10-K

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-K

(Mark One)

[ X ]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2017

[   ]	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 000-52613

FIRST TRINITY FINANCIAL CORPORATION

(Exact name of small business issuer as specified in its charter)

Oklahoma	34-1991436
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer number)

7633 East 63rd Place, Suite 230	Tulsa, Oklahoma	74133-1246
(Address of principal executive offices)

(918) 249-2438

(Issuer's telephone number)

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

Title of Each Class

None

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

Title of Each Class

Common Stock, $.01 Par Value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☐    No  ☒

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

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  ☒    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 Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒  No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of 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.  ☒

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Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” "accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer:  ☐	Accelerated filer:  ☐	Non-accelerated filer:  ☐	Smaller reporting company:☑
Emerging growth company: ☐

If an emerging growth company, indicate by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).

Yes ☐       No ☒

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

Because of the absence of an established trading market for the common stock, the registrant is unable to calculate the aggregate market value of the voting stock held by non-affiliates as of the last business day of the registrant’s most recently completed second fiscal quarter.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.    Common stock $.01 par value as of March 5, 2018: 7,802,593 shares

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive Proxy Statement to be used in connection with its 2018 Annual Meeting of Shareholders, which is expected to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year covered by this Form 10-K, are incorporated by reference into Part III of this report.

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FIRST TRINITY FINANCIAL CORPORATION

TABLE OF CONTENTS

Part I
Item 1.	Business	4
Item 2.	Properties	9
Item 3.	Legal Proceedings	10
Item 4.	Mine Safety Disclosures	10
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities	11
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 8.	Financial Statements	39
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	82
Item 9A.	Controls and Procedures	82
Item 9B.	Other Information	83
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	83
Item 11.	Executive Compensation	83
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	83
Item 13.	Certain Relationships and Related Transactions, and Director Independence	83
Item 14.	Principal Accounting Fees and Services	83
Item 15.	Exhibits	83
Signatures		84
Exhibit Index		85

Exhibit 21.1

Exhibit 31.1

Exhibit 31.2

Exhibit 32.1

Exhibit 32.2

Exhibit No. 101.INS

Exhibit No. 101.SCH

Exhibit No. 101.CAL

Exhibit No. 101.DEF

Exhibit No. 101.LAB

Exhibit No. 101.PRE

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PART I

Item 1. Business

Business Development

First Trinity Financial Corporation (the “Company” or “FTFC”) is the parent holding company of Trinity Life Insurance Company (“TLIC”), Family Benefit Life Insurance Company (“FBLIC”) and First Trinity Capital Corporation (“FTCC”). The Company was incorporated in Oklahoma on April 19, 2004, for the primary purpose of organizing a life insurance subsidiary.

The Company owns 100% of TLIC. TLIC owns 100% of FBLIC. TLIC and FBLIC are primarily engaged in the business of marketing, underwriting and distributing a broad range of individual life insurance products and annuity contracts to individuals.

TLIC’s and FBLIC’s current product portfolio consists of a modified premium whole life insurance policy with a flexible premium deferred annuity rider, whole life, term, final expense, accidental death and dismemberment policies and annuity contracts. The term products are both renewable and convertible and issued for 10, 15, 20 and 30 years. They can be issued with premiums fully guaranteed for the entire term period or with a limited premium guarantee. The final expense is issued as either a simplified issue or as a graded benefit, determined by underwriting. The TLIC and FBLIC products are sold through independent agents.

TLIC is licensed in the states of Illinois, Kansas, Kentucky, Nebraska, North Dakota, Ohio, Oklahoma and Texas.FBLIC is licensed in the states of Alabama, Arizona, Arkansas, Colorado, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Nebraska, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Virginia and West Virginia.

The Company owns 100% of FTCC that was incorporated in 2006, and began operations in January 2007. FTCC provided financing for casualty insurance premiums for individuals and companies and was licensed to conduct premium financing business in the states of Alabama, Arkansas, Louisiana, Mississippi and Oklahoma. FTCC has made no premium financing loans since June 30, 2012.

Company Capitalization

Our operations have been financed primarily through the private placement of equity securities and intrastate public stock offerings. Through December 31, 2017, we have received $27,119,480 from the sale of our shares.

The Company raised $1,450,000 from two private placements during 2004 and $25,669,480 from two public stock offerings and one private placement stock offering from June 22, 2005 through February 23, 2007; June 29, 2010 through April 30, 2012 and August 15, 2012 through March 8, 2013. The Company issued 7,347,488 shares of its common stock and incurred $3,624,518 of offering costs during these private placements and public stock offerings.

Our operations have been profitable and have generated $13,890,213 of net income from operations since we were incorporated in 2004. The Company also issued 702,685 shares of its common stock in connection with two stock dividends paid to shareholders in 2011 and 2012 that resulted in accumulated earnings being charged $5,270,138 with an offsetting credit of $5,270,138 to common stock and additional paid-in capital.

