debt to equity ratio ever exceeds 13.0x during the term of the Line of Credit and/or this Agreement, it shall be deemed on Event of Default.

Company Debt to Equity.  Grantor's debt to equity ratio shall not exceed 9.00x on a consolidated basis during the term or the Line of Credit and/or this Agreement.  If Grantor's debt to equity ratio ever exceeds 9.0x during the term of the Line of Credit and/or this Agreement, it shall be deemed on Event of Default.

COMMERCIAL PLEDGE AGREEMENT

Loan No.___________ (Continued) Page 7

RIGHTS AND REMEDIES ON DEFAULT.  If an Event of Default occurs under this Agreement, at any time thereafter, Lender may exercise any one or more of the following rights and remedies:

Accelerate Indebtedness.  Declare all lndebtedness, including any prepayment penalty which Grantor would be required to pay, immediately due and payable, without notice of any kinds to Grantor.

Collect the Collateral.  Collect any of the Collateral and, at Lender's option and to the extent permitted by applicable law, retain possession of the Collateral while suing on the Indebtedness.

Sell the Collateral.  Sell the Collateral, at Lender's discretion, as a unit or in parcels, at one or more public or private sales.  Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender shall give or mail to Grantor, and other persons as required by law, notice at least ten (10) days in advance of the time and place of any public sale, or of the time after which any private sale may be made.  However, no notice need be provided to any person who, after an Event of Default occurs, enters into and authenticates an agreement waiving that person's right to notification of sale.  Grantor agrees that any requirement of reasonable notice as to Grantor is satisfied if Lender mails notice by ordinary mail addressed to Grantor at the last address Grantor has publication in any newspaper of general circulation in the county where the Collateral is located, setting forth the time and place of sale and a brief description of the property to be sold.  Lender may be a purchaser at any public sale.  This provision is expressly agreed to by Lender, Grantor, and the Company.

Sell Securities.  Sell any securities included in the Collateral in a manner consistent with applicable federal and state securities laws.  If, because of restrictions under such laws, Lender is unable, or believes Lender is unable, to sell the securities in an open market transaction, to one or more persons or to a restricted group of persons, even though such sale may result in a price that is less favorable than might be obtained in an open market transaction.  Such a sale will be considered commercially reasonable.  If any securities held as Collateral are "restricted securities" as defined in the Rules of the Securities and Exchange Commission (such as Regulation D or Rule 144) or the rules of state securities departments under state "Blue Sky" laws, or if Grantor or any other owner of the Collateral is an affiliate of the issuer of the securities, Grantor agrees that neither Grantor, not any member of Grantor's family, nor any other person signing this Agreement will sell or dispose of any securities of such issuer without obtaining Lender's prior written consent.

Rights and Remedies with Respect to Investment Property, Financial Assets and Related Collateral.  In addition to other rights and remedies granted under this Agreement and under applicable law, Lender may exercise any or all of the following rights and remedies: (I) register with any issuer or broker or other securities intermediary any of the Collateral consisting of investment property or financial assets (collectively herein, "investment property") in Lender's sole name or in the name of Lender's broker, agent or nominee; (2) cause any issuer or broker or other securities intermediary to deliver to Lender any of the Collateral consisting of securities, or investment property capable of being delivered; (3) enter into a control agreement or power of attorney with any issuer or securities intermediary with respect to any Collateral consisting of investment property, on such terms as Lender may deem appropriate, in its sole discretion, including without limitation, an agreement granting to Lender any of the rights provided hereunder without further notice to or consent by Grantor; (4) attorney-in-fact, coupled with an interest, for the purpose of executing such control agreement on Grantor's behalf; (5) exercise any and all rights of Lender under any such control agreement or power of attorney; (6) exercise any voting, conversion, registration, purchase, option, or other rights with respect to any Collateral; (7) collect, with or without legal action, and issue receipts concerning any notes, checks, drafts, remittances or distributions that are paid or payable with respect to any Collateral consisting of investment property.  Any control agreement entered with respect to any investment property shall contain the following provisions, at Lender's discretion.  Lender shall be authorized to instruct the issuer, broker or other securities intermediary to take or to refrain from taking such actions with respect to the investment property as Lender may instruct, without further notice to or consent by Grantor.  Such actions may include without limitation the issuance of entitlement orders, account instructions, general trading or buy or sell orders, transfer and redemption orders, and stop loss orders.  Lender shall be further entitled to instruct the issuer, broker or securities intermediary to sell or to liquidate any investment property, or to pay the cash surrender or account

COMMERCIAL PLEDGE AGREEMENT

Loan No.___________ (Continued) Page 8

termination value with respect to any and all investment property, and to deliver all such payments and liquidation proceeds to Lender.  Any such control agreement shall contain such authorizations as are necessary to place Lender in "control" of such investment collateral, as contemplated under the provisions of the Uniform Commercial Code, and shall fully authorize Lender to issue "entitlement orders" concerning the transfer, redemption, liquidation or disposition of investment collateral, in conformance with the provisions of the Uniform Commercial Code.

Foreclosure.  Maintain a judicial suit for foreclosure and sale of the Collateral.

Transfer Title.  Effect transfer of title upon sale of all or part of the Collateral.  For this purpose, Grantor irrevocably appoints Lender as Grantor's attorney-in-fact to execute endorsements, assignments and instruments in the name of Grantor and each of them (if more than one) as shall be necessary or reasonable.

Other Rights and Remedies.  Have and exercise any or all of the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, at law, in equity, or otherwise.

Application of Proceeds. Apply any cash which is part of the Collateral, or which is received from the collection or sale of the Collateral, to reimbursement of any expenses, including any costs for registration of securities, commissions incurred in connection with a sale, attorneys' fees and court costs, whether or not there is a lawsuit and including any fees on appeal, incurred by Lender in connection with the collection and sale of such Collateral and to the payment of the Indebtedness of Grantor to Lender, with any excess funds to be paid to Grantor as the interests of Grantor may appear.  Grantor agrees, to the extent permitted by law, to pay any deficiency after application of the proceeds of the Collateral to the Indebtedness.

Election of Remedies.  Except as may be prohibited by applicable law, all of Lender's rights and remedies, whether evidenced by this Agreement, the Related Documents, or by any other writing, shall be cumulative and may be exercised singularly or concurrently.  Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Grantor under this Agreement, after Grantor's failure to perform, shall not affect Lender's right to declare a default and exercise its remedies.

MISCELLANEOUS PROVISIONS.  The following miscellaneous provisions are a part of this Agreement:

Amendments.  This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement.  No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.

Attorneys' Fees;  Expenses.  Grantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Agreement.  Lender may hire or pay someone else to help enforce this Agreement, and Grantor shall pay the costs and expenses of such enforcement.  Costs and expenses include Lender's attorneys' fees and legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services.  Grantor also shall pay all court costs and such additional fees as may be directed by the court.

Caption Headings.  Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement.

Governing Law.  This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Illinois without regard to its conflicts of law provisions.  This Agreement has been accepted by Lender in the State of Illinois.

COMMERCIAL PLEDGE AGREEMENT

Loan No.___________ (Continued) Page 9

Choice of Venue.  If there is a lawsuit, Grantor agrees upon Lender's request to submit to the jurisdiction of the courts of Sangamon County, State of Illinois.

No Waiver by Lender.  Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender.  No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right.  A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Agreement.  No prior waiver by Lender, nor any course of dealing between Lender and Grantor, shall constitute a waiver of any of Lender's rights or of any of Grantor's obligations as to any future transactions.  Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.

Notices.  Any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement.  Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address.  For notice purposes, Grantor agrees to keep Lender informed at all times of Grantor's current address.  Unless otherwise provided or required by law, if there is more than one Grantor, any notice given by Lender to any Grantor is deemed to be notice given to all Grantors.

Communications.  Grantor acknowledges that Lender shall have legitimate reasons to communicate with Company regarding the Indebtedness, before and after a default.  Grantor consents to all communications between Lender and Company regarding the Collateral, the Indebtedness, and other matters relating to the subject matter of this Agreement.

Severability.  If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance.  If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement.  Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.

Successors and Assigns.  Subject to any limitations stated in this Agreement on transfer of Grantor's interest, this Agreement shall be finding upon and inure to the benefit of the parties, their successors and assigns.  If ownership of the Collateral becomes vested in a person other than Grantor, Lender, without notice to Grantor, may deal with Grantor's successors with reference to this Agreement and the Indebtedness by way of forbearance or extension without releasing Grantor from the obligations of this Agreement or liability under the Indebtedness.

Time is of the Essence.  Time is of the essence in the performance of this Agreement.

Waive Jury.  All parties to this Agreement hereby waiver the right to any jury trial in any action, proceeding, or counterclaim brought by any party against any other party.

DEFINITIONS.  The following capitalized words and terms shall have the following meanings when used in this Agreement.  Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America.  Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require.  Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code:

COMMERCIAL PLEDGE AGREEMENT

Loan No.___________ (Continued) Page 10

Agreement.  The word "Agreement" means this Commercial Pledge Agreement, as this Commercial Pledge Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Commercial Pledge Agreement from time to time.

Borrower.  The word "Borrower" means UTG, Inc. and includes all co-signers and co-makers signing the Note and all its successors and assigns.

Collateral.  The word "Collateral" means all of Grantor's right, title and interest in and to all the Collateral as described in the Collateral Description section of this Agreement.

Company.  The word "Company" means Universal Guaranty Life Insurance Company and all of its successors and assigns.

Default.  The word "Default" means the Default set forth in this Agreement in the section titled "Default".

Event of Default.  The words "Event of Default" mean any of the events of default set forth in this Agreement in the default section of this Agreement, and elsewhere.

Grantor.  The word "Grantor" means UTG, Inc..

Guarantor.  The word "Guarantor" means any guarantor, surety, or accommodation party of any or all of the Indebtedness.

Guaranty.  The word "Guaranty" means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note.

Income and Proceeds.  The words "Income and Proceeds" means all present and future income, proceeds, earnings, increases, and substitutions from or for the Collateral of every kinds and nature, including without limitation all payments, interest, profits, distributions, benefits, rights, options, warrants, dividends, stock dividends, stock splits, stock rights, regulatory dividends, subscriptions, monies, claims for money due and to become due, proceeds of any insurance on the Collateral, shares of stock of different par value or no par value issued in substitution or exchange for shares included in the Collateral, and all other property Grantor is entitled to receive on account of such Collateral, including accounts, documents, instruments, chattel paper, investment property, and general intangibles.

Indebtedness.  The word "Indebtedness" means the indebtedness evidenced by the Line of Credit or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Grantor is responsible under this Agreement or under any of the Related Documents.  Specifically, without limitation, indebtedness includes all amounts that may be indirectly secured by the Cross-Collateralization provision of this Agreement.

Line of Credit.  The words "Line of Credit" mean the operating line of credit executed by UTG, Inc. in the amount of $8,000,000.00 dated November 20, 2012, together with all renewals of, extensions of, modifications of, refinancing of, consolidations of, and substations of the operating line of credit.

Lender.  The word "Lender" means ILLINOIS NATIONAL BANK, its successors and assigns.

Obligor.  The word "Obligor" means without limitation any and all persons obligated to pay money or to perform some other act under the Collateral.

Property.  The word "Property" means all of Grantor's right, title and interest in and to all the Property as described in the "Collateral Description" section of this Agreement.

COMMERCIAL PLEDGE AGREEMENT

Loan No.___________ (Continued) Page 10

Related Documents.  The words "Related Documents" mean all promissory notes, credit agreements, lines of credit, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether not or hereafter existing, executed in connection with the Indebtedness.

GRANTOR AND COMPANY HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL PLEDGE AGREEMENT AND AGREE TO ITS TERMS.  THIS AGREEMENT IS DATED November 20, 2012.

GRANTOR: UTG, INC.		COMPANY: UNIVERSAL GUARANTY LIFE INSURANCE COMPANY
/s/ James P. Rousey		/s/ James P. Rousey
JAMES P. ROUSEY, President		JAMES P. ROUSEY, President
/s/ Theodore C. Miller		/s/ Theodore C. Miller
THEODORE C. MILLER, CFO/Secretary		THEODORE C. MILLER, CFO/Secretary
LENDER: ILLINOIS NATIONAL BANK
By:	/s/ Mark Donovan
	MARK R DONOVAN, Vice President

EX-10.19

Exhibit 10.19

PROMISSORY NOTE

Principal $8,000,000.00		Loan Date 11-20-2012	Maturity 11-20-2013	Loan No. 40000	Call / Coll C / X	Account 72957158	Officer MRD	Initials
	References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item. Any item above containing "***" has been omitted due to text length limitations.

Borrower:	UTG, INC.		Lender:	ILLINOIS NATIONAL BANK
	5250 SOUTH SIXTH STREET			MAIN BRANCH
	SPRINGFIELD, IL 62703			322 E. CAPITOL
				SPRINGFIELD, IL 62701
Principal Amount:  $8,000,000.00		Interest Rate:  3.750%		Date of Note:  November 20, 2012

PROMISE TO PAY.UTG, INC. ("Borrower") promises to pay to ILLINOIS NATIONAL BANK {"Lender"]. or order, in lawful money of the United States of America, the principal amount of Eight Million & 00/100 Dollars  ($8,000,000,00)  or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance, calculated as described in the "INTEREST CALCULATION METHOD" paragraph using an interest rate of 3.750%.  Interest shall be calculated from the date of each advance until repayment of each advance.  The interest rate may change under the terms and conditions of the "INTEREST AFTER DEFAULT" section.

PAYMENT.  Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on November 20, 2013.In addition, Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning December 20, 2012, with all subsequent interest payments to be due on the same day of each month after that.  Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any unpaid collection costs; and then to any late charges.  Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing.

INTEREST CALCULATION METHOD.  Interest on this Note is computed on a 365/365 simple Interest basis; that is, by applying the ratio of the interest rate over the number of days in a year (366 during leap years), multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding.  All interest payable under this Note is computed using this method.

PREPAYMENT; MINIMUM INTEREST CHARGE.In any event, even upon full prepayment of this Note, Borrower understands that Lender is entitled to a minimum interest charge of $50.00.Other than Borrower's obligation to pay any minimum interest charge,Borrower may pay without penalty all or a portion of the amount owed earlier than it is due.  Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments of accrued unpaid interest.  Rather, early payments will reduce the principal balance due.  Borrower agrees not to send Lender payments marked "paid in full", "without recourse", or similar language.  If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender.  All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to:  Illinois National Bank, 322 E. Capitol Springfield, IL 62701.

LATE CHARGE.  If a payment is 10 days or more late, Borrower will be charged 1.000% of the unpaid portion of the regularly scheduled payment or $25.00, whichever is greater.

INTEREST AFTER DEFAULT.Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by 4.000 percentage points.  However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.

DEFAULT.  Each of the following shall constitute an event of default ("Event of Default") under this Note:

Payment Default.  Borrower fails to make any payment when due under this Note.

Other Defaults.Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.

Default in Favor of Third Parties.  Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's ability to repay this Note or perform Borrower's obligations under this Note or any of the related documents.

False Statements.  Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.

Insolvency.  The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

Creditor or Forfeiture Proceedings.  Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan.  This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender.  However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

Events Affecting Guarantor.  Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.

Change In Ownership.  Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.

PROMISSORY NOTE

Loan No:  40000 (Continued) Page 2

Adverse Change.  A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note is impaired.

Insecurity.  Lender in good faith believes itself insecure.

Cure Provisions.  If any default, other than a default in payment is curable and if Borrower has not been given a notice of a breach of the same provision of this Note within the preceding twelve (12) months, it may be cured if Borrower, after Lender sends written notice to Borrower demanding cure of such default: (1) cures the default within ten (10) days; or (2) if the cure requires more than ten (10) days, immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.

LENDER'S RIGHTS.  Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount.

ATTORNEYS' FEES; EXPENSES.  Lender may hire or pay someone else to help collect this Note if Borrower does not pay.  Borrower will pay Lender that amount.  This includes, subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit, including attorneys' fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals.  If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.

JURY WAIVER.  Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other.

GOVERNING LAW.  This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Illinois without regard to its conflicts of law provisions.  This Note has been accepted by Lender in the State of Illinois.

CHOICE OF VENUE.  If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of SANGAMON County, State of Illinois.

CONFESSION OF JUDGMENT.  Borrower hereby irrevocably authorizes and empowers any attorney-at-law to appear in any court of record and to confess judgment against Borrower for the unpaid amount of this Note as evidenced by an affidavit signed by an officer of Lender setting forth the amount then due, attorneys' fees plus costs of suit, and to release all errors, and waive all rights of appeal.  If a copy of this Note, verified by an affidavit, shall have been filed in the proceeding, it will not be necessary to file the original as a warrant of attorney.  Borrower waives the right to any stay of execution and the benefit of all exemption laws now or hereafter in effect.  No single exercise of the foregoing warrant and power to confess judgment will be deemed to exhaust the power, whether or not any such exercise shall be held by any court to be invalid, voidable, or void; but the power will continue undiminished and may be exercised from time to time as Lender may elect until all amounts owing on this Note have been paid in full.  Borrower hereby waives and releases any and all claims or causes of action which Borrower might have against any attorney acting under the terms of authority which Borrower has granted herein arising out of or connected with the confession of judgment hereunder.

RIGHT OF SETOFF.  To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account).  This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future.  However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law.  Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts, and, at Lender's option, to administratively freeze all such accounts to allow Lender to protect Lender's charge and setoff rights provided in this paragraph.

COLLATERAL.  Borrower acknowledges this Note is secured by Commercial Pledge Agreement covering 400,000 shares of Universal Guaranty Life Insurance Company, Certificate 111.

LINE OF CREDIT.  This Note evidences a revolving line of credit.  Advances under this Note, as well as directions for payment from Borrower's accounts, may be requested orally or in writing by Borrower or by an authorized person.  Lender may, but need not, require that all oral requests be confirmed in writing. Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person or (B) credited to any of Borrower's accounts with Lender.  The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender's internal records, including daily computer print-outs.

SECURITY INTEREST IN DEPOSIT ACCOUNTS.  Borrower grants to Lender a contractual security interest in, and hereby assigns, conveys, delivers, pledges, and transfers to Lender all Borrower's right, title and interest in and to, Borrower's deposit accounts with Lender (whether checking, savings, or some other account), including without limitation all deposit accounts held jointly with someone else and all deposit accounts Borrower may open in the future, excluding however all IRA and Keogh accounts, and all trust accounts for which the grant of a security interest would be prohibited by law.  Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on this Note against any and all such deposit accounts.

DISHONORED ITEM FEE.  Borrower will pay a fee to Lender of $25.00 if Borrower makes a payment on Borrower's loan and the check or preauthorized charge with which Borrower pays is later dishonored.  If your payment is returned unpaid, you authorize Illinois National Bank to make a one-time electronic fund transfer from your account to collect a fee of $25.00.

SUCCESSOR INTERESTS.  The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.

GENERAL PROVISIONS.If any part of this Note cannot be enforced, this fact will not affect the rest of the Note.  Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them.  Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor.  Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability.  All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone.  All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made.  The obligations under this Note are Joint and several.

PROMISSORY NOTE

Loan No:  40000 (Continued) Page 3

PRIOR TO SIGNING THIS NOTE,BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE.  BORROWER AGREES TO THE TERMS OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

BORROWER: UTG, INC.
By:	/s/ James P. Rousey	By:	/s/ Theodore C. Miller
	JAMES P. ROUSEY, President of UTG, INC.		THEODORE C. MILLER, CFO/Secretary of UTG, INC.

EX-10.21

Exhibit 10.21

HPG Acquisition LLC	First National Bank of Tennessee
TCTB Management Group, LLC	Livingston – West Main	Loan Number		203200774-00001
MDTC, LP	1115 West Main Street	Date	03/04/2013
303 W Wall St Suite 2300	Livingston, Tennessee 38570	Maturity Date			03/04/2018
Midland TX 79701-5101		Loan Amount $				12,000,000.00
		Renewal Of
BORROWER'S NAME AND ADDRESS     "I" includes each borrower above, jointly and severally	LENDER'S NAME AND ADDRESS     "You" means the lender, its successors and assigns.

