Note 7 – Credit Arrangements

At December 31, 2013 and 2012, the Company had the following outstanding debt:

			Outstanding Principal Balance
Instrument	Issue Date	Maturity Date	December 31, 2013		December 31, 2012
Promissory Note:
HPG Acquisitions	2/7/2007	11/7/2017	$	0	$	202,919
HPG Acquisitions	12/27/2012	3/4/2018		12,000,000		12,000,000

Instrument	Issue Date	Maturity Date	Revolving Credit Limit		December 31, 2012		Borrowings	Repayments	December 31, 2013

Lines of Credit:
UTG	11/20/2013	11/20/2014	$	8,000,000	$	1,655,035	3,000,000	2,557,501	$	2,097,534
UTG Avalon	1/3/2013	1/3/2014		5,000,000		5,000,000	0	5,000,000		0
UTG Avalon	3/28/2013	3/28/2014		5,000,000		0	5,000,000	0		5,000,000
UG	12/28/2010	12/5/2014		15,000,000		0	0	0		0

The HPG Acquisitions promissory note issued on February 7, 2007 carried interest at a fixed rate of 5%. This promissory note was fully repaid during 2013.

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.

The UTG 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, Universal Guaranty Life Insurance Company ("UG"). The UTG line of credit was fully repaid on July 5, 2013. On October 28, 2013, the Company borrowed $3,000,000 on its line of credit. The funds were used to pay the ACAP dissenting shareholders. See Note 8 for further information regarding this matter.

The UTG Avalon line of credit issued on January 3, 2013 carried interest at a rate of 4.0% and was payable in two semi-annual payments. This line of credit was repaid during March 2013 and replaced by the line of credit described below.

The UTG Avalon line of credit issued on March 28, 2013 currently carries interest at a rate of 4.0% with interest payable in two semi-annual payments. The interest rate is a variable rate that will be 0.50% above the lowest of the U.S. Prime Rates as published in the money section of the Wall Street Journal. The interest rate is subject to change monthly and changes in the interest rate will take effect on the first day of the month following the rate change.

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 Company had no borrowings on this line of credit during 2013 or 2012.

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

Year	Amount

2014	$	7,097,534
2015		345,459
2016		478,193
2017		499,278
2018		10,677,070