The historic impact of these two stock dividend charges of $5,270,138 decreased the balance of accumulated earnings during 2011 and 2012 and resulted in a reported balance as of December 31, 2017 of $8,620,075, as shown in the accumulated earnings caption in the December 31, 2017 consolidated statement of financial position.

The Company has also purchased 247,580 shares of treasury stock at a cost of $893,947 from former members of the Board of Directors and others including the former Chairman of the Board of Directors, a former agent, the former spouse of the Company’s Chairman, Chief Executive Officer and President and a charitable organization where a former member of the Board of Directors had donated shares of the Company’s common stock.

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Acquisitions

On December 23, 2008, FTFC acquired 100% of the outstanding common stock of First Life America Corporation (“FLAC”) from an unaffiliated company. The acquisition of FLAC was accounted for as a purchase. The aggregate purchase price for FLAC was $2,695,234 including direct cost associated with the acquisition of $195,234. The acquisition of FLAC was financed with the working capital of FTFC.

On December 31, 2008, FTFC made FLAC a 15 year loan in the form of a surplus note in the amount of $250,000 with an interest rate of 6% payable monthly, that was approved by the Oklahoma Insurance Department (“OID”). This surplus note is eliminated in consolidation.

On August 31, 2009, two of the Company’s subsidiaries, Trinity Life Insurance Company (“Old TLIC”) and FLAC, were merged, with FLAC being the surviving company. Immediately following the merger, FLAC changed its name to TLIC.

On December 28, 2011, TLIC acquired 100% of the outstanding common stock of FBLIC from FBLIC’s shareholders. The acquisition of FBLIC was accounted for as a purchase. The aggregate purchase price for the acquisition of FBLIC was $13,855,129. The acquisition of FBLIC was financed with the working capital of TLIC.

On April 28, 2015, the Company acquired a block of life insurance policies and annuity contracts according to the terms of an assumption reinsurance agreement. The Company acquired assets of $3,644,839 (including cash), assumed liabilities of $3,055,916 and recorded a gain on reinsurance assumption of $588,923.

Financial Information about Segments

The Financial Accounting Standards Board (“FASB”) guidance requires a "management approach" in the presentation of business segments based on how management internally evaluates the operating performance of business units. The discussion of segment operating results that follows is being provided based on segment data prepared in accordance with this methodology.

Our business segments are as follows:

● Life insurance operations, consisting of the life insurance operations of TLIC and FBLIC;

● Annuity operations, consisting of the annuity operations of TLIC and FBLIC and

● Corporate operations, which includes the results of the parent company and FTCC after the elimination of intercompany amounts.

Please see below and Note 11 to the Consolidated Financial Statements for the years ended December 31, 2017 and 2016 and as of December 31, 2017 and 2016 for additional information regarding segment information.

Life Insurance and Annuity Operations

Our Life Insurance and Annuity Operations consists of issuing ordinary whole life insurance, modified premium whole life with an annuity rider, term, final expense and accidental death and dismemberment policies and annuity contracts. The policies can be issued with premiums fully guaranteed for the entire term period or with a limited premium guarantee. The final expense is issued as either a simplified issue or as a graded benefit, determined by underwriting.

TLIC renewed its administrative services agreement with Investors Heritage Life Insurance Company (“IHLIC”) on September 1, 2017. Under the terms of this agreement, the services provided by IHLIC include underwriting, actuarial, policy issue, accounting, claims processing and other services incidental to the operations of TLIC. The agreement is effective for a period of five (5) years from September 1, 2017 through August 31, 2022 and includes a provision that the agreement may be terminated at any time by either party with a 180 day prior notice.

FBLIC renewed its administrative services agreement with IHLIC on November 1, 2017. Under the terms of this agreement, the services provided by IHLIC include underwriting, actuarial, policy issue, accounting, claims processing and other services incidental to the operations of FBLIC. The agreement is effective for a period of five (5) years from November 1, 2017 through October 31, 2022 and includes a provision that the agreement may be terminated at any time by either party with a 180 day prior notice.

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TLIC continues to seek to serve middle income households in the states of Illinois, Kansas, Kentucky, Nebraska, North Dakota, Ohio, Oklahoma and Texas. TLIC markets its products through independent agents. With the acquisition of FBLIC in late 2011, we expanded into Arizona, Colorado, Missouri and New Mexico. FBLIC also had initial licenses in Kansas, Nebraska and Oklahoma where TLIC was also licensed. In late 2012, FBLIC was licensed in Arkansas, Indiana, Kentucky, North Dakota, South Dakota, Texas and West Virginia. In 2013, FBLIC was licensed in Illinois and Pennsylvania. In 2014, FBLIC was licensed in Georgia, Louisiana, Michigan, Mississippi, North Carolina, Ohio, Tennessee and Virginia. In 2015, FBLIC was licensed in Alabama and Utah.

The following tables sets forth our direct collected life insurance premiums and annuity considerations by the policyholder’s state of residence at the time of premium collection and annuity consideration, for the most significant states in which we are licensed, for the years ended December 31, 2017 and 2016, in accordance with statutory accounting practices prescribed by the states of domicile of TLIC and FBLIC.