For value received, I promise to pay to you, or your order, at your address listed above the PRINICPAL sum of __TWELVE MILLION DOLLARS AND                    

ZERO CENTS__________________________________________________________________ Dollars $ _12,000,000.00_____________________________      

x Single Advance: I will receive all of this principal sum on 03/04/2013______.  No additional advances are contemplated under this note.

o Multiple Advance: The principal sum shown above is the maximum amount of principal I can borrow under this note.  On ______________________________

_________ I will receive the amount of $ _________________________ and future principal advances are contemplated.

Conditions:  The conditions for future advances are  ________________________________________________________________________________

________________________________________________________________________________________________________________________

________________________________________________________________________________________________________________________

o Open End Credit: You and I agree that I may borrow up to the maximum principal sum more than one time.  This feature is subject to all other conditions and

expires on ________________________________________.

o Closed End Credit: You and I agree that I may borrow (subject to all other conditions) up to the maximum principal sum only one time.

INTEREST: I agree to pay interest on the outstanding principal balance from ___03/04/2013___________________ at the rate of __4.000000_ %

per year until _the final payment or maturity date of this note____________.

o Variable Rate: This rate may then change as stated below.

o Index Rate : The future rate will be __N/A_____________________ the following index rate: _______________________________________________

N/A_____________________________________________________________________________________________________________________

N/A_____________________________________________________________________________________________________________________

o No Index: The future rate will not be subject to any internal or external index.  It will be entirely in your control.

o Frequency and Timing: The rate on this note may change as often as __N/A____________________________________________________________.

A change in the interest rate will take effect N/A_______________________________________________________________________________.

o Limitations: During the term of this loan, the applicable annual interest rate will not be more than ______________________ % or less than

____________________ %.  The rate may not change more than _____________________ % each ______________________________________.

Effect of Variable Rate: A change in the interest rate will have the following effect on the payments:

o The amount of each scheduled payment will change.                           o The amount of the final payment will change.

o N/A___________________________________________________________________________________________________________________.

ACCURAL METHOD: Interest will be calculated on a _Actual/360______________________ basis.

POST MATURITY RATE: I agree to pay interest on the unpaid balance of this note owing after maturity, and until paid in full, as stated below:

o on the same fixed or variable rate basis in effect before maturity (as indicated above).

x at a rate equal to _4% in excess of the interest rate stated above that applied before maturity________________________________________________.

x LATE CHARGE: If a payment is made more than _15_____ days after it is due, I agree to pay a late charge of __5% of the payment_____________________.

x ADDITIONAL CHARGES: In addition to interest, I agree to pay the following charges which    o are    x are not included in the principal amount

above: _Loan, recording, attorney, release, flood determinations and title ins premium_______________________________________________________.

PAYMENTS: I agree to pay this note as follows:

x Interest: I agree to pay accrued interest __24 Monthly Payment(s) varying from $37,333.33 to $41,333.34 beginning 04-04-2013__________________________

________________________________________________________________________________________________________________________

o Principal: I agree to pay the principal _____________________________________________________________________________________________

_________________________________________________________________________________________________________________________

x Installments: I agree to pay this note in ___36_____ payments.  The first payment will be in the amount of $ _78,608.77_______________________________

and will be due __04/04/2015__________________________________.  A payment of $ _78,608.77_________ will be due _________________________

__Monthly_________________________________________________________________________ thereafter.  The final payment of the entire

unpaid balance of principal and interest will be due __03/04/2018__________________________________________________.

o Unpaid Interest: Any accrued interest not paid when due (whether due by reason of a schedule of payments or due because of Lender's demand)

will become part of the principal thereafter, and will bear interest at the interest rate in effect from time to time as provided for in this agreement.

PURPOSE: The purpose of this loan is _Refinance commercial real estate____________________________________________________________________.

ADDITIONAL TERMS:

    This loan has a demand feature, however, if no demand is made, the loan is payable according to the terms specified under "Payments" above.

    The bank has the right to engage a re-appraisal of the property securing this loan from time to time at borrower's expense.

SECURITY

SECURITY INTEREST: I give you a security interest in all of the Property described below that I own or have sufficient rights in which to transfer an interest, now or in the future, whichever the Property is or will be located, and all proceeds and products of the Property.  "Property" includes all parts, accessories, repairs, replacements, improvements, and accessions to the Property; any original evidence of title or ownership; and all obligations that support the payment or performance of the Property.  "Proceeds" includes anything acquired upon the sale, lease, license, exchange, or other disposition of the Property; any rights and claims arising from the Property; and any collections and distributions on account of the Property.

o Accounts and Other Rights to Payment: All rights to payment, whether or not earned by performance, including, but not limited to, payment for property or services sold, leased, rented, licensed, or assigned. This includes any rights and interests (including all liens) which I have by law or agreement against any account debtor or obligor.

o Inventory: All inventory held for ultimate sale or lease, or which has been or will be supplied under contracts of service, or which are raw materials, work in process, or materials used or consumed in my business.

o Equipment: All equipment including, but not limited to, machinery, vehicles, furniture, fixtures, manufacturing equipment, farm machinery and equipment, shop equipment, office and record keeping equipment, parts, and tools.  The Property includes any equipment described in a list or schedule I give to you, but such a list is not necessary to create a valid security interest in all of my equipment.

o Instruments and Chattel Paper: All instruments, including negotiable instruments and promissory notes and any other writings or records that evidence the right to payment of a monetary obligation, and tangible and electronic chattel paper.

o General Intangibles: All general intangibles including, but not limited to, tax refunds, patents and applications for patents, copyrights, trademarks, trade secrets, goodwill, trade names, customer lists, permits and franchises, payment intangibles, computer programs and all supporting information provided in connection with a transaction relating to computer programs, and the right to use my name.

o Documents: All documents of title including, but not limited to, bills of lading, dock warrants and receipts, and warehouse receipts.

o Farm Products and Supplies: All farm products including, but not limited to, all poultry and livestock and their young, along with their produce, products, and replacements; all crops, annual or perennial, and all products of the crops; and all feed, seed, fertilizer, medicines, and other supplies used or produced in my farming operations.

o Government Payments and Programs: All payments, accounts, general intangibles, and benefits including, but not limited to, payments in kind, deficiency payments, letters of entitlement, warehouse receipts, storage payments, emergency assistance and diversion payments, production flexibility contracts, and conservation reserve payments under any preexisting, current, or future federal or state government program.

o Investment Property: All investment property including, but not limited to, certificated securities, uncertificated securities, securities entitlements, securities accounts, commodity contracts, commodity accounts, and financial assets.

o Deposit Accounts: All deposit accounts including, but not limited to, demand, time, savings, passbook, and similar accounts.

x Specific Property Description: The Property includes, but is not limited by, the following:

Deed of Trust, Absolute Assignment of Rents, Security Agreement and Financing Statements

Dated 03/04/2013 – Buildings and Real Estate known as 303 W Wall Street,

310 W Wall Street & 306 W Wall Street, Midland, Texas 79701

If this agreement covers timber to be cut, enter real estate description and record owner information: ______________________________________

__________________________________________________________________________________________________________________________

__________________________________________________________________________________________________________________________

__________________________________________________________________________________________________________________________

The Property will be used for a    o personal  x business  o agricultural  o ____________________________________________________ purpose.

Borrower/Owner State of organization/registration (if applicable) ____________________________________________________________________

ADDITIONAL TERMS OF THE SECURITY AGREEMENT

GENERALLY – This agreement secures this note and any other debt I have with you, now or later.  However, it will not secure other debts if you fail with respect to such other debts, to make any required disclosure about this security agreement or if you fail to give any required notice of the right of rescission.  If property described in this agreement is located in another state, this agreement may also, in some circumstances, be governed by the law of the state in which the Property is located.

NAME AND LOCATION – My name indicated on page 1 is my exact legal name.  If I am an individual, my address is my principal residence.  If I am not an individual, may address is the location of my chief executive offices or sole place of business.  If I am in entity organized and registered under state law, my address is located in the state in which I am registered, unless otherwise indicated on page 2.  I will provide verification of registration and location upon your request.  I will provide you with at least 30 days notice prior to any change in my name, address, or state of organization or registration.

OWNERSHIP AND DUTIES TOWARD PROPERTY – I represent that I own all of the Property, or to the extent this is a purchase money security interest I will acquire ownership of the Property with the proceeds of the loan.  I will defend it against any other claim.  Your claim to the Property is ahead of the claims of any other creditor.  I agree to do whatever you require to protect your security interest and to keep your claim in the Property ahead of the claims of other creditors.  I will not do anything to harm your position.  I will not use the Property for a purpose that will violate any laws or subject the Property to forfeiture or seizure.

I will keep books, records and accounts about the Property and my business in general.  I will let you examine these records at any reasonable time.  I will prepare any report or accounting you request, which deals with the Property.

I will keep the Property in my possession and will keep it in good repair and use it only for the purpose(s) described on page 1 of this agreement.  I will not change this specified use without your express written permission.  I represent that I am the original owner of the Property and, if I am not, that I have provided you with a list of prior owners of the Property.

I will keep the Property at my address listed on page 1 of this agreement, unless we agree I may keep it at another location.  If the Property is to be used in another state, I will give you a list of those states.  I will not try to sell the Property unless it is inventory or I receive your written permission to do so. If I sell the Property I will have the payment made payable to the order of you and me.

You may demand immediate payment of the debts(s) if the debtor is not a natural person and without your prior written consent; (1) a beneficial interest in the debtor is sold or transferred, or (2) there is a change in either the identity or number of members of a partnership, or (3) there is a change in ownership of more than 25 percent of the voting stock of a corporation.

I will pay all taxes and charges on the Property as they become due.  You have the right of reasonable access in order to inspect the property.  I will immediately inform you of any loss or damage to the Property.

If I fail to perform any of my duties under this security agreement, or any mortgage, deed of trust, lien or other security interest, you may without notice to me perform the duties or cause them to be performed.  Your right to perform for me shall not create an obligation to perform and your failure to perform will not preclude you from exercising any of your other rights under the law or this security agreement.

PURCHASE MONEY SECURITY INTEREST – For the sole purpose of determining the extent of a purchase money security interest arising under this security agreement: (a) payments on any nonpurchase money loan also secured by this agreement will not be deemed to apply to the Purchase Money Loan, and (b) payments on the Purchase Money Loan will be deemed to apply first to the nonpurchase money portion of the loan, if any, and then to the purchase money obligations in the order in which the items of collateral were acquired or if acquired at the same time, in the order selected by you.  No security interest will be terminated by application of this formula.  "Purchase Money Loan" means any loan the proceeds of which, in whole or in part, are used to acquire any collateral securing the loan and all extensions, renewals, consolidations and refinancing of such loan.

PAYMENTS BY LENDER – You are authorized to pay, on my behalf, charges I am or may become obligated to pay to preserve or protect the secured property (such as property insurance premiums).  You may treat those payments as advances and add them to the unpaid principal under the note secured by this agreement or you may demand immediate payment of the amount advanced.

INSURANCE – I agree to buy insurance on the Property against the risks and for the amounts you require and to furnish you continuing proof of coverage.  I will have the insurance company name you as loss payee on any such policy.  You may require added security if you agree that insurance proceeds may be used to repair or replace the Property.  I will buy insurance from a firm licensed to do business in the state where you are located.  The firm will be reasonably acceptable to you.  The insurance will last until the Property is released from this agreement.  If I fail to buy or maintain the insurance (or fail to name you as loss payee) you may purchase it yourself.

WARRANTIES AND REPRESENTATIONS – If this agreement includes accounts, I will not settle any account for less than its full value without your written permission.  I will collect all accounts until you tell me otherwise.  I will keep the proceeds from all the accounts and any goods which are returned to me or which I take back in trust for you.  I will not mix them with any other property of mine.  I will deliver them to you at your request.  If you ask me to pay you the full price on any returned items or items retaken by myself, I will do so.  You may exercise my rights with respect to obligations of any account debtors, or other persons obligated on the Property, to pay or perform, and you may enforce any security interest that secures such obligations.

If this agreement covers inventory, I will not dispose of it except in my ordinary course of business at the fair market value for the Property, or at a minimum price established between you and me.

Any person who signs within this box does so to give you a security interest in the Property described on this page.  This person does not promise to pay the note.  "I" as used in this security agreement will include the borrower and any person who signs within this box.

Date ________________________

Signed ____________________________________________________

If this agreement covers farm products I will provide you, at your request, a written list of the buyers, commission merchants or selling agent to or through whom I may sell my farm products.  In addition to those parties named on this written list, I authorize you to notify at your sole discretion any additional parties regarding your security interest in my farm products.  I remain subject to all applicable penalties for selling my farm products in violation of my agreement with you and the Food Security Act.  In this paragraph the terms farm products, buyers, commission merchants and selling agents have the meanings given to them in the Federal Food Security Act of 1985.

If this agreement covers chattel paper or instruments, either as original collateral or proceeds of the Property, I will note your interest on the fact of the chattel paper or instruments.

REMEDIES – I will be in default on this security agreement if I am in default on any note this agreement secures or if I fail to keep any promise contained in the terms of this agreement.  If I default, you have all of the rights and remedies provided in the note and under the Uniform Commercial Code.  You may require me to make the secured property available to you at a place which is reasonably convenient.  You may take possession of the secured property and sell it as provided by law.  The proceeds will be applied first to your expenses and then to the debt.  I agree that 10 days written notice sent to my last known address by first class mail will be reasonable notice under the Uniform Commercial Code.  My current address is on page 1.

PERFECTION OF SECURITY INTEREST – I authorize you to file a financing statement covering the Property.  I will comply with, facilitate, and otherwise assist you in connection with obtaining possession of or control over the Property for purposes of perfecting your security interest under the Uniform Commercial Code.

ADDITIONAL TERMS OF THE NOTE

DEFINITIONS – As used on pages 1 and 2, "x" means the terms that apply to this loan.  "I," "me" or "my" means each Borrower who signs this note and each other person or legal entity (including guarantors, endorsers, and sureties) who agrees to pay this note (together referred to as "us").  "You" or "your" means the Lender and its successors and assigns.

APPLICABLE LAW – The law of the state of Tennessee will govern this agreement.  Any term of this agreement which is contrary to applicable law will not be effective, unless the law permits you and me to agree to such a variation.  If any provision of this agreement cannot be enforced according to its terms, this fact will not affect the enforceability of the remainder of this agreement.  No modification of this agreement may be made without your express written consent.  Time is of the essence in this agreement.

PAYMENTS – Each payment I make on this note will first reduce the amount I owe you for charges which are neither interest nor principal.  The remainder of each payment will then reduce accrued unpaid interest, and then unpaid principal.  If you and I agree to a different application of payments, we will describe our agreement on this note.  I may prepay a part of, or the entire balance of this loan without penalty, unless we specify to the contrary on this note.  Any partial prepayment will not excuse or reduce any later scheduled payment until this note is paid in full (unless, when I make the prepayment, you and I agree in writing to the contrary).

INTEREST – Interest accrues on the principal remaining unpaid from time to time, until paid in full.  If I receive the principal in more than one advance, each advance will start to earn interest only when I receive the advance.  The interest rate in effect on this note as any given time will apply to the entire principal sum outstanding at that time.  You and I may provide in this agreement for accrued interest not paid when due to be added to principal.  Notwithstanding anything to the contrary, I do not agree to pay and you do not intend to charge any rate of interest that is higher than the maximum rate of interest you could charge under applicable law for the extension of credit that is agreed to in this note (either before or after maturity).  If any notice of interest accrual is sent and is in error, we mutually agree to correct it, and if you actually collect more interest than allowed by law and this agreement, you agree to refund it to me.

INDEX RATE – The index will serve only as a device for setting the interest rate on this note.  You do not guarantee by selecting this index, or the margin, that the interest rate on this note will be the same rate you charge on any other loans or class of loans you make to me or other borrowers.

POST MATURITY RATE – For purposes of deciding when the "Post Maturity Rate" (shown on page 1) applies, the term "maturity" means the date of the last scheduled payment indicated on page 1 of this note or the date you accelerate payment on the note, whichever is earlier.

SINGLE ADVANCE LOANS – If this is a single advance loan, you and I expect that you will make only one advance of principal.  However, you may add other amounts to the principal if you make any payments described in the "PAYMENTS BY LENDER" paragraph on page 2, or if we have agreed that accrued interest not paid when due may be added to principal.

MULTIPLE ADVANCE LOANS – If this is a multiple advance loan, you and I expect that you will make more than one advance of principal.  If this is closed end credit, repaying a part of the principal will not entitle me to additional credit.

SET-OFF – I agree that you may set off any amount due and payable under this note against any right I have to receive money from you.

"Right to receive money from you" means:

(1) any deposit account balance I have with you;

(2) any money owed to me on an item presented to you or in your possession for collection or exchange; and

(3) any repurchase agreement of other nondeposit obligation.

"Any amount due and payable under this note" means the total amount of which you are entitled to demand payment under the terms of this note at the time you set off.  This total includes any balance the due date for which you properly accelerate under this note.

If my right to receive money from you is also owned by someone who has not agreed to pay this note, your right of set-off will apply to my interest in the obligation and to any other amounts I could withdraw on my sole request or endorsement.  Your right of set-off does not apply to an account or other obligation where my rights are only as a representative.  It also does not apply to any Individual Retirement Account or other tax-deferred retirement account.

You will not be liable for the dishonor of any check when the dishonor occurs because you set off this debt against any of my accounts.  I agree to hold you harmless from any such claims arising as a result of your exercise of your right to set-off.

DEFAULT – I will be in default if any one or more of the following occur:  (1) I fail to make a payment on time or in the amount due; (2) I fail to keep the Property insured, if required; (3) I fail to pay, or keep any promise, on any debt or agreement I have with you; (4) any other creditor of mine attempt to collect any debt I owe him through court proceedings; (5) I die, am declared incompetent, make an assignment for the benefit of creditors, or become insolvent (either because my liabilities exceed my assets or I am unable to pay my debts as they become due); (6) I make any written statement or provide any financial information that is untrue or inaccurate at the time it was provided; (7) I do or fail to do something which causes you to believe you will have difficulty collecting the amount I owe you; (8) any collateral securing this note is used in a manner or for a purpose which threatens confiscation by a legal authority; (9) I change my name or assume an additional name without first notifying you before making such a change; (10) I fail to plant, cultivate and harvest crops in due season if I am a producer of crops; (11) any loan proceeds are used for a purpose that will contribute to excessive erosion of highly erodible land or to the conversion of wetlands to produce an agricultural commodity, as further explained in 7 C.F.R. Part 1940, Subpart G, Exhibit M.

REMEDIES – If I am in default on this note you have, but are not limited to, the following remedies:

(1) You may demand immediate payment of  all I owe you under this note (principal, accrued unpaid interest and other accrued unpaid charges).

(2) You may set off this debt against any right I have to the payment of money from you, subject to the terms of the "SET-OFF" paragraph herein.

(3) You may demand security, additional security, or additional parties to be obligated to pay this note as a condition for not using any other remedy.

(4) You may refuse to make advances to me or allow purchases on credit by me.

(5) You may use any remedy you have under state or federal law.

(6) You may make use of any remedy given to you in any agreement securing this note.

By selecting any one or more of these remedies you do not give up your right to use later any other remedy.  By waiving your right to declare an event to be a default, you do not waive your right to consider later the event a default if it continues or happens again.

COLLECTION COSTS AND ATTORNEY'S FEES – I agree to pay all costs of collection, replevin or any other or similar type of cost if I am in default.  In addition, if you hire an attorney to collect this note, I also agree to pay any fee you incur with such attorney plus court costs (except where prohibited by law).  To the extent permitted by the United States Bankruptcy Code, I also agree to pay the reasonable attorney's fees and costs you incur to collect this debt as awarded by any court exercising jurisdiction under the Bankruptcy Code.

