Note 5 – Credit Arrangements

At September 30, 2014 and December 31, 2013, the Company had the following outstanding debt:

Outstanding Principal Balance

Instrument

Issue Date

Maturity Date

September 30, 2014

December 31, 2013

Promissory Note:

HPG Acquisitions

12/27/2012

3/4/2018

12,000,000

Instrument	Issue Date	Maturity Date		Revolving Credit Limit		December 31, 2013	Borrowings	Repayments		September 30, 2014
Lines of Credit:
UTG	11/20/2013	11/20/2014	$	8,000,000	$	2,097,534	1,600,000	900,000	$	2,797,534
UTG Avalon	3/28/2013	3/28/2015		5,000,000		5,000,000	0	600,000		4,400,000
UG	12/28/2010	12/5/2014		15,000,000		0	0	0		0

The HPG Acquisitions, LLC ("HPG") 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 4.00 %. 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"). .During July of 2014, the Company borrowed an additional $1,600,000 on the line of credit. The proceeds were used to purchase an interest in an aircraft. The Company made a principal payment of $1,800,000 on the outstanding line of credit during October of 2014. The Company is currently negotiating the renewal of this line of credit and anticipates the renewal occurring on or before the maturity date of November 20, 2014.

The UTG Avalon, LLC line of credit issued on March 28, 2013 currently carries interest at a rate of 4.00 % with monthly interest 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 with a floor rate of 4%. 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. This line of credit was renewed on March 28, 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

2014	$	2,797,534
2015		4,745,460
2016		478,193
2017		499,277
2018		10,677,070

Note 6 – Shareholders' Equity