WAIVER – I give up my rights to require you to do certain things.  I will not require you to:

(1) demand payment of amounts due (presentment);

(2) obtain official certification of nonpayment (protest); or

(3) give notice that amounts due have not been paid (notice of dishonor).

I waive any defenses I have based on suretyship or impairment of collateral.

OBLIGATIONS INDEPENDENT – I understand that I must pay this note even if someone else has also agreed to pay it (by, for example, signing this form or a separate guarantee or endorsement).  You may sue me alone, or anyone else who is obligated on this note, or any number of us together, to collect this note.  You may without notice release any party to this agreement without releasing any other party.  If you give up any of your rights, with or without notice, it will not affect my duty to pay this note.  Any extension of new credit to any of us, or renewal of this note by all or less than all of us will not release me from my duty to pay it.  (Of course, you are entitled to only one payment in full.)  I agree that you may at your option extend this note or the debt represented by this note, or any portion of the note or debt, from time to time without limit or notice and for any term without affecting my liability for payment of the note.  I will not assign my obligation under this agreement without your prior written approval.

FINANCIAL INFORMATION – I agree to provide you, upon request, any financial statement or information you may deem necessary.  I warrant that the financial statements and information I provide to you are or will be accurate, correct and complete.

SIGNATURES: I AGREE TO THE TERMS OF THIS AGREEMENT (INCLUDING THOSE ON PAGES 1 AND 2).  I have received a copy on today's date.
HPG Acquisition, LLC /s/ Jon M Morgan	TCTB Management Group, LLC /s/ Jon M Morgan
By:  Jon M Morgan     Managing Member	By:  Jon M Morgan     Managing Member
SIGNATURE FOR LENDER:___________________________________________________________________________________

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STATUTORY ACCOUNTING (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Statutory Accounting Practices [Line Items]
Statutory net income	$ 6,868,111	$ (184,213)
Statutory capital and surplus	$ 32,243,089	$ 33,167,222

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REINSURANCE (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Reinsurance [Line Items]
Retention amount limit	$ 125,000
Gross insurance in force	1,600,000,000	1,700,000,000
Gross insurance ceded to reinsurers	335,000,000	401,000,000
Retention limit amount of reinsurers	100,000
Cession on retention limit	25,000
Percentage of reinsurers in force on accidental death benefits (in hundredths)	100.00%
Percentage of future results sold (in hundredths)	100.00%
Percentage in terms of reinsurance reserve credit (in hundredths)	63.00%	64.00%
Percentage of reserves and liabilities (in hundredths)	25.00%
Effect of long duration reinsurance contracts on premiums earned [Abstract]
Direct	13,242,000	14,049,000
Assumed	35,000	33,000
Ceded	(3,366,000)	(3,935,000)
Net Premiums	9,911,000	10,147,000
Independent Order of Vikings (IOV) [Member]
Reinsurance [Line Items]
Remaining balance from gross insurance in force	1,579,000	1,582,000
Gross insurance in force, Reserve	358,000	365,000
Canada Life Assurance Company [Member]
Reinsurance [Line Items]
Remaining balance from gross insurance in force	7,433,000	52,560,000
Gross insurance in force, Reserve	$ 0	$ 34,193,000
Quota share of new issues percentage (in hundredths)	15.00%

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

INCOME TAXES [Abstract]

Income tax expense (benefits)

Income tax expense (benefit) consists of the following components:

		2012		2011
Current tax	$	5,716,480	$	5,296,407
Deferred tax		(222,098)		(4,030,745)
	$	5,494,382	$	1,265,662

Income tax expense (benefit) reconciliation

The expense for income differed from the amounts computed by applying the applicable United States statutory rate of 35% before income taxes as a result of the following differences:

		2012		2011
Tax computed at statutory rate	$	5,404,636	$	2,719,131
Changes in taxes due to:
Non-controlling interest		(238,632)		(65,334)
Small company deduction		0		(623,767)
Other		328,378		(764,368)
Income tax expense (benefit)	$	5,494,382	$	1,265,662

Major components that comprise the deferred tax liability

The following table summarizes the major components that comprise the deferred tax liability as reflected in the balance sheets:

		2012		2011
Investments	$	4,644,740	$	5,519,570
Cost of insurance acquired		4,095,268		4,496,193
Deferred policy acquisition costs		149,176		170,893
Management/consulting fees		(66,344)		(70,554)
Future policy benefits		2,137,835		2,447,327
Deferred gain on sale of subsidiary		2,312,483		2,312,483
Other liabilities		(63,967)		(120,039)
Federal tax DAC		(907,614)		(1,010,122)
Deferred tax liability	$	12,301,577	$	13,745,751

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CONCENTRATIONS (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
CONCENTRATIONS [Abstract]
Number of states by which entity primarily serves	4
Percentage of total direct premium from major states (in hundredths)	55.00%	52.00%
Maximum retention limits per life	$ 125,000
Life insurance ceded, percentage (in hundredths)	21.00%	24.00%
Percentage of premium income represents for insurance ceded (in hundredths)	25.00%	28.00%

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COMMITMENTS AND CONTINGENCIES (Details) (USD $)	Dec. 31, 2012
Liability for contingent costs [Line Items]
Cost contingency, tier one (in hundredths)	100.00%
Cost contingency threshold, tier one	$ 50,000
Cost contingency, tier two (in hundredths)	90.00%
Cost contingency threshold, tier two	50,000
Cost contingency, tier three (in hundredths)	75.00%
Cost contingency threshold, tier three	50,000
Cost contingency, tier four (in hundredths)	50.00%
Cost contingency threshold, tier four	150,000
Loss Contingency	47,727
Share Conversion	233
RLF III, LLC [Member]
Investment Commitment [Line Items]
Total Funding Commitment	4,000,000
Unfunded Commitment	398,120
Llano Music, LLC [Member]
Investment Commitment [Line Items]
Total Funding Commitment	2,000,000
Unfunded Commitment	571,000
Marcellus III, LLC [Member]
Investment Commitment [Line Items]
Total Funding Commitment	1,250,000
Unfunded Commitment	393,750
Dew Learning, LLC [Member]
Investment Commitment [Line Items]
Total Funding Commitment	1,000,000
Unfunded Commitment	725,445
Marcellus HBPI, LLP [Member]
Investment Commitment [Line Items]
Total Funding Commitment	1,800,000
Unfunded Commitment	1,113,300
PBEX, LLC [Member]
Investment Commitment [Line Items]
Total Funding Commitment	5,625,000
Unfunded Commitment	2,818,750
Sovereign's Capital, LP [Member]
Investment Commitment [Line Items]
Total Funding Commitment	500,000
Unfunded Commitment	250,000
Texas Imperial Life Insurance Company sale contingent costs [Member]
Liability for contingent costs [Line Items]
Estimate of cost contingency, total	50,000
ACAP [Member]
Liability for contingent costs [Line Items]
Estimate of cost contingency, total	$ 2,550,822

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FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2012

FAIR VALUE MEASUREMENTS [Abstract]

FAIR VALUE MEASUREMENTS

Note 3 – Fair Value Measurements

The Company measures its assets and liabilities recorded at fair value in the Consolidated Balance Sheets based on the framework set forth in the GAAP fair value accounting guidance.  The framework establishes a fair value hierarchy of three levels based upon the transparency of information used in measuring the fair value of assets or liabilities as of the measurement date.  The fair value hierarchy prioritizes the inputs in the valuation techniques used to measure fair value into three categories.

Level 1 – Valuation is based upon quoted prices for identical assets or liabilities in active markets that the Company is able to access.  Level 1 fair value is not subject to valuation adjustments.

Level 2 – Valuation is based upon quoted prices for similar assets and liabilities in active markets or quoted prices for identical or similar instruments in markets that are not active. In addition, the Company may use various valuation techniques or pricing models that use observable inputs to measure fair value.

Level 3 – Valuation is based upon unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs reflect the Company's own assumptions about the inputs that market participants would use in pricing the asset or liability.

The Company determines the existence of an active market for an asset or liability based on its judgment as to whether transactions for the asset or liability occur in such markets with sufficient frequency and volume to provide reliable pricing information.  If the Company concludes that there has been a significant decrease in the volume and level of activity for an investment in relation to normal market activity for such investment, adjustments to transactions and quoted prices are made to estimate fair value.

The inputs used in the valuation techniques employed by the Company are provided by nationally recognized pricing services, external investment managers and internal resources.  To assess these inputs, the Company's review process includes, but is not limited to, quantitative analysis including benchmarking, initial and ongoing evaluations of methodologies used by external parties to calculate fair value, and ongoing evaluations of fair value estimates based on the Company's knowledge and monitoring of market conditions.

The Company periodically reviews the pricing service provider's policies and procedures for valuing securities.  The assumptions underlying the valuations from external service providers, including unobservable inputs, are generally not readily available as this information is often deemed proprietary.  Accordingly, the Company is unable to obtain comprehensive information regarding these assumptions and methodologies.

The Company's investments in fixed maturity securities available for sale, equity securities available for sale and trading securities assets and liabilities are carried at fair value.  The following are the Company's methodologies and valuation techniques for assets and liabilities measured at fair value.

Fixed maturities available for sale mainly consist of U.S. treasury securities and corporate debt securities. The Company employs a market approach to the valuation of securities where there are sufficient market transactions involving identical or comparable assets. If sufficient market data is not available for identical or comparable assets, the Company uses an income approach to valuation. The majority of the financial instruments included in fixed maturity securities available for sale are evaluated utilizing observable inputs; accordingly, they are categorized in either Level 1 or Level 2 of the fair value hierarchy. However, in instances where significant inputs utilized in valuation of the securities are unobservable, the securities are categorized in Level 3 of the fair value hierarchy.

Corporate securities primarily include fixed rate corporate bonds. Inputs utilized in connection with the Company's valuation techniques relating to this class of securities include recently executed transactions, market price quotations, benchmark yields and issuer spreads. Corporate securities are categorized in Level 2 of the fair value hierarchy.

U.S. treasury securities are based on quoted prices in active markets and are generally categorized in Level 1 of the fair value hierarchy.

Equity securities available for sale consist of common and preferred stocks mainly in private equity investments, financial institutions and insurance companies. Equity securities for which there is sufficient market data are categorized as Level 2 in the fair value hierarchy.  For the equity securities in which quoted market prices are not available, the transaction price is used as the best estimate of fair value at inception.  When evidence is believed to support a change to the carrying value from the transaction price, adjustments are made to reflect the expected exit values. The Company performs ongoing reviews of the underlying investments. The reviews consist of the evaluations of expected cash flows, material events and market data. These investments are included in Level 3 of the fair value hierarchy.

Securities designated as trading securities consist of bonds, exchange traded equities, exchange traded options and exchange traded futures.  These securities are primarily valued at quoted active market prices, and are therefore categorized as Level 1 in the fair value hierarchy. The exchange-traded bonds consist of corporate bonds and are classified as Level 2, consistent with the classification of the fixed maturity corporate bonds.

The following table presents the Company's assets and liabilities measured at fair value in the consolidated balance sheet on a recurring basis as of December 31, 2012.

		Level 1		Level 2		Level 3		Total
Assets
Fixed Maturities, available for sale	$	20,993,398	$	166,060,160	$	273,727	$	187,327,285
Equity Securities, available for sale		1,448,585		6,092,614		22,963,715		30,504,914
Trading Securities		13,903,148		115,312		0		14,018,460
Total	$	36,345,131	$	172,268,086	$	23,237,442	$	231,850,659
Liabilities
Trading Securities	$	7,552,704	$	0	$	0	$	7,552,704

The following table presents the Company's assets and liabilities measured at fair value in the consolidated balance sheet on a recurring basis as of December 31, 2011.

		Level 1		Level 2		Level 3		Total
Assets
Fixed Maturities, available for sale	$	59,735,100	$	64,632,760	$	215,317	$	124,583,177
Equity Securities, available for sale		0		7,344,260		9,955,368		17,299,628
Trading Securities		8,519,064		0		0		8,519,064
Total	$	68,254,164	$	71,977,020	$	10,170,685	$	150,401,869
Liabilities
Trading Securities	$	5,471,475	$	0	$	0	$	5,471,475

The following table provides reconciliations for Level 3 assets measured at fair value on a recurring basis. Transfers into and out of Level 3 are recognized as of the end of the quarter in which they occur.

		Fixed Maturities, Available for Sale		Equity Securities, Available for Sale		Total
Balance at December 31, 2011	$	215,317	$	9,955,368	$	10,170,685
Transfers in to Level 3		0		1,424,117		1,424,117
Total unrealized gain or losses:
Included in other comprehensive income		58,410		61,945		120,355
Purchases		0		11,522,285		11,522,285
Balance at December 31, 2012	$	273,727	$	22,963,715	$	23,237,442

The Level 3 securities include collateralized debt obligations of trust preferred securities issued by banks and insurance companies and certain equity securities with unobservable inputs. None of the collateral is subprime or Alt-A mortgages (loans for which the typical documentation was not provided by the borrower).

The following table presents transfers in and out of each of the valuation levels of fair value.

		2012
		In		Out		Net
Level 1	$	0	$	0	$	0
Level 2		0		(1,424,117)		(1,424,117)
Level 3		1,424,117		0		1,424,117

Transfers into Level 3 occur when there is a lack of observable market information.  The transfers occurred at December 31, 2012.

Certain assets are not carried at fair value on a recurring basis, including investments such as mortgage loans and policy loans. Accordingly such investments are only included in the fair value hierarchy disclosure when the investment is subject to re-measurement at fair value after initial recognition and the resulting re-measurement is reflected in the consolidated financial statements.

The carrying values and estimated fair values of certain of the Company's financial instruments not recorded at fair value in the Consolidated Balance Sheets are shown below. Because the fair value for all consolidated balance sheet items are not required to be disclosed, the aggregate fair value amounts presented below are not reflective of the underlying value of the Company.

		December 31, 2012				December 31, 2011
Assets		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Mortgage loans on real estate	$	17,671,554	$	17,803,159	$	9,272,919	$	9,116,148
Discounted mortgage loans		26,336,953		26,336,953		27,467,920		27,467,920
Investment real estate		68,165,013		68,165,013		62,701,375		62,701,375
Policy loans		12,591,572		12,591,572		13,312,229		13,312,229
Cash and cash equivalents		23,321,246		23,321,246		82,925,675		82,925,675
Short term investments		6,268,320		6,268,320		0		0
Liabilities
Notes payable		18,857,954		18,857,954		9,531,645		9,519,300

The above estimated fair value amounts have been determined based upon the following valuation methodologies. Considerable judgment was required to interpret market data in order to develop these estimates. Accordingly, the estimates are not necessarily indicative of the amounts which could be realized in a current market exchange.  The use of different market assumptions or estimation methodologies may have a material effect on the fair value amounts.

The fair values of mortgage loans on real estate are estimated using discounted cash flow analyses and interest rates being offered for similar loans to borrowers with similar credit ratings.

The Company has been purchasing non-performing discounted mortgage loans at a deep discount through an auction process led by the Federal Government.  In general, the discounted loans are non-performing and there is a significant amount of uncertainty surrounding the timing and amount of cash flows to be received by the Company.  Accordingly, the Company records its investment in the discounted loans at its original purchase price, which Management believes approximates fair value.

Investment real estate is recorded at the lower of the net investment in the real estate or the fair value of the real estate less costs to sell.  The determination of fair value assessments are performed on a periodic, non-recurring basis by external appraisal and assessment of property values by Management.

Policy loans are carried at the aggregate unpaid principal balances in the consolidated balance sheets which approximates fair value, and earn interest at rates ranging from 4% to 8%.  Individual policy liabilities in all cases equal or exceed outstanding policy loan balances.

The carrying amount of short term investments in the financial statements approximates fair value.

The carrying amount of cash and cash equivalents in the financial statements approximates fair value given the highly liquid nature of the instruments.

The carrying value is a reasonable estimate of fair value for notes payable subject to floating rates of interest.  The fair value of notes payable with fixed rate borrowings is determined based on the borrowing rates currently available to the Company for loans with similar terms and average maturities.

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OTHER CASH FLOW DISCLOSURES (Tables)

12 Months Ended

Dec. 31, 2012

OTHER CASH FLOW DISCLOSURES [Abstract]

Expenses paid on a cash basis

On a cash basis, the Company paid the following expenses for the periods ended December 31:

		2012		2011
Interest expense	$	215,255	$	251,791
Federal income tax		3,413,081		5,801,521

Assets received attributable to reinsurance agreement

At the end of August 2012, the reinsurance agreement with Canada Life Assurance Company was fully repaid.  At that time, the reserves were recaptured through elimination of reinsurance recoverable in exchange for assets received equal to the recaptured reserves.  The following table reflects the breakdown of the assets received.

		Assets Received
Bonds	$	27,651,746
Common Stock		1,023,394
Cash		2,480,706
Total	$	31,155,846

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SHAREHOLDERS' EQUITY (Tables)

12 Months Ended

Dec. 31, 2012

CAPITAL STOCK TRANSACTIONS [Abstract]

Reconciliation of the numerators and denominators of the basic and diluted EPS

Earnings Per Share - The following is a reconciliation of basic and diluted weighted average shares outstanding used in the computation of basic and diluted earnings per share:

	2012	2011
Basic weighted average shares outstanding	3,809,639	3,824,444
Weighted average dilutive options outstanding	0	0
Diluted weighted average shares outstanding	3,809,639	3,824,444

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Subsidiary or Equity Method Investee [Line Items]
Ownership in subsidiary bank (in hundredths)	100.00%
Related Party Disclosure [Line Items]
Ownership or control of outstanding common stock directly or indirectly (in hundredths)	55.66%
Maximum amount retained per individual life	$ 125,000
Depreciation, Total	168,442	162,941
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment, Excluding Capital Leased Assets	$ 3,399,309	$ 3,235,642
Minimum Useful Life	3
Property, Plant and Equipment, Estimated Useful Lives	30

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INVESTMENTS (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Fixed maturities [Abstract]
Original or Amortized Cost	$ 203,023,718	$ 123,714,443
Gross Unrealized Gains	16,915,155	20,003,796
Gross Unrealized Losses	(2,106,674)	(1,835,434)
Estimated Market Value	217,832,199	141,882,805
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 months, Fair value	594,081	848,032
Less than 12 months, Unrealized losses	(295,415)	(55,141)
Twelve months or longer, Fair value	0	292,441
Twelve months or longer, Unrealized losses	0	(61,560)
Total Fair value	594,081	1,140,473
Total Unrealized losses	(295,415)	(116,701)
Amortized cost and estimated market value of debt securities, by contractual maturity [Abstract]
Due in one year or less	4,067,722
Due after one year through five years	22,420,385
Due after five years through ten years	105,150,475
Due after ten years	39,643,584
Collateralized mortgage obligation	2,244,551
Total	173,526,717
Amortized cost and estimated value of debt securities, by contractual maturity [Abstract]
Due in one year or less	4,116,580
Due after one year through five years	24,718,707
Due after five years through ten years	113,890,802
Due after ten years	42,173,173
Collateralized mortgage obligations	2,428,023
Available-for-sale Securities, Debt Securities	187,327,285	124,583,177
Amortized cost of investment in fixed maturities rated below investment grade	19,080,167	1,843,314
Trading Securities [Abstract]
Fair value, derivative included in trading security liabilities	(6,050,344)	(4,187,885)
Fair value, derivatives included in trading security assets	6,745,528	3,217,420
Trading securities, net unrealized gain (loss)	(352,761)	(1,604,757)
Trading securities, realized gain (loss)	2,918,279	(737,328)
Increase (Decrease) in Trading Securities [Abstract]
Net Realized and Unrealized Gain (Loss) on Trading Securities	2,565,518	(2,342,085)
Mortgages [Abstract]
Mortgage Loans including Discounted Mortgage Loans	22,244,731	11,123,386
Servicing Fee on Loan Percent	0.25%
Loan Origination Percent	0.50%
Commercial loans maximum rate	10.00%	18.00%
Commercial loans minimum rate	3.21%	3.24%
Residential loans maximum rate	8.00%	8.00%
Residential loans minimum rate	6.00%	7.00%
Average purchase price to outstanding loan (in hundredths)	36.10%
Mortgage loans reserve	0
Discounted mortgage loan portfolio payment performance [Abstract]
Number of discounted loans with no payments	13
Number of discounted loans one-time payment received	3
Number of discounted loans irregular payments received	17
Number of discounted loans periodic payments received	23
Number of discounted loans	56
Discounted loans with no payments	5,558,962
Discounted loans with one-time payment received	0
Discounted loans with irregular payments received	7,681,387
Discounted loans with periodic payments received	13,096,604
Discounted loans	26,336,953
Discounted mortgage loan holdings [Abstract]
In good standing	3,945,701	6,657,971
Overdue interest over 90 days	3,368,750	5,907,192
Restructured	7,685,690	7,726,156
In process of foreclosure	11,336,812	7,176,601
Total discounted mortgage loans	26,336,953	27,467,920
Total foreclosed discounted mortgage loans	2,603,017	21,059,386
NET INVESTMENT INCOME [Abstract]
Investment Income	26,212,704	19,576,771
Investment Income, Investment Expense	(7,693,447)	(8,378,606)
Consolidated Net Investment Income	18,519,257	11,198,165
Gain (Loss) on Investments [Line Items]
Gross realized gains	14,916,656	16,662,247
Gross Realized (Losses)	(611,344)	(5,099,618)
Total realized investment gains (losses), net	14,305,312	11,562,629
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Other than Temporary Impairment Losses, Investments, Total	187,405	4,342,784
Carrying Value	30,504,914	17,299,628
Fair value of investments on deposit with state insurance departments	11,660,630	10,998,036
Common Stock [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net, Available-for-sale Securities	174,725	0
Municipal Bonds [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net, Available-for-sale Securities	12,680	0
Real Estate [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Cost-method Investments, Other than Temporary Impairment	0	3,360,430
Discounted Mortgage Loans [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Cost-method Investments, Other than Temporary Impairment	0	982,354
Fixed Maturity Available for Sale [Member]
Gain (Loss) on Investments [Line Items]
Gross realized gains	9,816,015	9,290,554
Gross Realized (Losses)	(409,745)	(376,567)
Total realized investment gains (losses), net	9,406,270	8,913,987
Fixed Maturities Available for Sale - OTTI [Member]
Gain (Loss) on Investments [Line Items]
Gross realized gains	0
Gross Realized (Losses)	(12,680)
Total realized investment gains (losses), net	(12,680)
Equity Securities [Member]
Gain (Loss) on Investments [Line Items]
Gross realized gains	566,894	0
Gross Realized (Losses)	0	(126,193)
Total realized investment gains (losses), net	566,894	(126,193)
Equity Securities - OTTI [Member]
Gain (Loss) on Investments [Line Items]
Gross realized gains	0
Gross Realized (Losses)	(174,725)
Total realized investment gains (losses), net	(174,725)
Real Estate [Member]
Gain (Loss) on Investments [Line Items]
Gross realized gains	4,533,747	7,371,693
Gross Realized (Losses)	(14,194)	(50,634)
Total realized investment gains (losses), net	4,519,553	7,321,059
Mortgage loans [Member]
Gain (Loss) on Investments [Line Items]
Gross realized gains		0
Gross Realized (Losses)		(203,440)
Total realized investment gains (losses), net		(203,440)
Real Estate - OTTI [Member]
Gain (Loss) on Investments [Line Items]
Gross realized gains		0
Gross Realized (Losses)		(3,360,430)
Total realized investment gains (losses), net		(3,360,430)
Mortgage Loans - OTTI [Member]
Gain (Loss) on Investments [Line Items]
Gross realized gains		0
Gross Realized (Losses)		(982,354)
Total realized investment gains (losses), net		(982,354)
Fixed Maturity Available for Sale [Member]
NET INVESTMENT INCOME [Abstract]
Investment Income	7,490,812	4,277,019
Equity Securities [Member]
NET INVESTMENT INCOME [Abstract]
Investment Income	1,745,375	971,008
Trading Securities [Member]
NET INVESTMENT INCOME [Abstract]
Investment Income	2,565,518	(2,342,085)
Mortgage Loans [Member]
NET INVESTMENT INCOME [Abstract]
Investment Income	1,022,895	645,838
Discounted Mortgage Loans [Member]
NET INVESTMENT INCOME [Abstract]
Investment Income	4,186,155	8,231,832
Real Estate [Member]
NET INVESTMENT INCOME [Abstract]
Investment Income	8,384,417	6,820,847
Policy Loans [Member]
NET INVESTMENT INCOME [Abstract]
Investment Income	809,885	807,389
Short-term Investments [Member]
NET INVESTMENT INCOME [Abstract]
Investment Income	0	156,527
Cash and Cash Equivalents [Member]
NET INVESTMENT INCOME [Abstract]
Investment Income	7,647	8,396
U.S. Government and Government Agencies and Authorities [Member]
Fixed maturities [Abstract]
Original or Amortized Cost	33,430,165	56,794,363
Gross Unrealized Gains	5,457,009	13,805,565
Gross Unrealized Losses	0	0
Estimated Market Value	38,887,174	70,599,928
States, Municipalities and Political Subdivisions [Member]
Fixed maturities [Abstract]
Original or Amortized Cost	160,000	235,000
Gross Unrealized Gains	6,637	6,317
Gross Unrealized Losses	0	0
Estimated Market Value	166,637	241,317
Collateralized Mortgage Obligations [Member]
Fixed maturities [Abstract]
Original or Amortized Cost	2,241,384	750,944
Gross Unrealized Gains	183,409	11,756
Gross Unrealized Losses	(8)	(2,973)
Estimated Market Value	2,424,785	759,727
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 months, Fair value	4,513	7,008
Less than 12 months, Unrealized losses	(8)	(36)
Twelve months or longer, Fair value	0	97,868
Twelve months or longer, Unrealized losses	0	(2,937)
Total Fair value	4,513	104,876
Total Unrealized losses	(8)	(2,973)
Public Utilities [Member]
Fixed maturities [Abstract]
Original or Amortized Cost	399,900	399,887
Gross Unrealized Gains	63,662	62,188
Gross Unrealized Losses	0	0
Estimated Market Value	463,562	462,075
Debt Securities [Member]
Fixed maturities [Abstract]
Original or Amortized Cost	173,526,717	107,514,400
Gross Unrealized Gains	15,611,827	18,787,510
Gross Unrealized Losses	(1,811,259)	(1,718,733)
Estimated Market Value	187,327,285	124,583,177
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 months, Fair value	13,781,218	3,922,401
Less than 12 months, Unrealized losses	(245,854)	(17,610)
Twelve months or longer, Fair value	385,823	1,366,451
Twelve months or longer, Unrealized losses	(1,565,405)	(1,701,123)
Total Fair value	14,167,041	5,288,852
Total Unrealized losses	(1,811,259)	(1,718,733)
Less than 12 months Number of Securities	8	5
Twelve months or longer Number of Securities	3	6
Total Number of Securities	11	11
Equity Securities [Member]
Fixed maturities [Abstract]
Original or Amortized Cost	29,497,001	16,200,043
Gross Unrealized Gains	1,303,328	1,216,286
Gross Unrealized Losses	(295,415)	(116,701)
Estimated Market Value	30,504,914	17,299,628
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 months Number of Securities	9	2
Twelve months or longer Number of Securities	0	1
Total Number of Securities	9	3
All Other Corporate Bonds [Member]
Fixed maturities [Abstract]
Original or Amortized Cost	135,145,198	49,334,206
Gross Unrealized Gains	9,747,565	4,901,684
Gross Unrealized Losses	(1,811,251)	(1,715,760)
Estimated Market Value	143,081,512	52,520,130
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less than 12 months, Fair value	13,776,705	3,915,393
Less than 12 months, Unrealized losses	(245,846)	(17,574)
Twelve months or longer, Fair value	385,823	1,268,583
Twelve months or longer, Unrealized losses	(1,565,405)	(1,698,186)
Total Fair value	14,162,528	5,183,976
Total Unrealized losses	(1,811,251)	(1,715,760)
US Special Revenue and Assessments [Member]
Fixed maturities [Abstract]
Original or Amortized Cost	2,150,070
Gross Unrealized Gains	153,545
Gross Unrealized Losses	0
Estimated Market Value	$ 2,303,615

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INVESTMENTS

12 Months Ended

Dec. 31, 2012

INVESTMENTS [Abstract]

INVESTMENTS

Note 2 – Investments

Available for Sale Securities – Fixed Maturity and Equity Securities

The following tables provide a summary of fixed maturities available for sale and equity securities by original or amortized cost and estimated fair value:

December 31, 2012		Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Investments available for sale:
Fixed maturities
U.S. Government and govt. agencies and authorities	$	33,430,165	$	5,457,009	$	0	$	38,887,174
States, municipalities and political subdivisions		160,000		6,637		0		166,637
U.S. special revenue and assessments		2,150,070		153,545		0		2,303,615
Collateralized mortgage obligations		2,241,384		183,409		(8)		2,424,785
Public utilities		399,900		63,662		0		463,562
All other corporate bonds		135,145,198		9,747,565		(1,811,251)		143,081,512
		173,526,717		15,611,827		(1,811,259)		187,327,285
Equity securities		29,497,001		1,303,328		(295,415)		30,504,914
Total	$	203,023,718	$	16,915,155	$	(2,106,674)	$	217,832,199

December 31, 2011		Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Investments available for sale:
Fixed maturities
U.S. Government and govt. agencies and authorities	$	56,794,363	$	13,805,565	$	0	$	70,599,928
States, municipalities and political subdivisions		235,000		6,317		0		241,317
Collateralized mortgage obligations		750,944		11,756		(2,973)		759,727
Public utilities		399,887		62,188		0		462,075
All other corporate bonds		49,334,206		4,901,684		(1,715,760)		52,520,130
		107,514,400		18,787,510		(1,718,733)		124,583,177
Equity securities		16,200,043		1,216,286		(116,701)		17,299,628
Total	$	123,714,443	$	20,003,796	$	(1,835,434)	$	141,882,805

The following table provides a summary of fixed maturities by contractual maturity as of December 31, 2012.  Actual maturities could differ from contractual maturities due to call or prepayment provisions:

Fixed Maturities Available for Sale December 31, 2012		Amortized Cost		Estimated Fair Value
Due in one year or less	$	4,067,722	$	4,116,580
Due after one year through five years		22,420,385		24,718,707
Due after five years through ten years		105,150,475		113,890,802
Due after ten years		39,643,584		42,173,173
Collateralized mortgage obligations		2,244,551		2,428,023
Total	$	173,526,717	$	187,327,285

By insurance statute, the majority of the Company's investment portfolio is invested in investment grade securities to provide ample protection for policyholders.

Below investment grade debt securities generally provide higher yields and involve greater risks than investment grade debt securities because their issuers typically are more highly leveraged and more vulnerable to adverse economic conditions than investment grade issuers.  In addition, the trading market for these securities is usually more limited than for investment grade debt securities.  Debt securities classified as below-investment grade are those that receive a Standard & Poor's rating of BB or below.

The Company held, below investment grade investments with an amortized cost of $19,080,167 and $1,843,314 as of December 31, 2012 and 2011, respectively.  The investments are all classified as "All other corporate bonds".

The fair value of investments with sustained gross unrealized losses at December 31, 2012 and 2011 are as follows:

December 31, 2012		Less than 12 months			12 months or longer			Total
		Fair value	Unrealized losses		Fair value	Unrealized losses		Fair value	Unrealized losses
Collateralized mortgage obligations	$	4,513	(8)	$	0	0	$	4,513	(8)
All other corporate bonds		13,776,705	(245,846)		385,823	(1,565,405)		14,162,528	(1,811,251)
Total fixed maturities	$	13,781,218	(245,854)	$	385,823	(1,565,405)	$	14,167,041	(1,811,259)
Equity securities	$	594,081	(295,415)	$	0	0	$	594,081	(295,415)

December 31, 2011		Less than 12 months			12 months or longer			Total
		Fair value	Unrealized losses		Fair value	Unrealized losses		Fair value	Unrealized losses
Collateralized mortgage obligations	$	7,008	(36)	$	97,868	(2,937)	$	104,876	(2,973)
All other corporate bonds		3,915,393	(17,574)		1,268,583	(1,698,186)		5,183,976	(1,715,760)
Total fixed maturities	$	3,922,401	(17,610)	$	1,366,451	(1,701,123)	$	5,288,852	(1,718,733)
Equity securities	$	848,032	(55,141)	$	292,441	(61,560)	$	1,140,473	(116,701)

The following table provides additional information regarding the number of securities that were in an unrealized loss position for greater than or less than twelve months:

	Less than 12  months	12 months or  longer	Total
As of December 31, 2012
Fixed maturities	8	3	11
Equity securities	9	0	9
As of December 31, 2011
Fixed maturities	5	6	11
Equity securities	2	1	3

Substantially all of the unrealized losses on fixed maturities available for sale at December 31, 2012 and 2011 are attributable to changes in market interest rates and general disruptions in the credit market subsequent to purchase.  The unrealized losses on equity investments were primarily attributable to normal market fluctuations.  The Company does not currently intend to sell nor does it expect to be required to sell any of the securities in an unrealized loss position.  Based upon the Company's expected continuation of receipt of contractually required principal and interest payments and its intent and ability to retain the securities until price recovery, as well as the Company's evaluation of other relevant factors, the Company deems these securities to be temporarily impaired as of December 31, 2012 and 2011.

Trading Securities

Securities designated as trading securities are reported at fair value, with gains or losses resulting from changes in fair value recognized in net investment income on the Consolidated Statements of Operations.  Trading securities include bonds, exchange traded equities, exchange traded options and exchange traded futures.  Trading securities carried as liabilities are securities sold short. A gain, limited to the price at which the security was sold short, or a loss, potentially unlimited in size, will be recognized upon the termination of the short sale.  The fair value of derivatives included in trading security assets and trading security liabilities as of December 31, 2012 was $6,745,528 and ($6,050,344), respectively. The fair value of derivatives included in trading security assets and trading security liabilities as of December 31, 2011 was $3,217,420 and $(4,187,885), respectively.  The derivatives held by the Company are for income generation purposes only.

Earnings from trading securities are classified in cash flows from operating activities.

The following table reflects trading securities revenue charged to net investment income for the periods ended December 31:

		2012		2011
Net unrealized gains (losses)	$	(352,761)	$	(1,604,757)
Net realized gains (losses)		2,918,279		(737,328)
Net unrealized and realized gains (losses)	$	2,565,518	$	(2,342,085)

Mortgage Loans and Discounted Mortgage Loans on Real Estate

The Company, from time to time, acquires mortgage loans through participation agreements with FSNB.  FSNB has been able to provide the Company with additional expertise and experience in underwriting commercial and residential mortgage loans, which provide more attractive yields than the traditional bond market.  The Company is able to receive participations from FSNB for three primary reasons:  1) FSNB has already reached its maximum lending limit to a single borrower, but the borrower is still considered a suitable risk; 2) the interest rate on a particular loan may be fixed for a long period that is more suitable for UG given its asset-liability structure; and 3) FSNB's loan growth might at times outpace its deposit growth, resulting in FSNB participating such excess loan growth rather than turning customers away.  For originated loans, the Company's Management is responsible for the final approval of such loans after evaluation.  Before a new loan is issued, the applicant is subject to certain criteria set forth by Company Management to ensure quality control.  These criteria include, but are not limited to, a credit report, personal financial information such as outstanding debt, sources of income, and personal equity.  Once the loan is approved, the Company directly funds the loan to the borrower.  The Company bears all risk of loss associated with the terms of the mortgage with the borrower.

The Company began purchasing discounted commercial mortgage loans in 2009.  Management has extensive background and experience in the analysis and valuation of commercial real estate. The discounted loans are available through the FDIC's sale of assets of closed banks and from banks wanting to reduce their loan portfolios.  The loans are available on a loan by loan bid process.  Once a loan has been acquired, contact is made with the appropriate individuals to begin a dialog with a goal of determining the borrower's willingness to work together.  There are generally three paths a discounted loan will take:  the borrowers pay as required; a settlement is reached with the loan being paid off at a discounted value; or the loan is foreclosed.

During 2012 and 2011, the Company acquired $22,244,731 and $11,123,386 in mortgage loans, respectively, including both regular participation mortgage loans as well as discounted mortgage loans.  FSNB services the mortgage loan portfolio of the Company.  The Company pays FSNB a .25% servicing fee on these loans and a one-time fee at loan origination of .50% of the original loan amount to cover costs incurred by FSNB relating to the processing and establishment of the loan.

During 2012 and 2011, the maximum and minimum lending rates for mortgage loans were:

	2012		2011
	Maximum rate	Minimum rate	Maximum rate	Minimum rate
Commercial Loans	10.00%	3.21%	18.00%	3.24%
Residential Loans	8.00%	6.00%	8.00%	7.00%

Most mortgage loans are first position loans.  Loans issued are generally limited to no more than 80% of the appraised value of the property.

The Company has in place a monitoring system to provide Management with information regarding potential troubled loans.  Letters are sent to each mortgagee when the loan becomes 30 days or more delinquent.  Management is provided with a monthly listing of loans that are 60 days or more past due along with a brief description of what steps are being taken to resolve the delinquency.  All loans 90 days or more past due are placed on a non-performing status and classified as delinquent loans.  Quarterly, coinciding with external financial reporting, the Company reviews each delinquent loan and determines how each delinquent loan should be classified.  Management believes the current internal controls surrounding the mortgage loan selection process provide a quality portfolio with minimal risk of foreclosure and/or negative financial impact.

Management has conservatively decided to place the loans in the discounted mortgage loan portfolio on a non-accrual status, due to the instability of the borrowers.  The Company additionally only recognizes any discount once the Company's entire basis in a loan has been recovered.

On the remainder of the mortgage loan portfolio, interest accruals are analyzed based on the likelihood of repayment.  In no event will interest continue to accrue when accrued interest along with the outstanding principal exceeds the net realizable value of the property.  The Company does not utilize a specified number of days delinquent to cause an automatic non-accrual status.

A mortgage loan reserve is established and adjusted based on Management's quarterly analysis of the portfolio and any deterioration in value of the underlying property which would reduce the net realizable value of the property below its current carrying value.  The Company acquired the discounted mortgage loans at below fair value, therefore no reserve for delinquent loans is deemed necessary.  Those not currently paying are being vigorously worked by Management.The current discounted commercial mortgage loan portfolio has an average price of 36.1% of face value and Management has determined that this deep discount provides a financial cushion or built in allowance for any of the loans that are not currently performing within the portfolio of loans purchased.  The mortgage loan reserve was $0 at December 31, 2012 and 2011.

The following table summarizes the number loans held in the discounted mortgage loan portfolio and the carrying value of the loans as of December 31, 2012:

Payment Frequency	Number of Loans		Carrying Value
No payments received	13	$	5,558,962
One-time payment received	3		0
Irregular payments received	17		7,681,387
Regular payments received	23		13,096,604
Total	56	$	26,336,953

The following table summarizes discounted mortgage loan holdings of the Company for the periods ended December 31:

		2012		2011
In good standing	$	3,945,701	$	6,657,971
Overdue interest over 90 days		3,368,750		5,907,192
Restructured		7,685,690		7,726,156
In process of foreclosure		11,336,812		7,176,601
Total discounted mortgage loans	$	26,336,953	$	27,467,920
Total foreclosed discounted mortgage loans during the year	$	2,603,017	$	21,059,386

Investment Real Estate

Real estate acquired through foreclosure, consisting of properties obtained through foreclosure proceedings or acceptance of a deed in lieu of foreclosure, is reported on an individual asset basis at the lower of cost or fair value, less disposal costs. Fair value is determined on the basis of current appraisals, comparable sales, and other estimates of value obtained principally from independent sources. When properties are acquired through foreclosure, any excess of the loan balance at the time of foreclosure over the fair value of the real estate held as collateral is recognized and charged to the income statement. Based upon Management's evaluation of the real estate acquired through foreclosure, additional expense is recorded when necessary in an amount sufficient to reflect any declines in estimated fair value. Gains and losses recognized on the disposition of the properties are recorded as realized gains and losses in the consolidated statements of income.

Analysis of Investment Operations

The following table reflects the Company's net investment income for the periods ended December 31:

		2012		2011
Fixed maturities	$	7,490,812	$	4,277,019
Equity securities		1,745,375		971,008
Trading securities		2,565,518		(2,342,085)
Mortgage loans		1,022,895		645,838
Discounted mortgage loans		4,186,155		8,231,832
Real estate		8,384,417		6,820,847
Policy loans		809,885		807,389
Short-term investments		0		156,527
Cash and cash equivalents		7,647		8,396
Total consolidated investment income		26,212,704		19,576,771
Investment expenses		(7,693,447)		(8,378,606)
Consolidated net investment income	$	18,519,257	$	11,198,165

The following table reflects the Company's net realized investments gains and losses for the periods ended December 31:

2012		Gross Realized Gains		Gross Realized (Losses)		Net Realized Gains (Losses)
Fixed maturities	$	9,816,015	$	(409,745)	$	9,406,270
Real estate		4,533,747		(14,194)		4,519,553
Common stock		566,894		0		566,894
Fixed maturities – OTTI		0		(12,680)		(12,680)
Common stock – OTTI		0		(174,725)		(174,725)
Total realized gains (losses)	$	14,916,656	$	(611,344)	$	14,305,312

2011		Gross Realized Gains		Gross Realized (Losses)		Net Realized Gains (Losses)
Fixed maturities	$	9,290,554	$	(376,567)	$	8,913,987
Equity securities		0		(126,193)		(126,193)
Real estate		7,371,693		(50,634)		7,321,059
Mortgage loans		0		(203,440)		(203,440)
Real estate – OTTI		0		(3,360,430)		(3,360,430)
Mortgage loans – OTTI		0		(982,354)		(982,354)
Total realized gains (losses)	$	16,662,247	$	(5,099,618)	$	11,562,629

Other-Than-Temporary Impairments

The Company regularly reviews its investment securities for factors that may indicate that a decline in fair value of an investment is other than temporary.  The factors considered by Management in its regular review to identify and recognize other-than-temporary impairment losses on fixed maturities include, but are not limited to: the length of time and extent to which the fair value has been less than cost; the Company's intent to sell, or be required to sell, the debt security before the anticipated recovery of its remaining amortized cost basis; the financial condition and near-term prospects of the issuer; adverse changes in ratings announced by one or more rating agencies; subordinated credit support, whether the issuer of a debt security has remained current on principal and interest payments; current expected cash flows; whether the decline in fair value appears to be issuer specific or, alternatively, a reflection of general market or industry conditions, including the effect of changes in market interest rates.  If the Company intends to sell a debt security, or it is more likely than not that it would be required to sell a debt security before the recovery of its amortized cost basis, the entire difference between the security's amortized cost basis and its fair value at the balance sheet date would be recognized by a charge to other-than-temporary losses in the Consolidated Statements of Operations.

Equity securities may experience other-than-temporary impairments in the future based on the prospects for full recovery in value in a reasonable period of time and the Company's ability and intent to hold the security to recovery.  If a decline in fair value is judged by Management to be other-than-temporary or Management does not have the intent or ability to hold a security, a loss is recognized by a charge to other-than-temporary impairment losses in the Consolidated Statements of Operations.

Based on Management's review of the investment portfolio, the Company recorded the following losses for other-than-temporary impairments in the Consolidated Statements of Operations for the periods ended December 31:

		2012		2011
Other than temporary impairments:
Common stock	$	174,725	$	0
Discounted mortgage loans		0		982,354
Real estate		0		3,360,430
States, municipalities and political subdivisions		12,680		0
Total other than temporary impairments	$	187,405	$	4,342,784

The other-than-temporary impairments recognized during 2012 were due to Management's assessment and consideration of the length of time the securities have remained in an unrealized loss position.

The other-than-temporary impairments recognized during 2011 were due to appraisal valuations and Management's analysis of discounted mortgage loans and real estate. The mortgage loans and real estate were written down to better reflect current expected market values.

Investments on Deposit

The Company had investments with a fair value of $11,660,630 and $10,998,036 on deposit with various state insurance departments as of December 31, 2012 and 2011, respectively.

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FAIR VALUE MEASUREMENTS (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Assets [Abstract]
Fixed Maturities, available for sale	$ 187,327,285	$ 124,583,177
Equity Securities, available for sale	30,504,914	17,299,628
Trading Securities	14,018,460	8,519,064
Total Financial Assets	231,850,659	150,401,869
Liabilities [Abstract]
Trading Securities	6,050,344	4,187,885
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance	10,170,685
Total Unrealized Gains (Losses) Included in Other Comprehensive Income	120,355
Purchases	11,522,285
Transfers in to Level 3	1,424,117
Transfers out of Level 3	0
Ending Balance	23,237,442
Level 1 [Abstract]
In	0
Out	0
Net	0
Level 2 [Abstract]
In	0
Out	(1,424,117)
Net	(1,424,117)
Level 3 [Abstract]
In	1,424,117
Out	0
Net	1,424,117
Assets [Abstract]
Fixed maturities available for sale	187,327,285	124,583,177
Trading securities	14,018,460	8,519,064
Discounted mortgage loans	26,336,953	27,467,920
Investment real estate	68,165,013	62,701,375
Cash and cash equivalents	23,321,246	82,925,675	18,483,452
Other Assets, Fair Value Disclosure	6,268,320	0
Liabilities [Abstract]
Trading securities	6,050,344	4,187,885
Policy loan interest rate, minimum (in hundredths)	4.00%
Policy loan interest rate, maximum (in hundredths)	8.00%
Carrying Amount [Member]
Assets [Abstract]
Mortgage loans on real estate	17,671,554	9,272,919
Discounted mortgage loans	26,336,953	27,467,920
Investment real estate	68,165,013	62,701,375
Policy Loans	12,591,572	13,312,229
Cash and cash equivalents	23,321,246	82,925,675
Liabilities [Abstract]
Notes payable	18,857,954	9,531,645
Estimated Fair Value [Member]
Assets [Abstract]
Mortgage loans on real estate	17,803,159	9,116,148
Discounted mortgage loans	26,336,953	27,467,920
Investment real estate	68,165,013	62,701,375
Policy Loans	12,591,572	13,312,229
Cash and cash equivalents	23,321,246	82,925,675
Liabilities [Abstract]
Notes payable	18,857,954	9,519,300
Fixed Maturities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance	215,317
Total Unrealized Gains (Losses) Included in Other Comprehensive Income	58,410
Purchases	0
Transfers in to Level 3	0
Ending Balance	273,727
Level 3 [Abstract]
In	0
Equity Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance	9,955,368
Total Unrealized Gains (Losses) Included in Other Comprehensive Income	61,945
Purchases	11,522,285
Transfers in to Level 3	1,424,117
Ending Balance	22,963,715
Level 3 [Abstract]
In	1,424,117
Level 1 [Member]
Assets [Abstract]
Fixed Maturities, available for sale	20,993,398	59,735,100
Equity Securities, available for sale	1,448,585	0
Trading Securities	13,903,148	8,519,064
Total Financial Assets	36,345,131	68,254,164
Liabilities [Abstract]
Trading Securities	7,552,704	5,471,475
Assets [Abstract]
Fixed maturities available for sale	20,993,398	59,735,100
Trading securities	13,903,148	8,519,064
Liabilities [Abstract]
Trading securities	7,552,704	5,471,475
Level 2 [Member]
Assets [Abstract]
Fixed Maturities, available for sale	166,060,160	64,632,760
Equity Securities, available for sale	6,092,614	7,344,260
Trading Securities	115,312	0
Total Financial Assets	172,268,086	71,977,020
Liabilities [Abstract]
Trading Securities	0	0
Assets [Abstract]
Fixed maturities available for sale	166,060,160	64,632,760
Trading securities	115,312	0
Liabilities [Abstract]
Trading securities	0	0
Level 3 [Member]
Assets [Abstract]
Fixed Maturities, available for sale	273,727	215,317
Equity Securities, available for sale	22,963,715	9,955,368
Trading Securities	0	0
Total Financial Assets	23,237,442	10,170,685
Liabilities [Abstract]
Trading Securities	0	0
Assets [Abstract]
Fixed maturities available for sale	273,727	215,317
Trading securities	0	0
Liabilities [Abstract]
Trading securities	0	0
Total trading securities liabilities [Member]
Liabilities [Abstract]
Trading Securities	7,552,704	5,471,475
Liabilities [Abstract]
Trading securities	$ 7,552,704	$ 5,471,475

XML

RELATED PARTY TRANSACTIONS (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Related Party Transaction [Line Items]
Purchased trust preferred security offering	$ 4,000,000
Term for mandatory redemption	30
Term for call provision	5
Dividend rate (in hundredths)	651.50%
Dividend Income	264,219	264,943
Equity Method Investments	1,000,000
Percentage owned (in hundredths)	73.00%
Number of shares to be received (in shares)	233
Number of shares issued (in shares)	50,328
Number shares not issued to dissenting shareholders (in shares)	129,548
Ownership interest in aircraft (in hundredths)	8.08%
Initial payment - Aircraft joint ownership agreement	150,000
Additional payment - Aircraft joint ownership agreement	125,000
Monthly operational fees	25,000
Costs associated with aircraft	573,393	392,227
Administrative Services and Cost	8,843,596	7,185,037
Servicing fee on loan (in hundredths)	0.25%
Loan origination (in hundredths)	0.50%
Servicing fees	102,447	136,457
Origination fees	81,851	89,651
Reimbursement cost	90,939	15,392
Total reimbursement payment	$ 462,819	$ 348,610

XML

Balance Sheet (USD $)	Dec. 31, 2012	Dec. 31, 2011
Investments available for sale:
Fixed maturities, at fair value	$ 187,327,285	$ 124,583,177
Equity securities, at fair value	30,504,914	17,299,628
Trading securities, at fair value	14,018,460	8,519,064
Mortgage loans on real estate at amortized cost	17,671,554	9,272,919
Discounted mortgage loans on real estate at cost	26,336,953	27,467,920
Investment real estate	68,165,013	62,701,375
Policy loans	12,591,572	13,312,229
Short-term investments	6,268,320	0
Total investments	362,884,071	263,156,312
Cash and cash equivalents	23,321,246	82,925,675
Accrued investment income	2,444,790	1,136,741
Future policy benefits	29,318,018	64,693,384
Policy claims and other benefits	4,492,430	4,029,412
Cost of insurance acquired	11,700,765	12,846,266
Deferred policy acquisition costs	426,218	488,266
Property and equipment, net of accumulated depreciation	1,344,851	1,527,285
Income tax receivable	20,035	281,636
Other assets	5,381,969	2,636,280
Total assets	441,334,393	433,721,257
Liabilities:
Future policyholder benefits	293,800,162	301,393,689
Policy claims and benefits payable	3,371,767	3,016,866
Other policyholder funds	477,948	636,319
Dividend and endowment accumulations	14,072,513	14,176,151
Income tax payable	2,042,786	0
Deferred income taxes	12,301,577	13,745,751
Notes payable	18,857,954	9,531,645
Trading securities liabilities, at fair value	7,552,704	5,471,475
Other liabilities	9,202,354	9,964,313
Total liabilities	361,679,765	357,936,209
Common stock	3,799	3,855
Additional paid-in capital	44,337,743	45,051,608
Retained earnings	21,917,318	12,651,687
Accumulated other comprehensive income	9,664,466	11,792,214
Total UTG shareholders' equity	75,923,326	69,499,364
Noncontrolling interests	3,731,302	6,285,684
Total shareholders' equity	79,654,628	75,785,048
Total liabilities and shareholders' equity	$ 441,334,393	$ 433,721,257

XML

Statement of Cash Flows (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Cash flows from operating activities:
Net income attributable to common shareholders	$ 9,265,631	$ 6,316,615
Proceeds from (Payments for) Trading Securities	(2,462,205)	3,714,513
Amortization (accretion) of investments	(998,853)	(3,964,398)
Realized investment gains, net	(14,305,312)	(11,562,629)
Unrealized trading gains included in income	352,761	1,604,757
Amortization of deferred policy acquisition costs	62,048	68,692
Amortization of cost of insurance acquired	1,145,501	1,231,015
Depreciation	1,242,149	1,412,661
Net income attributable to noncontrolling interest	681,805	186,669
Charges for mortality and administration of universal life and annuity products	(7,067,717)	(7,353,389)
Interest credited to account balances	5,192,370	5,152,218
Change in accrued investment income (loss)	(1,308,049)	472,684
Change in reinsurance receivables	3,756,502	2,757,683
Change in policy liabilities and accruals	(4,987,472)	(5,037,087)
Change in income taxes receivable (payable)	2,082,289	(4,535,859)
Change in other assets and liabilities, net	(3,292,668)	(951,349)
Net cash provided by (used in) operating activities	(10,641,220)	(10,487,204)
Cash flows from investing activities:
Fixed maturities available for sale	98,640,115	173,221,329
Equity securities available for sale	1,953,434	3,572,456
Trading securities	15,299,053	29,733,306
Mortgage loans	7,546,798	3,139,903
Discounted mortgage loans	6,533,313	15,032,186
Real estate	16,411,306	29,621,068
Policy loans	3,678,795	4,299,197
Total proceeds from investments sold and matured	150,062,814	258,619,445
Cost of investments acquired:
Fixed maturities available for sale	(128,314,307)	(128,598,767)
Equity securities available for sale	(13,834,829)	(727,258)
Trading securities	(16,597,713)	(19,626,789)
Mortgage loans	(15,945,433)	(1,235)
Discounted mortgage loans	(6,299,298)	(11,122,151)
Real estate	(15,829,535)	(15,842,681)
Policy loans	(2,958,138)	(3,635,407)
Payments for (Proceeds from) Other Investing Activities	(6,268,320)	0
Total cost of investments acquired	(206,047,573)	(179,554,288)
Sale/Purchase of property and equipment	17,440	(214,475)
Net cash used in investing activities	(55,967,319)	78,850,682
Cash flows from financing activities:
Policyholder contract deposits	6,006,858	6,213,174
Policyholder contract withdrawals	(6,644,674)	(5,851,344)
Proceeds from notes payable/line of credit	16,321,035	7,943,000
Payments of principal on notes payable/line of credit	(6,994,726)	(8,783,594)
Purchase of treasury stock	(928,902)	(475,547)
Discontinued Operation, Gain (Loss) on Disposal of Discontinued Operation, Net of Tax, Total	0	164,327
Distributions to minority interests of consolidated subsidiaries	(3,236,187)	(3,131,271)
Cash received in reinsurance recapture	2,480,706	0
Net cash provided by (used in) financing activities	7,004,110	(3,921,255)
Net increase (decrease) in cash and cash equivalents	(59,604,429)	64,442,223
Cash and cash equivalents at beginning of period	82,925,675	18,483,452
Cash and cash equivalents at end of period	$ 23,321,246	$ 82,925,675

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INCOME TAXES (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Income tax expense (benefits) [Abstract]
Current tax	$ 5,716,480	$ 5,296,407
Deferred tax	(222,098)	(4,030,745)
Income tax expense	5,494,382	1,265,662
Income tax expense (benefit) reconciliation [Abstract]
United States statutory rate (in hundredths)	35.00%
Tax computed at statutory rate	5,404,636	2,719,131
Changes in taxes due to [Abstract]
Non-controlling interest	(238,632)	(65,334)
Small company deduction	0	(623,767)
Other	328,378	(764,368)
Income tax expense	5,494,382	1,265,662
Deferred tax liability [Abstract]
Investments	4,644,740	5,519,570
Cost of insurance acquired	4,095,268	4,496,193
Deferred policy acquisition costs	149,176	170,893
Management/consulting fees	(66,344)	(70,554)
Future policy benefits	2,137,835	2,447,327
Deferred gain on sale of subsidiary	2,312,483	2,312,483
Other liabilities	(63,967)	(120,039)
Federal tax DAC	(907,614)	(1,010,122)
Deferred income taxes	12,301,577	13,745,751
Gross deferred tax assets	2,793,932	2,879,079
Gross deferred tax liabilities	15,095,508	16,624,830
Valuation allowance	$ 0

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FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Dec. 31, 2012

FAIR VALUE MEASUREMENTS [Abstract]

Financial assets and liabilities measured on recurring basis

The following table presents the Company's assets and liabilities measured at fair value in the consolidated balance sheet on a recurring basis as of December 31, 2012.

		Level 1		Level 2		Level 3		Total
Assets
Fixed Maturities, available for sale	$	20,993,398	$	166,060,160	$	273,727	$	187,327,285
Equity Securities, available for sale		1,448,585		6,092,614		22,963,715		30,504,914
Trading Securities		13,903,148		115,312		0		14,018,460
Total	$	36,345,131	$	172,268,086	$	23,237,442	$	231,850,659
Liabilities
Trading Securities	$	7,552,704	$	0	$	0	$	7,552,704

The following table presents the Company's assets and liabilities measured at fair value in the consolidated balance sheet on a recurring basis as of December 31, 2011.

		Level 1		Level 2		Level 3		Total
Assets
Fixed Maturities, available for sale	$	59,735,100	$	64,632,760	$	215,317	$	124,583,177
Equity Securities, available for sale		0		7,344,260		9,955,368		17,299,628
Trading Securities		8,519,064		0		0		8,519,064
Total	$	68,254,164	$	71,977,020	$	10,170,685	$	150,401,869
Liabilities
Trading Securities	$	5,471,475	$	0	$	0	$	5,471,475

The following table provides reconciliations for Level 3 assets measured at fair value on a recurring basis. Transfers into and out of Level 3 are recognized as of the end of the quarter in which they occur.

		Fixed Maturities, Available for Sale		Equity Securities, Available for Sale		Total
Balance at December 31, 2011	$	215,317	$	9,955,368	$	10,170,685
Transfers in to Level 3		0		1,424,117		1,424,117
Total unrealized gain or losses:
Included in other comprehensive income		58,410		61,945		120,355
Purchases		0		11,522,285		11,522,285
Balance at December 31, 2012	$	273,727	$	22,963,715	$	23,237,442

The Level 3 securities include collateralized debt obligations of trust preferred securities issued by banks and insurance companies and certain equity securities with unobservable inputs. None of the collateral is subprime or Alt-A mortgages (loans for which the typical documentation was not provided by the borrower).

The following table presents transfers in and out of each of the valuation levels of fair value.

		2012
		In		Out		Net
Level 1	$	0	$	0	$	0
Level 2		0		(1,424,117)		(1,424,117)
Level 3		1,424,117		0		1,424,117

Estimated fair value of financial instruments required to be valued by ASC 820

The carrying values and estimated fair values of certain of the Company's financial instruments not recorded at fair value in the Consolidated Balance Sheets are shown below. Because the fair value for all consolidated balance sheet items are not required to be disclosed, the aggregate fair value amounts presented below are not reflective of the underlying value of the Company.

		December 31, 2012				December 31, 2011
Assets		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Mortgage loans on real estate	$	17,671,554	$	17,803,159	$	9,272,919	$	9,116,148
Discounted mortgage loans		26,336,953		26,336,953		27,467,920		27,467,920
Investment real estate		68,165,013		68,165,013		62,701,375		62,701,375
Policy loans		12,591,572		12,591,572		13,312,229		13,312,229
Cash and cash equivalents		23,321,246		23,321,246		82,925,675		82,925,675
Short term investments		6,268,320		6,268,320		0		0
Liabilities
Notes payable		18,857,954		18,857,954		9,531,645		9,519,300

Transfers in and out of each of valuation levels of fair value

The following table presents transfers in and out of each of the valuation levels of fair value.

		2012
		In		Out		Net
Level 1	$	0	$	0	$	0
Level 2		0		(1,424,117)		(1,424,117)
Level 3		1,424,117		0		1,424,117

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CREDIT ARRANGEMENTS (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Outstanding principal balance	$ 12,000,000	$ 0
Scheduled principal reductions on notes payable for the next five years [Abstract]
2013	1,686,621
2014	5,034,154
2015	382,395
2016	518,134
2017	542,470
Repayments of Debt	6,994,726	8,783,594
Percentage of ownership (in hundredths)	100.00%
Promisory Note [Member]
Debt Instrument [Line Items]
Issue Date	Dec. 27, 2012
Maturity Date	Mar. 04, 2018
Line of Credit [Member]
Debt Instrument [Line Items]
Issue Date	Nov. 20, 2012
Maturity Date	Nov. 20, 2013
Revolving Credit Limit	8,000,000
Outstanding Balance	1,655,035	0
Borrowings	2,910,035
Repayments	1,255,000
UTG [Member]
Debt Instrument [Line Items]
Outstanding principal balance	0	3,291,411
UTG [Member] | Promisory Note [Member]
Debt Instrument [Line Items]
Issue Date	Dec. 08, 2006
Maturity Date	Dec. 07, 2012
UTG [Member] | Line of Credit [Member]
Debt Instrument [Line Items]
Issue Date	Jul. 14, 2011
Maturity Date	Dec. 07, 2012
Revolving Credit Limit	5,000,000
Outstanding Balance	0	1,000,000
Borrowings	1,411,000
Repayments	2,411,000
UTG Avalon [Member] | Line of Credit [Member]
Debt Instrument [Line Items]
Issue Date	Dec. 28, 2011
Maturity Date	Jan. 03, 2013
Revolving Credit Limit	5,000,000
Outstanding Balance	5,000,000	5,000,000
Borrowings	0
Repayments	0
UG [Member] | Line of Credit [Member]
Debt Instrument [Line Items]
Issue Date	Dec. 28, 2010
Maturity Date	Dec. 06, 2013
Revolving Credit Limit	15,000,000
Outstanding Balance	0	0
Borrowings	0
Repayments	0
HPG Acquisitions [Member]
Debt Instrument [Line Items]
Outstanding principal balance	$ 202,919	$ 240,234
HPG Acquisitions [Member] | Promisory Note [Member]
Debt Instrument [Line Items]
Issue Date	Feb. 07, 2007
Maturity Date	Nov. 07, 2017

XML

COST OF INSURANCE ACQUIRED (Tables)

12 Months Ended

Dec. 31, 2012

Cost of Insurance Acquired [Abstract]

Cost of insurance acquired

Note 5 – Cost of Insurance Acquired

When an insurance company is acquired, the Company assigns a portion of its cost to the right to receive future cash flows from insurance contracts existing at the date of the acquisition.  The cost of policies purchased represents the actuarially determined present value of the projected future profits from the acquired policies.  Cost of insurance acquired is amortized with interest in relation to expected future profits, including direct charge-offs for any excess of the unamortized asset over the projected future profits.  The interest rates utilized may vary due to differences in the blocks of business.  The interest rate utilized in the amortization calculation of the remaining cost of insurance acquired is 12%.  The amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised.

		2012		2011
Cost of insurance acquired, beginning of year	$	12,846,266	$	14,077,281
Interest accretion		1,564,162		1,711,885
Amortization		(2,709,663)		(2,942,900)
Net amortization		(1,145,501)		(1,231,015)
Cost of insurance acquired, end of year	$	11,700,765	$	12,846,266

Estimated net amortization expense of cost of insurance acquired for the next five years is as follows:

	Interest Accretion	Amortization	Net Amortization
2013	1,427,000	2,491,000	1,064,000
2014	1,299,000	2,285,000	986,000
2015	1,181,000	2,088,000	907,000
2016	1,072,000	1,945,000	873,000
2017	967,000	1,806,000	839,000

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2012

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 1 – Summary of Significant Accounting Policies

Business – UTG, Inc. is an insurance holding company. The Company's dominant business is individual life insurance, which includes the servicing of existing insurance in-force and the acquisition of other companies in the life insurance business. UTG and its subsidiaries are collectively referred to as the "Company".

This document at times will refer to the Registrant's largest shareholder, Mr. Jesse T. Correll and certain companies controlled by Mr. Correll.  Mr. Correll holds a majority ownership of First Southern Funding LLC, a Kentucky corporation, ("FSF") and First Southern Bancorp, Inc. ("FSBI"), a financial services holding company.  FSBI operates through its 100% owned subsidiary bank, First Southern National Bank ("FSNB").  Banking activities are conducted through multiple locations within south-central and western Kentucky.  Mr. Correll is Chief Executive Officer and Chairman of the Board of Directors of UTG and is currently UTG's largest shareholder through his ownership control of FSF, FSBI and affiliates.  At December 31, 2012, Mr. Correll owns or controls directly and indirectly approximately 55.66% of UTG's outstanding stock.

UTG's life insurance subsidiary has several wholly-owned and majority-owned subsidiaries.  The subsidiaries were formed to hold certain real estate investments.  The real estate investments were placed into the limited liability companies and partnerships to provided additional protection to the policyholders and to UG.

Basis of Presentation – The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"), under guidance issued by the Financial Accounting Standards Board ("FASB").  The preparation of financial statements in accordance with GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Principles of Consolidation – The accompanying consolidated financial statements include the accounts of the Registrant and its wholly and majority-owned subsidiaries.  All significant intercompany accounts and transactions have been eliminated during consolidation.

Business Segments – The Company has only one business segment – life insurance.

Investments – The Company reports its investments as follows:

Fixed Maturity Investments – The Company classifies its fixed maturity investments, which include bonds, as available for sale. Investments classified as available for sale are carried at fair value with unrealized gains and losses, net of deferred taxes, reflected directly in accumulated other comprehensive income.  Premiums and discounts on debt securities purchased at other than par value are amortized and accreted, respectively, to interest income in the Consolidated Statements of Operations, using the constant yield method over the period to maturity.  Net realized gains and losses on sales of available for sale securities, and unrealized losses considered to be other-than-temporary, are recorded to net realized investment gains (losses) in the Consolidated Statements of Operations.

Equity Securities – Investments in equity securities, which include common and preferred stocks, are reported at fair value with unrealized gains and losses, net of deferred taxes, reflected directly in accumulated other comprehensive income.

Trading Securities – Trading security investments are reported at fair value with gains and losses resulting from changes in fair value recognized in earnings. Trading securities include bonds, exchange traded equities, exchange traded options and exchange traded futures.

Mortgage Loans on Real Estate – Mortgage loans on real estate are reported at their unpaid principal balances, adjusted for amortization of premium or discount and valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected.

Discounted Mortgage Loans on Real Estate – Discounted mortgage loans on real estate are non-performing loans that the Company purchased at a deep discount through an auction process led by the Federal Government.  In general, the discounted loans are non-performing and there is a significant amount of uncertainty surrounding the timing and amount of cash flows to be received by the Company.  Accordingly, the Company records its investment in the discounted loans at its original purchase price.  Management works with the borrower to reach a settlement on the loan or they foreclose on the underlying collateral which is primarily commercial real estate.  For cash payments received during the work out process, the Company records these payments to interest income on a cash basis.  For loan settlements reached, the Company records the amount in excess of the carrying amount of the loan as a discount accretion to investment income at the closing date.  Management reviews the discount loan portfolio regularly for impairment.  If an impairment is identified (after consideration of the underlying collateral), the Company records an impairment to earnings in the period the information becomes known.

Investment Real Estate – Investment real estate held for sale is reported at the lower of cost or fair value less cost to sell. Expenses to maintain the property are expensed as incurred.

Policy Loans – Policy loans are reported at their unpaid balances, including accumulated interest, but not in excess of the cash surrender value of the related policy.

Short-Term Investments – Short-term investments are reported at amortized cost, which approximates fair value.

Gains and Losses – Realized gains and losses include sales of investments and investment impairments.  If any, other-than-temporary impairments in fair value are recognized in net income on the specific identification basis.

Fair Value – Fair values for cash, short-term investments, short-term debt, receivables and payables approximate carrying value. Fair values for fixed maturities, equity securities and certain other assets are determined in accordance with specific accounting guidance.  Fair values are based on quoted market prices, where available.  Otherwise, fair values are based on quoted market prices of comparable instruments in active markets, quotes in inactive markets, or other observable criteria. Mortgage loans on real estate are valued using discounted cash flow analyses. Discounted mortgage loans on real estate are reported at original purchase price, which Management believes reflects fair value.  For more specific information regarding the Company's measurements and procedures in valuing financial instruments, see Note 3 – Fair Value Measurements.

Impairment of Investments – The Company evaluates its investment portfolio for other-than-temporary impairments as described in Note 2 – Investments.  If a security is deemed to be other-than-temporarily impaired, the cost basis of the security is written down to fair value and is treated as a realized loss.

Current accounting guidance states that if an entity intends to sell or if it is more likely than not that it will be required to sell an impaired security prior to recovery of its cost basis, the security is to be considered other-than-temporarily impaired and the full amount of impairment must be charged to earnings.  Otherwise, losses on fixed maturities which are other-than-temporarily impaired are separated into two categories, the portion of the loss which is considered credit loss and the portion of the loss which is due to other factors.  The credit loss portion is charged to earnings while the loss due to other factors is charged to other comprehensive income.

Cash Equivalents – The Company considers certificates of deposit and other short-term instruments with an original purchased maturity of three months or less to be cash equivalents.

Cash – Cash consists of balances on hand and on deposit in banks and financial institutions.

Reinsurance - In the normal course of business, the Company seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding reinsurance to other insurance enterprises or reinsurers under excess coverage and coinsurance contracts.  The Company retains a maximum of $125,000 of coverage per individual life.

Reinsurance receivables are recognized in a manner consistent with the liabilities relating to the underlying reinsured contracts.  The cost of reinsurance related to long-duration contracts is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies.

Cost of Insurance Acquired - When an insurance company is acquired, the Company assigns a portion of its cost to the right to receive future cash flows from insurance contracts existing at the date of the acquisition.  The cost of policies purchased represents the actuarially determined present value of the projected future profits from the acquired policies.  Cost of insurance acquired is amortized with interest in relation to expected future profits, including direct charge-offs for any excess of the unamortized asset over the projected future profits.  The amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised.

Deferred Policy Acquisitions Costs - Commissions and other costs (salaries of certain employees involved in the underwriting and policy issue functions and medical and inspection fees) of acquiring life insurance products that vary with and are primarily related to the production of new business have been deferred. Deferred acquisition costs are amortized in a systematic manner which matches these costs with the associated revenues.

Property and Equipment - Company-occupied property, data processing equipment and furniture and office equipment are stated at cost less accumulated depreciation of $3,399,309 and $3,235,642 at December 31, 2012 and 2011, respectively.  Depreciation is computed on a straight-line basis for financial reporting purposes using estimated useful lives of three to thirty years.  Depreciation expense was $168,442 and $162,941 for the years ended December 31, 2012 and 2011, respectively.

Future Policy Benefits and Expenses - The liabilities for traditional life insurance and accident and health insurance policy benefits are computed using a net level method. These liabilities include assumptions as to investment yields, mortality, withdrawals, and other assumptions based on the life insurance subsidiary's experience adjusted to reflect anticipated trends and to include provisions for possible unfavorable deviations. The Company makes these assumptions at the time the contract is issued or, in the case of contracts acquired by purchase, at the purchase date.  Future policy benefits for individual life insurance and annuity policies are computed using interest rates ranging from 2% to 6% for life insurance and 2.5% to 9.25% for annuities. Benefit reserves for traditional life insurance policies include certain deferred profits on limited-payment policies that are being recognized in income over the policy term. Policy benefit claims are charged to expense in the period that the claims are incurred. Current mortality rate assumptions are based on 1975-80 select and ultimate tables. Withdrawal rate assumptions are based upon Linton B or C, which are industry standard actuarial tables for forecasting assumed policy lapse rates.

Benefit reserves for universal life insurance and interest sensitive life insurance products are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges.  Policy benefits and claims that are charged to expense include benefit claims in excess of related policy account balances.  Interest crediting rates for universal life and interest sensitive products range from 4.0% to 5.5% as of December 31, 2012 and 2011.

Policy Claims and Benefits Payable - Policy and contract claims include provisions for reported claims in process of settlement, valued in accordance with the terms of the policies and contracts, as well as provisions for claims incurred and unreported. The estimate of incurred and unreported claims is based on prior experience. The Company makes an estimate after careful evaluation of all information available to the Company.  There is no certainty the stated liability for policy claims and benefits payable, including the estimate for incurred but unreported claims, will be the Company's ultimate obligation.

Income Taxes – Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement book values and tax bases of assets and liabilities.  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.  More information concerning income taxes is provided in Note 6 – Income Taxes.

Earnings Per Share – The objective of both basic earnings per share ("EPS") and diluted EPS is to measure the performance of an entity over the reporting period.  The Company presents basic and diluted EPS on the face of the Consolidated Statements of Operations. Basic EPS is computed by dividing income available to common shareholders by the weighted average common shares outstanding for the period.  Diluted EPS is calculated by adding to shares outstanding the additional net effect of potentially dilutive securities or contracts, such as stock options, which could be exercised or converted into common shares.

Recognition of Revenues and Related Expenses - Premiums for traditional life insurance products, which include those products with fixed and guaranteed premiums and benefits, consist principally of whole life insurance policies, and certain annuities with life contingencies are recognized as revenues when due. Limited payment life insurance policies defer gross premiums received in excess of net premiums, which is then recognized in income in a constant relationship with insurance in force. Accident and health insurance premiums are recognized as revenue pro rata over the terms of the policies. Benefits and related expenses associated with the premiums earned are charged to expense proportionately over the lives of the policies through a provision for future policy benefit liabilities and through deferral and amortization of deferred policy acquisition costs. For universal life and investment products, generally there is no requirement for payment of premium other than to maintain account values at a level sufficient to pay mortality and expense charges. Consequently, premiums for universal life policies and investment products are not reported as revenue, but as deposits. Policy fee revenue for universal life policies and investment products consists of charges for the cost of insurance and policy administration fees assessed during the period. Expenses include interest credited to policy account balances and benefit claims incurred in excess of policy account balances.

Recently Issued Accounting Standards

Intangibles-Goodwill and Other – In July 2012, the Financial Accounting Standards Board ("FASB") issued guidance on the testing of indefinite-lived intangible assets for impairment, which is intended to reduce the cost and complexity of the impairment test for indefinite-lived intangible assets by providing an entity with the option to first assess qualitatively whether it is necessary to perform the impairment test that is currently in place. An entity would not be required to quantitatively calculate the fair value of an indefinite-lived intangible asset unless the entity determines that it is more likely than not that its fair value is less than its carrying value. This guidance is effective for interim and annual impairment tests beginning after September 15, 2012, with early adoption permitted. The adoption of this guidance did not have a material effect on the Company's consolidated financial statements.

Comprehensive Income - In June and December 2011, the FASB issued guidance that requires all non-owner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. For public entities, the amendments were effective for fiscal years and interim periods within those years, beginning after December 15, 2011 and should be applied retrospectively. This standard only affected the Company's presentation of comprehensive income.

Fair Value Measurement - In May 2011, the FASB issued guidance to achieve common fair value measurement and disclosure requirements in U.S. GAAP and IFRS. Some of the amendments in this update clarify the FASB's intent about the application of certain existing fair value measurement requirements and other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. None of the amendments in this update require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting. For public entities, this guidance was effective during interim and annual periods beginning after December 15, 2011. The adoption of this guidance, effective January 1, 2012, did not have a material effect on the Company's consolidated financial statements.

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Income Statement (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Revenues:
Premiums and policy fees	$ 13,276,880	$ 14,082,400
Ceded reinsurance premiums and policy fees	(3,365,796)	(3,935,191)
Net investment income	18,519,257	11,198,165
Other income	2,098,642	2,055,502
Revenues before realized gains	30,528,983	23,400,876
Other-than-temporary impairments	(187,405)	(4,342,784)
Other realized investment gains, net	14,492,717	15,905,413
Total realized investment gains, net	14,305,312	11,562,629
Total revenues	44,834,295	34,963,505
Benefits and other expenses:
Life	21,436,471	20,539,432
Ceded Reinsurance benefits and claims	(4,223,621)	(3,843,351)
Annuity	1,074,622	1,044,455
Dividends to policyholders	501,070	514,268
Commissions and amortization of deferred policy acquisition costs	(443,102)	(941,581)
Amortization of cost of insurance acquired	1,145,501	1,231,015
Operating expenses	9,604,668	8,389,781
Interest expense	296,868	260,540
Total benefits and other expenses	29,392,477	27,194,559
Income before income taxes	15,441,818	7,768,946
Income tax expense	(5,494,382)	(1,265,662)
Net income	9,947,436	6,503,284
Net income attributable to noncontrolling interests	(681,805)	(186,669)
Net income attributable to common shareholders'	$ 9,265,631	$ 6,316,615
Basic income per share (in dollars per share)	$ 2.43	$ 1.65
Diluted income per share (in dollars per share)	$ 2.43	$ 1.65
Basic weighted average shares outstanding (in shares)	3,809,639	3,824,444
Diluted weighted average shares outstanding (in shares)	3,809,639	3,824,444

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RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2012

RELATED PARTY TRANSACTIONS [Abstract]

RELATED PARTY TRANSACTIONS

Note 11 – Related Party Transactions

On February 20, 2003, UG purchased $4,000,000 of a trust preferred security offering issued by First Southern Bancorp, Inc. ("FSBI").  The security has a mandatory redemption after 30 years with a call provision after 5 years.  The security pays a quarterly dividend at a fixed rate of 6.515%.  The Company received dividends of $264,943 and $264,219 during 2012 and 2011, respectively.  On March 30, 2009, UG purchased $1,000,000 of FSBI common stock.  The sale and transfer of this security is restricted by the provisions of a stock restriction and buy-sell agreement.

On November 14, 2011, UTG, Inc. merged with ACAP. Shareholders of ACAP received shares of UTG in exchange for their ACAP shares. ACAP was a 73% owned subsidiary of UG. The merger reduced the corporate structure and provided certain efficiencies and economies to the Companies.  All ACAP shareholders, other than UTG or UG, have the right to receive 233 shares of UTG common stock for each share of ACAP common stock they owned at closing.  Under the terms of the exchange ratio, UTG issued 50,328 shares to former ACAP shareholders.  An additional 129,548 UTG shares were not issued due to dissenting ACAP shareholders.  See Note 8 - Commitments and Contingencies for additional information regarding the ACAP dissenting shareholders.

On September 28, 2011 UTG entered a joint ownership agreement with Bandyco, LLC and First Southern National Bank, for an 8.08% interest in an aircraft. Bandyco, LLC is affiliated with Ward F Correll, who is a director of the Company. The Company was responsible for an initial payment of $150,000 on September 30, 2011, along with a $125,000 payment on October 30, 2011. The Company pays a monthly operational fee of $25,000 starting in November 2011 and lasting through July 2016. The aircraft is issued for business related travel by various officers and employees of the Company. For years 2012 and 2011 UTG paid $573,393 and $392,227 for costs associated with the aircraft.

Effective January 1, 2007, UTG entered into administrative services and cost sharing agreements with its subsidiary.  Under this arrangement, the subsidiary pays its proportionate share of expenses, based on an allocation formula.  During 2012 and 2011, UG paid $8,843,596 and $7,185,037, respectively, in expenses. The Ohio Department of Insurance has approved the cost sharing agreement and it is Management's opinion that where applicable, costs have been allocated fairly and such allocations are based upon accounting principles generally accepted in the United States of America.

The Company from time to time acquires mortgage loans through participation agreements with FSNB.  FSNB services the Company's mortgage loans including those covered by the participation agreements.  The Company pays a .25% servicing fee on these loans and a one-time fee at loan origination of .50% of the original loan amount to cover costs incurred by FSNB relating to the processing and establishment of the loan.  The Company paid $102,447 and $136,457 in servicing fees and $81,851 and $89,651 in origination fees to FSNB during 2012 and 2011, respectively.

The Company reimbursed expenses incurred by employees of FSNB relating to travel and other costs incurred on behalf of or relating to the Company.  The Company paid $90,939 and $15,392 in 2012 and 2011, respectively to FSNB in reimbursement of such costs.  In addition, the Company began reimbursing FSNB a portion of salaries and pension costs for Mr. Correll, Mr. Ditto and a third employee.  The reimbursement was approved by the UTG Board of Directors and totaled $462,819 and $348,610 in 2012 and 2011, respectively, which included salaries and other benefits.

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2012	Feb. 01, 2013	Jun. 30, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	UTG Inc
Entity Central Index Key	0000832480
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	No
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 18,154,912
Entity Common Stock, Shares Outstanding		3,797,391
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2012

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OTHER CASH FLOW DISCLOSURES

12 Months Ended

Dec. 31, 2012

OTHER CASH FLOW DISCLOSURES [Abstract]

OTHER CASH FLOW DISCLOSURES

Note 12 – Other Cash Flow Disclosures

On a cash basis, the Company paid the following expenses for the periods ended December 31:

		2012		2011
Interest expense	$	215,255	$	251,791
Federal income tax		3,413,081		5,801,521

At the end of August 2012, the reinsurance agreement with Canada Life Assurance Company was fully repaid.  At that time, the reserves were recaptured through elimination of reinsurance recoverable in exchange for assets received equal to the recaptured reserves.  The following table reflects the breakdown of the assets received.

		Assets Received
Bonds	$	27,651,746
Common Stock		1,023,394
Cash		2,480,706
Total	$	31,155,846

The non-cash acquisitions of bonds and common stock resulting from the recapture of reinsurance have been excluded from the accompanying statements of cash flows.

During 2011, the Company closed on an ACAP share for UTG share transaction. All ACAP shareholders, other than UTG or UG, have the right to receive 233 shares of UTG common stock for each share of ACAP common stock they owned at closing.  Accordingly, the Company no longer reports a non-controlling interest component of equity for the minority ownership in ACAP. The difference between the carrying value of the non-controlling interest and the consideration received was recorded as a non-cash flow increase to additional paid-in capital of $4,100,000.

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Condensed Consolidated Statement of Comprehensive Income (Unaudited) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Condensed Consolidated Statement of Comprehensive Income (Unaudited) [Abstract]
Net Income	$ 9,947,436	$ 6,503,284
Other comprehensive income, net of tax
Unrealized holding gains/(losses) arising during period	3,978,086	14,578,037
Less reclassification adjustment for (gains)/losses included in net income	(6,105,834)	(5,794,092)
Subtotal: Other comprehensive income (loss), net of tax	(2,127,748)	8,783,945
Comprehensive income	7,819,688	15,287,229
Less comprehensive income attributable to noncontrolling interests	(681,805)	(858,084)
Comprehensive income attributable to UTG, Inc.	$ 7,137,883	$ 14,429,145

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INCOME TAXES

12 Months Ended

Dec. 31, 2012

INCOME TAXES [Abstract]

INCOME TAXES

Note 6 – Income Taxes

UTG and UG file separate federal income tax returns.

Income tax expense (benefit) consists of the following components:

		2012		2011
Current tax	$	5,716,480	$	5,296,407
Deferred tax		(222,098)		(4,030,745)
	$	5,494,382	$	1,265,662

The expense for income differed from the amounts computed by applying the applicable United States statutory rate of 35% before income taxes as a result of the following differences:

		2012		2011
Tax computed at statutory rate	$	5,404,636	$	2,719,131
Changes in taxes due to:
Non-controlling interest		(238,632)		(65,334)
Small company deduction		0		(623,767)
Other		328,378		(764,368)
Income tax expense (benefit)	$	5,494,382	$	1,265,662

The following table summarizes the major components that comprise the deferred tax liability as reflected in the balance sheets:

		2012		2011
Investments	$	4,644,740	$	5,519,570
Cost of insurance acquired		4,095,268		4,496,193
Deferred policy acquisition costs		149,176		170,893
Management/consulting fees		(66,344)		(70,554)
Future policy benefits		2,137,835		2,447,327
Deferred gain on sale of subsidiary		2,312,483		2,312,483
Other liabilities		(63,967)		(120,039)
Federal tax DAC		(907,614)		(1,010,122)
Deferred tax liability	$	12,301,577	$	13,745,751

At December 31, 2012 and 2011, respectively, the Company had gross deferred tax assets of $2,793,932 and $2,879,079, and gross deferred tax liabilities of $15,095,508 and $16,624,830, resulting from temporary differences primarily related to the life insurance subsidiary.  A valuation allowance is to be provided when it is more likely than not that deferred tax assets will not be realized by the Company. No valuation allowance has been recorded relating to the Company's deferred tax assets since, in Management's judgment, the Company will more likely than not have sufficient taxable income in future periods to fully realize its existing deferred tax assets.

The Company's Federal income tax returns are periodically audited by the Internal Revenue Service ("IRS").  In February 2011, the IRS audited UTG's 2009 federal income tax return.  The examination was closed with no adjustments to the return.  There are currently no examinations in process, nor is Management aware of any pending examination by the IRS.  The statutes of limitation for the assessments of additional tax are closed for all tax years prior to 2009.  Management believes that adequate provision has been made in the consolidated financial statements for any potential assessments that may result from future tax examinations and other tax-related matters for all open tax years.

The Company classifies interest and penalties on underpayment of income taxes as income tax expense.  No interest or penalties were included in the reported income taxes for the years presented.  The Company is not aware of any potential or proposed changes to any of its tax filings.

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COST OF INSURANCE ACQUIRED

12 Months Ended

Dec. 31, 2012

Cost of Insurance Acquired [Abstract]

Schedule of cost of insurance acquired [Table Text Block]

Note 5 – Cost of Insurance Acquired

When an insurance company is acquired, the Company assigns a portion of its cost to the right to receive future cash flows from insurance contracts existing at the date of the acquisition.  The cost of policies purchased represents the actuarially determined present value of the projected future profits from the acquired policies.  Cost of insurance acquired is amortized with interest in relation to expected future profits, including direct charge-offs for any excess of the unamortized asset over the projected future profits.  The interest rates utilized may vary due to differences in the blocks of business.  The interest rate utilized in the amortization calculation of the remaining cost of insurance acquired is 12%.  The amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised.

		2012		2011
Cost of insurance acquired, beginning of year	$	12,846,266	$	14,077,281
Interest accretion		1,564,162		1,711,885
Amortization		(2,709,663)		(2,942,900)
Net amortization		(1,145,501)		(1,231,015)
Cost of insurance acquired, end of year	$	11,700,765	$	12,846,266

Estimated net amortization expense of cost of insurance acquired for the next five years is as follows:

	Interest Accretion	Amortization	Net Amortization
2013	1,427,000	2,491,000	1,064,000
2014	1,299,000	2,285,000	986,000
2015	1,181,000	2,088,000	907,000
2016	1,072,000	1,945,000	873,000
2017	967,000	1,806,000	839,000

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REINSURANCE (Tables)

12 Months Ended

Dec. 31, 2012

REINSURANCE [Abstract]

Effect of long duration reinsurance contracts on premiums earned

The Company does not have any short-duration reinsurance contracts.  The effect of the Company's long-duration reinsurance contracts on premiums earned in 2012 and 2011 were as follows:

		2012 Premiums Earned		2011 Premiums Earned
Direct	$	13,242,000	$	14,049,000
Assumed		35,000		33,000
Ceded		(3,366,000)		(3,935,000)
Net Premiums	$	9,911,000	$	10,147,000

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CONCENTRATIONS

12 Months Ended

Dec. 31, 2012

CONCENTRATIONS [Abstract]

CONCENTRATIONS

Note 13 - Concentrations

The Company maintains cash balances in financial institutions that at times may exceed federally insured limits.  The Company maintains its primary operating cash accounts with First Southern National Bank, an affiliate of the largest shareholder of UTG, Mr. Jesse T. Correll, the Company's CEO and Chairman.  The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Because UTG serves primarily individuals located in four states, the ability of our customers to pay their insurance premiums is impacted by the economic conditions in these areas.  As of December 31, 2012, approximately 55% of the Company's total direct premium was collected from Illinois, Ohio, Texas and West Virginia. As of December 31, 2011, approximately 52% of the Company's total direct premium was collected from Illinois, Louisiana, Ohio and Texas.  Thus, results of operations are heavily dependent upon the strength of these economies.

The Company reinsures that portion of insurance risk which is in excess of its retention limits.  Retention limits range up to $125,000 per life.  Life insurance ceded represented 21% and 24% of total life insurance in force at December 31, 2012 and 2011, respectively.  Insurance ceded represented 25% and 28% of premium income for 2012 and 2011, respectively.  The Company would be liable for the reinsured risks ceded to other companies to the extent that such reinsuring companies are unable to meet their obligations.

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SHAREHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2012

CAPITAL STOCK TRANSACTIONS [Abstract]

CAPITAL STOCK TRANSACTIONS

Note 9 – Shareholders' Equity

Stock Repurchase Program – The Board of Directors of UTG authorized the repurchase in the open market or in privately negotiated transactions of UTG's common stock. During September 2012, the Board of Directors approved a resolution to increase the repurchase amount by $1 million, for a total repurchase of $6 million.  Repurchased shares are available for future issuance for general corporate purposes.  This program can be terminated at any time.  Open market purchases are made based on the last available market price and are generally limited to a maximum per share price of the most recent reported per share GAAP equity book value of the Company.  During the current year, the Company repurchased 71,964 common shares through the stock repurchase program for $928,902.   Through December 31, 2012, UTG has spent $4,611,696 in the acquisition of 562,690 shares under this program.

ACAP Merger - On November 14, 2011, ACAP was merged into UTG.  The merger was a share exchange with ACAP shareholders receiving 233 UTG shares for each ACAP share held.  UTG issued 50,328 shares of common stock under this transaction.

Executive Compensation – In December 2012, the Company issued 16,225 shares of its common stock to certain members of management as part of year-end bonuses based on 2012 operating results.  The shares were valued at $13.25 per share, the market value at the date of issue.  The Company recorded $214,981 in operating expenses related to this stock issuance.

Earnings Per Share - The following is a reconciliation of basic and diluted weighted average shares outstanding used in the computation of basic and diluted earnings per share:

	2012	2011
Basic weighted average shares outstanding	3,809,639	3,824,444
Weighted average dilutive options outstanding	0	0
Diluted weighted average shares outstanding	3,809,639	3,824,444

The computation of diluted earnings per share is the same as basic earnings per share for the years ending December 31, 2012 and 2011, as there were no outstanding securities, options or other offers that give the right to receive or acquire common shares of UTG.

Statutory Restrictions – Restrictions exist on the flow of funds to UTG from its insurance subsidiary.  Statutory regulations require life insurance subsidiaries to maintain certain minimum amounts of capital and surplus. UG is required to maintain minimum statutory surplus of $2,500,000. At December 31, 2012, substantially all of the consolidated shareholders' equity represents net assets of UTG's subsidiaries.

UG is domiciled in the state of Ohio. Ohio requires notification within five business days to the insurance commissioner following the declaration of any ordinary dividend and at least ten calendar days prior to payment of such dividend.  Ordinary dividends are defined as the greater of: a) prior year statutory net income or b) 10% of statutory capital and surplus.  Extraordinary dividends (amounts in excess of ordinary dividend limitations) require prior approval of the insurance commissioner and are not restricted to a specific calculation.  UG paid ordinary dividends of $3,316,722 and $3,530,000 to UTG in 2012 and 2011, respectively. No extraordinary dividends were paid during the two year period.

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CREDIT ARRANGEMENTS

12 Months Ended

Dec. 31, 2012

NOTES PAYABLE [Abstract]

NOTES PAYABLE

Note 7 – Credit Arrangements

At December 31, 2012 and 2011, the Company had the following outstanding debt:

				Outstanding Principal Balance
Instrument	Issue Date	Maturity Date		December 31, 2012		December 31, 2011
Promissory Note:
UTG	2006-12-08	2012-12-07	$	0	$	3,291,411
HPG Acquisitions	2007-02-07	2017-11-07		202,919		240,234
HPG Acquisitions	2012-12-27	2018-03-04		12,000,000		0

Instrument	Issue Date	Maturity Date		Revolving Credit Limit		December 31, 2011	Borrowings	Repayments		December 31, 2012
Lines of Credit:
UTG	2011-07-14	2012-12-07	$	5,000,000	$	1,000,000	1,411,000	2,411,000	$	0
UTG	2012-11-20	2013-11-20		8,000,000		0	2,910,035	1,255,000		1,655,035
UTG Avalon	2011-12-28	2013-01-03		5,000,000		5,000,000	0	0		5,000,000
UG	2010-12-28	2013-12-06		15,000,000		0	0	0		0

The UTG promissory note was secured by the pledge of 100% of the common stock of UG.  The promissory note carried a variable rate of interest based on the 3 month LIBOR rate plus 180 basis points.  Interest was payable quarterly and principal was payable annually beginning at the end of the second year. During the fourth quarter 2012, UTG repaid the outstanding principal balance of this note.

The HPG Acquisitions promissory note issued on February 7, 2007 bears interest at a fixed rate of 5%.

The HPG Acquisitions promissory note issued on December 27, 2012 is secured by real estate owned by HPG. The promissory note bears interest at a fixed rate of 4%. Interest is payable monthly. Principal is payable monthly beginning in the third year of the note.

UTG's line of credit issued on July 14, 2011 had a variable rate of interest based on the 90 day LIBOR rate plus 2.75 percentage points, but at no time would the rate be less than 3.25%. The collateral held on the above promissory note also secured this line of credit.  This line of credit expired on December 7, 2012 and was replaced by a new line of credit.

UTG's line of credit issued November 20, 2012 replaced the line of credit that expired on December 7, 2012.  The line of credit carries interest at a fixed rate of 3.75% and is payable monthly.  As collateral, UTG has pledged 100% of the common voting stock of its wholly owned subsidiary, UG.

The UTG Avalon line of credit carries interest at a rate of 4.0% and is payable in two semi-annual payments.  The UTG Avalon promissory note was renewed on January 3, 2013 and matures on January 3, 2014.

UG is a member of the Federal Home Loan Bank ("FHLB").  This membership allows the Company access to additional credit up to a maximum of 50% of the total assets of UG.  To be a member of the FHLB, the Company was required to purchase shares of common stock of FHLB.  Borrowing capacity is based on 50 times each dollar of stock acquired in FHLB above the "base membership" amount.

The consolidated scheduled principal reductions on the notes payable for the next five years are as follows:

Year		Amount
2013	$	1,686,621
2014		5,034,154
2015		382,395
2016		518,134
2017		542,470

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2012

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

Note 8 – Commitments and Contingencies

The insurance industry has experienced a number of civil jury verdicts which have been returned against life and health insurers in the jurisdictions in which the Company does business involving the insurers' sales practices, alleged agent misconduct, failure to properly supervise agents, and other matters.  Some of the lawsuits have resulted in the award of substantial judgments against the insurer, including material amounts of punitive damages.  In some states, juries have substantial discretion in awarding punitive damages in these circumstances.  In the normal course of business the Company is involved from time to time in various legal actions and other state and federal proceedings. Management is of the opinion that the ultimate disposition of the matters will not have a material adverse effect on the Company's results of operations or financial position.

Under the insurance guaranty fund laws in most states, insurance companies doing business in a participating state can be assessed up to prescribed limits for policyholder losses incurred by insolvent or failed insurance companies.  Although the Company cannot predict the amount of any future assessments, most insurance guaranty fund laws currently provide that an assessment may be excused or deferred if it would threaten an insurer's financial strength.  Mandatory assessments may be partially recovered through a reduction in future premium tax in some states. The Company does not believe such assessments will be materially different from amounts already provided for in the financial statements, though the Company has no control over such assessments.

As part of the Texas Imperial Life Insurance Company sale, the Company remains contingently liable for certain costs pending the outcome of an ongoing race-based audit on Texas Imperial Life Insurance Company by the Texas Department of Insurance.  Under the agreement, the Company is responsible for 100% of the first $50,000 of costs, 90% of the next $50,000, 75% of the third $50,000 and 50% of the costs above $150,000.  Management had conservatively estimated the Company's exposure and other costs at $50,000 based on information provided to date from the examination team and has established a contingent liability of $47,727 in its financial statements.  This contingency expires on December 30, 2013.

Within the Company's trading accounts, certain trading securities carried as liabilities represent securities sold short.  A gain, limited to the price at which the security was sold short, or a loss, potentially unlimited in size, will be recognized upon the termination of the short sale.

On November 9, 2011, ACAP shareholders approved a proposed merger with UTG whereby ACAP shareholders received 233 shares of UTG for each share previously held of ACAP.  On November 14, 2011, the merger was completed.  Certain of the ACAP shareholders dissented to the merger requesting the courts determine the value of the ACAP shares.  The legal case is currently in the discovery phase.  The Company has established a contingent liability of $2,550,822 as of December 31, 2012 and 2011 to cover the anticipated proceeds due to the dissenting shareholders and associated legal and other costs.

The following table represents the total funding commitments and the unfunded commitment as of December 31, 2012 related to certain investments:

		Total Funding		Unfunded
		Commitment		Commitment
RLF III, LLC	$	4,000,000	$	398,120
Llano Music, LLC		2,000,000		571,000
MM-Marcellus III, LP		1,250,000		393,750
Dew Learning, LLC		1,000,000		725,445
MM-Marcellus HBPI, LP		1,800,000		1,113,300
PBEX, LLC		5,625,000		2,818,750
Sovereign's Capital, LP		500,000		250,000

During 2006, the Company committed to invest in RLF III, LLC ("RLF"), which makes land-based investment in undervalued assets. RLF does capital calls as funds are needed for continued land purchases.

During 2010, the Company made a commitment to invest in Llano Music, LLC ("Llano"), which invests in music royalties. Llano does capital calls to its investors as funds are needed to acquire the royalty rights.

During 2011, the Company committed to invest in MM-Marcellus III, LP, which purchases land for leasing opportunities to those looking to harvest natural resources. Marcellus III, LP does capital calls to its investors as funds are needed for continued land purchases.

During 2012, the Company made a commitment to invest in Dew Learning, LLC ("Dew"), which is involved in the marketing and distribution of an electronic education based classroom model. Dew does capital calls to investors as funds are needed for continued development of the program.

During 2012, the Company committed to invest in MM-Marcellus HBPI, LP, which purchases land for leasing opportunities to those looking to harvest natural resources. Marcellus HPBI, LP does capital calls to investors as funds are needed for continued land purchases.

During 2012, the Company committed to invest in PBEX, LLC, which purchases land and mineral rights for leasing opportunities to those looking to harvest natural resources. PBEX, LLC does capital calls to investors as funds are needed for continued land purchases.

During 2012, the Company committed to invest in Sovereign's Capital, LP ("Sovereign's"), which invests in companies in emerging markets. Sovereign's is expected to call the remaining unfunded commitment during 2013.

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STATUTORY ACCOUNTING

12 Months Ended

Dec. 31, 2012

SHAREHOLDERS DIVIDEND RESTRICTION AND MINIMUM STATUTORY CAPITAL [Abstract]

SHAREHOLDERS DIVIDEND RESTRICTION AND MINIMUM STATUTORY CAPITAL

Note 10 - Statutory Accounting

The insurance subsidiary prepares its statutory-based financial statements in accordance with accounting practices prescribed or permitted by the Ohio Department of Insurance.  These principles differ significantly from accounting principles generally accepted in the United States of America.  "Prescribed" statutory accounting practices include state laws, regulations, and general administrative rules, as well as a variety of publications of the National Association of Insurance Commissioners (NAIC).  "Permitted" statutory accounting practices encompass all accounting practices that are not prescribed; such practices may differ from state to state, from company to company within a state, and may change in the future.

The following table reflects UG's statutory basis net income and capital and surplus (shareholders' equity) as of December 31:

		2012		2011
Net income (loss)	$	6,868,111	$	(184,213)
Capital and surplus		32,243,089		33,167,222

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COST OF INSURANCE ACQUIRED (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Cost of insurance acquired [Roll Forward]
Interest rate used in amortization calculation	12.00%
Cost of insurance acquired, beginning of year	$ 12,846,266	$ 14,077,281
Interest accretion	1,564,162	1,711,885
Amortization	(2,709,663)	(2,942,900)
Net amortization	(1,145,501)	(1,231,015)
Cost of insurance acquired, end of year	11,700,765	12,846,266
Estimated net amortization expense of cost of insurance acquired for the next five years [Abstract]
2013 - Estimated interest accretion	1,427,000
2013 - Estimated amortization	2,491,000
2013 - Estimated net amortization	1,064,000
2014 - Estimated interest accretion	1,299,000
2014 - Estimated amortization	2,285,000
2014 - Estimated net amortization	986,000
2015 - Estimated interest accretion	1,181,000
2015 - Estimated amortization	2,088,000
2015 - Estimated net amortization	907,000
2016 - Estimated interest accretion	1,072,000
2016 - Estimated amortization	1,945,000
2016 - Estimated net amortization	873,000
2017 - Estimated interest accretion	967,000
2017 - Estimated amortization	1,806,000
2017 - Estimated net amortization	$ 839,000

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INVESTMENTS (Tables)

12 Months Ended

Dec. 31, 2012

INVESTMENTS [Abstract]

Amortized cost and estimated values of investments in securities including investments held for sale

The following tables provide a summary of fixed maturities available for sale and equity securities by original or amortized cost and estimated fair value:

December 31, 2012		Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Investments available for sale:
Fixed maturities
U.S. Government and govt. agencies and authorities	$	33,430,165	$	5,457,009	$	0	$	38,887,174
States, municipalities and political subdivisions		160,000		6,637		0		166,637
U.S. special revenue and assessments		2,150,070		153,545		0		2,303,615
Collateralized mortgage obligations		2,241,384		183,409		(8)		2,424,785
Public utilities		399,900		63,662		0		463,562
All other corporate bonds		135,145,198		9,747,565		(1,811,251)		143,081,512
		173,526,717		15,611,827		(1,811,259)		187,327,285
Equity securities		29,497,001		1,303,328		(295,415)		30,504,914
Total	$	203,023,718	$	16,915,155	$	(2,106,674)	$	217,832,199

December 31, 2011		Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Investments available for sale:
Fixed maturities
U.S. Government and govt. agencies and authorities	$	56,794,363	$	13,805,565	$	0	$	70,599,928
States, municipalities and political subdivisions		235,000		6,317		0		241,317
Collateralized mortgage obligations		750,944		11,756		(2,973)		759,727
Public utilities		399,887		62,188		0		462,075
All other corporate bonds		49,334,206		4,901,684		(1,715,760)		52,520,130
		107,514,400		18,787,510		(1,718,733)		124,583,177
Equity securities		16,200,043		1,216,286		(116,701)		17,299,628
Total	$	123,714,443	$	20,003,796	$	(1,835,434)	$	141,882,805

Amortized cost and estimated market value of debt securities, by contractual maturity

The following table provides a summary of fixed maturities by contractual maturity as of December 31, 2012.  Actual maturities could differ from contractual maturities due to call or prepayment provisions:

Fixed Maturities Available for Sale December 31, 2012		Amortized Cost		Estimated Fair Value
Due in one year or less	$	4,067,722	$	4,116,580
Due after one year through five years		22,420,385		24,718,707
Due after five years through ten years		105,150,475		113,890,802
Due after ten years		39,643,584		42,173,173
Collateralized mortgage obligations		2,244,551		2,428,023
Total	$	173,526,717	$	187,327,285

Fair value of investments with sustained gross unrealized losses

The fair value of investments with sustained gross unrealized losses at December 31, 2012 and 2011 are as follows:

December 31, 2012		Less than 12 months			12 months or longer			Total
		Fair value	Unrealized losses		Fair value	Unrealized losses		Fair value	Unrealized losses
Collateralized mortgage obligations	$	4,513	(8)	$	0	0	$	4,513	(8)
All other corporate bonds		13,776,705	(245,846)		385,823	(1,565,405)		14,162,528	(1,811,251)
Total fixed maturities	$	13,781,218	(245,854)	$	385,823	(1,565,405)	$	14,167,041	(1,811,259)
Equity securities	$	594,081	(295,415)	$	0	0	$	594,081	(295,415)

December 31, 2011		Less than 12 months			12 months or longer			Total
		Fair value	Unrealized losses		Fair value	Unrealized losses		Fair value	Unrealized losses
Collateralized mortgage obligations	$	7,008	(36)	$	97,868	(2,937)	$	104,876	(2,973)
All other corporate bonds		3,915,393	(17,574)		1,268,583	(1,698,186)		5,183,976	(1,715,760)
Total fixed maturities	$	3,922,401	(17,610)	$	1,366,451	(1,701,123)	$	5,288,852	(1,718,733)
Equity securities	$	848,032	(55,141)	$	292,441	(61,560)	$	1,140,473	(116,701)

The following table provides additional information regarding the number of securities that were in an unrealized loss position for greater than or less than twelve months:

	Less than 12  months	12 months or  longer	Total
As of December 31, 2012
Fixed maturities	8	3	11
Equity securities	9	0	9
As of December 31, 2011
Fixed maturities	5	6	11
Equity securities	2	1	3

Trading revenue charged to investment

The following table reflects trading securities revenue charged to net investment income for the periods ended December 31:

		2012		2011
Net unrealized gains (losses)	$	(352,761)	$	(1,604,757)
Net realized gains (losses)		2,918,279		(737,328)
Net unrealized and realized gains (losses)	$	2,565,518	$	(2,342,085)

Discounted mortgage holdings

The following table summarizes the number loans held in the discounted mortgage loan portfolio and the carrying value of the loans as of December 31, 2012:

Payment Frequency	Number of Loans		Carrying Value
No payments received	13	$	5,558,962
One-time payment received	3		0
Irregular payments received	17		7,681,387
Regular payments received	23		13,096,604
Total	56	$	26,336,953

The following table summarizes discounted mortgage loan holdings of the Company for the periods ended December 31:

		2012		2011
In good standing	$	3,945,701	$	6,657,971
Overdue interest over 90 days		3,368,750		5,907,192
Restructured		7,685,690		7,726,156
In process of foreclosure		11,336,812		7,176,601
Total discounted mortgage loans	$	26,336,953	$	27,467,920
Total foreclosed discounted mortgage loans during the year	$	2,603,017	$	21,059,386

Schedule of Net Investment Income

The following table reflects the Company's net investment income for the periods ended December 31:

		2012		2011
Fixed maturities	$	7,490,812	$	4,277,019
Equity securities		1,745,375		971,008
Trading securities		2,565,518		(2,342,085)
Mortgage loans		1,022,895		645,838
Discounted mortgage loans		4,186,155		8,231,832
Real estate		8,384,417		6,820,847
Policy loans		809,885		807,389
Short-term investments		0		156,527
Cash and cash equivalents		7,647		8,396
Total consolidated investment income		26,212,704		19,576,771
Investment expenses		(7,693,447)		(8,378,606)
Consolidated net investment income	$	18,519,257	$	11,198,165

Net realized investment gains losses

The following table reflects the Company's net realized investments gains and losses for the periods ended December 31:

2012		Gross Realized Gains		Gross Realized (Losses)		Net Realized Gains (Losses)
Fixed maturities	$	9,816,015	$	(409,745)	$	9,406,270
Real estate		4,533,747		(14,194)		4,519,553
Common stock		566,894		0		566,894
Fixed maturities – OTTI		0		(12,680)		(12,680)
Common stock – OTTI		0		(174,725)		(174,725)
Total realized gains (losses)	$	14,916,656	$	(611,344)	$	14,305,312

2011		Gross Realized Gains		Gross Realized (Losses)		Net Realized Gains (Losses)
Fixed maturities	$	9,290,554	$	(376,567)	$	8,913,987
Equity securities		0		(126,193)		(126,193)
Real estate		7,371,693		(50,634)		7,321,059
Mortgage loans		0		(203,440)		(203,440)
Real estate – OTTI		0		(3,360,430)		(3,360,430)
Mortgage loans – OTTI		0		(982,354)		(982,354)
Total realized gains (losses)	$	16,662,247	$	(5,099,618)	$	11,562,629

Other than temporary impairments

Based on Management's review of the investment portfolio, the Company recorded the following losses for other-than-temporary impairments in the Consolidated Statements of Operations for the periods ended December 31:

		2012		2011
Other than temporary impairments:
Common stock	$	174,725	$	0
Discounted mortgage loans		0		982,354
Real estate		0		3,360,430
States, municipalities and political subdivisions		12,680		0
Total other than temporary impairments	$	187,405	$	4,342,784

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CREDIT ARRANGEMENTS (Tables)

12 Months Ended

Dec. 31, 2012

NOTES PAYABLE [Abstract]

Schedule of promissory note

At December 31, 2012 and 2011, the Company had the following outstanding debt:

				Outstanding Principal Balance
Instrument	Issue Date	Maturity Date		December 31, 2012		December 31, 2011
Promissory Note:
UTG	2006-12-08	2012-12-07	$	0	$	3,291,411
HPG Acquisitions	2007-02-07	2017-11-07		202,919		240,234
HPG Acquisitions	2012-12-27	2018-03-04		12,000,000		0

Schedule of lines of credit

Instrument	Issue Date	Maturity Date		Revolving Credit Limit		December 31, 2011	Borrowings	Repayments		December 31, 2012
Lines of Credit:
UTG	2011-07-14	2012-12-07	$	5,000,000	$	1,000,000	1,411,000	2,411,000	$	0
UTG	2012-11-20	2013-11-20		8,000,000		0	2,910,035	1,255,000		1,655,035
UTG Avalon	2011-12-28	2013-01-03		5,000,000		5,000,000	0	0		5,000,000
UG	2010-12-28	2013-12-06		15,000,000		0	0	0		0

Scheduled principal reduction on notes payable for the next five years

The consolidated scheduled principal reductions on the notes payable for the next five years are as follows:

Year		Amount
2013	$	1,686,621
2014		5,034,154
2015		382,395
2016		518,134
2017		542,470

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OTHER CASH FLOW DISCLOSURES (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
OTHER CASH FLOW DISCLOSURES [Abstract]
Interest expense paid	$ 215,255	$ 251,791
Federal income tax	3,413,081	5,801,521
Bonds	27,651,746
Common Stock	1,023,394
Cash	2,480,706
Total reinsurance assets received	31,155,846
Share Conversion	233
Non controlling interest carrying value versus consideration received	$ 4,100,000

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Statement of Shareholders' Equity (USD $)	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Noncontrolling Interest [Member]
Balance, beginning of year at Dec. 31, 2010	$ 65,127,757	$ 3,848	$ 41,432,636	$ 6,335,072	$ 3,679,684	$ 13,676,517
Issued during year	4,094,526	50	4,094,476	0	0	0
Treasury shares acquired and retired	(475,547)	(43)	(475,504)	0	0	0
Net income attributable to common shareholders	6,316,615	0	0	6,316,615	0	0
Unrealized holding income (loss) on securities net of noncontrolling and reclassification adjustment and taxes	8,112,530	0	0	0	8,112,530	0
Distributions	(3,131,271)	0	0	0	0	(3,131,271)
Noncontrolling Interest, Decrease from Redemptions or Purchase of Interests	(6,895,546)	0	0	0	0
Noncontrolling Interest, Increase from Business Combination	1,777,900	0	0	0	0
Gain attributable to noncontrolling interest	858,084	0	0	0	0	858,084
Balance, end of period at Dec. 31, 2011	75,785,048	3,855	45,051,608	12,651,687	11,792,214	6,285,684
Issued during year	214,981	16	214,965	0	0	0
Treasury shares acquired and retired	(928,902)	(72)	(928,830)	0	0	0
Net income attributable to common shareholders	9,265,631	0	0	9,265,631	0	0
Unrealized holding income (loss) on securities net of noncontrolling and reclassification adjustment and taxes	(2,127,748)	0	0	0	(2,127,748)	0
Distributions	(3,236,187)	0	0	0	0	(3,236,187)
Gain attributable to noncontrolling interest	681,805	0	0	0	0	681,805
Balance, end of period at Dec. 31, 2012	$ 79,654,628	$ 3,799	$ 44,337,743	$ 21,917,318	$ 9,664,466	$ 3,731,302

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REINSURANCE

12 Months Ended

Dec. 31, 2012

REINSURANCE [Abstract]

REINSURANCE

Note 4 - Reinsurance

As is customary in the insurance industry, the insurance subsidiary cedes insurance to, and assumes insurance from, other insurance companies under reinsurance agreements.  Reinsurance agreements are intended to limit a life insurer's maximum loss on a large or unusually hazardous risk or to obtain a greater diversification of risk.  The ceding insurance company remains primarily liable with respect to ceded insurance should any reinsurer be unable to meet the obligations assumed by it.  However, it is the practice of insurers to reduce their exposure to loss to the extent that they have been reinsured with other insurance companies.  The Company sets a limit on the amount of insurance retained on the life of any one person.  The Company will not retain more than $125,000, including accidental death benefits, on any one life.  At December 31, 2012, the Company had gross insurance in force of $1.6 billion of which approximately $335 million was ceded to reinsurers.  At December 31, 2011, the Company had gross insurance in force of $1.7 billion of which approximately $401 million was ceded to reinsurers.

The Company's reinsured business is ceded to numerous reinsurers.  The Company monitors the solvency of its reinsurers in seeking to minimize the risk of loss in the event of a failure by one of the parties.  The Company is primarily liable to the insureds even if the reinsurers are unable to meet their obligations.  The primary reinsurers of the Company are large, well-capitalized entities.

Most recently, UG utilized reinsurance agreements with Optimum Re Insurance Company ("Optimum"), and Swiss Re Life and Health America Incorporated ("SWISS RE").  Optimum and SWISS RE currently hold an "A-" (Excellent) and "A+" (Superior) rating, respectively, from A.M. Best, an industry rating company.  The reinsurance agreements were effective December 1, 1993, and covered most new business of UG.  Under the terms of the agreements, UG cedes risk amounts above its retention limit of $100,000 with a minimum cession of $25,000.  Ceded amounts are shared equally between the two reinsurers on a yearly renewable term ("YRT") basis, a common industry method.  The treaty is self-administered; meaning the Company records the reinsurance results and reports them to the reinsurers.

Also, Optimum is the reinsurer of 100% of the accidental death benefits ("ADB") in force of UG.  This coverage is renewable annually at the Company's option.  Optimum specializes in reinsurance agreements with small to mid-size carriers such as UG.

UG entered into a coinsurance agreement with Park Avenue Life Insurance Company ("PALIC") effective September 30, 1996.  Under the terms of the agreement, UG ceded to PALIC substantially all of its then in-force paid-up life insurance policies.  Paid-up life insurance generally refers to non-premium paying life insurance policies.  Under the terms of the agreement, UG sold 100% of the future results of this block of business to PALIC through a coinsurance agreement.  UG continues to administer the business for PALIC and receives a servicing fee through a commission allowance based on the remaining in-force policies each month.  PALIC has the right to assumption reinsure the business, at its option, and transfer the administration.  The Company is not aware of any such plans.  PALIC and its ultimate parent, The Guardian Life Insurance Company of America ("Guardian"), currently hold an "A" (Excellent) and "A++" (Superior) rating, respectively, from A.M. Best.  The PALIC agreement accounts for approximately 63% and 64% of UG's reinsurance reserve credit, as of December 31, 2012 and 2011, respectively.

At December 31, 1992, UG (formerly American Capitol) entered into a reinsurance agreement with Canada Life Assurance Company ("the Canada Life agreement") that fully reinsured virtually all of its traditional life insurance policies. The reinsurer's obligations under the Canada Life agreement were secured by assets withheld by UG representing policy loans and deferred and uncollected premiums related to the reinsured policies. UG continues to administer the reinsured policies. At December 31, 2012, the Canada Life agreement has insurance in-force of approximately $7,433,000, with no reserves being held on that amount.  At December 31, 2011, the Canada Life agreement has insurance in-force of approximately $52,560,000, with reserves being held on that amount of approximately $34,193,000.

On September 30, 1998, UG entered into a coinsurance agreement with The Independent Order of Vikings, (IOV) an Illinois fraternal benefit society.  Under the terms of the agreement, UG agreed to assume, on a coinsurance basis, 25% of the reserves and liabilities arising from all in-force insurance contracts issued by the IOV to its members.  At December 31, 2012, the IOV insurance in-force assumed by UG was approximately $1,579,000, with reserves being held on that amount of approximately $358,000.  At December 31, 2011, the IOV insurance in-force assumed by UG was approximately $1,582,000, with reserves being held on that amount of approximately $365,000.

The Canada Life agreement was fully repaid in August 2012. With the reinsurance recaptured by the Company, a 15% profit share will continue to be paid to the reinsurer going forward relative to the block of business.  As a result of the reinsurance being repaid, the Company recognized assets in exchange for reducing its reinsurance recoverable.  See Note 12 – Other Cash Flow Disclosures for additional information regarding the reinsurance recapture.

The Company does not have any short-duration reinsurance contracts.  The effect of the Company's long-duration reinsurance contracts on premiums earned in 2012 and 2011 were as follows:

		2012 Premiums Earned		2011 Premiums Earned
Direct	$	13,242,000	$	14,049,000
Assumed		35,000		33,000
Ceded		(3,366,000)		(3,935,000)
Net Premiums	$	9,911,000	$	10,147,000

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COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2012

COMMITMENTS AND CONTINGENCIES [Abstract]

Funding commitment and unfunded commitment

The following table represents the total funding commitments and the unfunded commitment as of December 31, 2012 related to certain investments:

		Total Funding		Unfunded
		Commitment		Commitment
RLF III, LLC	$	4,000,000	$	398,120
Llano Music, LLC		2,000,000		571,000
MM-Marcellus III, LP		1,250,000		393,750
Dew Learning, LLC		1,000,000		725,445
MM-Marcellus HBPI, LP		1,800,000		1,113,300
PBEX, LLC		5,625,000		2,818,750
Sovereign's Capital, LP		500,000		250,000

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SHAREHOLDERS' EQUITY (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
STOCK REPURCHASE PROGRAM [Abstract]
Increase in stock repurchase program authorized amount	$ 1,000,000
Stock repurchase program authorized amount	6,000,000
Treasury Stock, Shares, Acquired	71,964
Amount paid to repurchase shares during the year	928,902
Amount of common stock repurchased	4,611,696
Number of common stock acquired (in shares)	562,690
ACAP MERGER [Abstract]
Number of shares to be received (in shares)	233
Number of shares issued (in shares)	50,328
Stock Issued During Period, Shares, Restricted Stock Award, Gross	16,225
Stock issued during period price per share	$ 13.25
Share-based Compensation, Total	214,981
EARNINGS PER SHARE CALCULATIONS [Abstract]
Basic Shares (Denominator) (in shares)	3,809,639	3,824,444
Effect of Dilutive Securities (Denominator) (in shares)	0	0
Diluted Shares (Denominator) (in shares)	3,809,639	3,824,444
Minimum statutory surplus required to maintain	2,500,000
Period from declaration of ordinary dividend requires notification to insurance commissioner	5
Minimum period prior to payment of dividend requires notification to insurance commissioner	10
Percentage of statutory capital and surplus (in hundredths)	10.00%
Ordinary dividends paid	$ 3,316,722	$ 3,530,000
Period for which no extraordinary dividends paid	2

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SELECTED QUARTERLY FINANCIAL DATA

12 Months Ended

Dec. 31, 2012

SELECTED QUARTERLY FINANCIAL DATA [Abstract]

SELECTED QUARTERLY FINANCIAL DATA [Text Block]

Note 14 – Selected Quarterly Financial Data

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and Item 10(f)(1) of Regulation S-K, the Company has elected to comply with certain scaled disclosure reporting obligations, and therefore does not have to provide the information required by this item.