	Year Ended December 31, 2017
	Life					Annuity
State	Premiums		Percentage			Considerations		Percentage
Arizona	$	61,364		0.38	%	$	401,702		0.72	%
Arkansas		238,372		1.48	%		406,520		0.72	%
Colorado		459,708		2.85	%		38,387		0.07	%
Georgia		474,792		2.94	%		534,626		0.95	%
Illinois		1,441,519		8.94	%		719,662		1.28	%
Indiana		534,599		3.32	%		59,299		0.11	%
Kansas		2,236,609		13.87	%		1,796,931		3.20	%
Kentucky		530,972		3.29	%		82,408		0.15	%
Louisiana		433,371		2.69	%		-		0.00	%
Michigan		263,984		1.64	%		2,381,477		4.24	%
Missouri		820,326		5.09	%		195,035		0.35	%
Nebraska		217,740		1.35	%		802,251		1.43	%
North Carolina		966,643		5.99	%		149,092		0.27	%
North Dakota		108,810		0.67	%		18,239,925		32.49	%
Ohio		2,003,162		12.42	%		1,431,925		2.55	%
Oklahoma		1,484,722		9.21	%		1,922,469		3.42	%
Pennsylvania		422,290		2.62	%		1,762,619		3.14	%
Tennessee		269,038		1.67	%		2,290,127		4.08	%
Texas		2,406,525		14.92	%		21,532,935		38.36	%
Virginia		195,474		1.21	%		40,017		0.07	%
All other states		555,891		3.45	%		1,344,979		2.40	%
Total direct collected premiums and considerations	$	16,125,911		100.00	%	$	56,132,386		100.00	%

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	Year Ended December 31, 2016
	Life					Annuity
State	Premiums		Percentage			Considerations		Percentage
Arizona	$	22,587		0.18	%	$	301,465		0.56	%
Arkansas		161,096		1.26	%		259,162		0.49	%
Colorado		267,553		2.09	%		376,154		0.70	%
Georgia		288,856		2.26	%		794,230		1.49	%
Illinois		1,300,813		10.16	%		1,280,438		2.40	%
Indiana		338,717		2.65	%		381,349		0.71	%
Kansas		2,253,534		17.59	%		1,933,441		3.62	%
Kentucky		439,721		3.43	%		244,864		0.46	%
Louisiana		286,694		2.24	%		100,000		0.19	%
Michigan		153,541		1.20	%		1,244,644		2.33	%
Missouri		715,992		5.59	%		580,712		1.09	%
Nebraska		216,880		1.69	%		827,130		1.55	%
North Carolina		498,876		3.90	%		366,841		0.69	%
North Dakota		119,710		0.94	%		17,972,674		33.64	%
Ohio		1,514,308		11.83	%		382,893		0.72	%
Oklahoma		1,613,573		12.60	%		1,641,576		3.07	%
Pennsylvania		282,608		2.21	%		2,510,524		4.70	%
Tennessee		141,227		1.10	%		1,103,240		2.07	%
Texas		1,756,722		13.72	%		19,525,059		36.55	%
Virginia		94,680		0.74	%		466,108		0.87	%
All other states		335,044		2.62	%		1,121,001		2.10	%
Total direct collected premiums and considerations	$	12,802,732		100.00	%	$	53,413,505		100.00	%

Reinsurance

TLIC cedes reinsurance under various agreements allowing management to control exposure to potential losses arising from large risks and providing additional capacity for growth and risk diversification. TLIC reinsures all amounts of risk on any one life in excess of $75,000 for individual life insurance with IHLIC, Optimum Re Insurance Company (“Optimum Re”) and Wilton Reassurance Company (“Wilton Re”).

TLIC is a party to an Automatic Retrocession Pool Agreement (the “Reinsurance Pool”) with Optimum Re, Catholic Order of Foresters, American Home Life Insurance Company and Woodmen of the World. The agreement provides for automatic retrocession of coverage in excess of Optimum Re’s retention on business ceded to Optimum Re by the other parties to the Reinsurance Pool. TLIC’s maximum exposure on any one insured under the Reinsurance Pool is $75,000. As of January 1, 2008, the Reinsurance Pool stopped accepting new cessions.

Effective September 29, 2005, FLAC and Wilton Re executed a binding letter of intent whereby both parties agreed that FLAC would cede the simplified issue version of its Golden Eagle Whole Life (Final Expense) product to Wilton Re on a 50/50 quota share original term coinsurance basis. The letter of intent was executed on a retroactive basis to cover all applicable business issued by FLAC subsequent to January 1, 2005. Wilton Re agreed to provide various commission and expense allowances to FLAC in exchange for FLAC ceding 50% of the applicable premiums to Wilton Re as they were collected. As of June 24, 2006, Wilton Re terminated the reinsurance agreement for new business issued after the termination date.

FBLIC also participates in reinsurance in order to provide risk diversification, additional capacity for future growth and limit the maximum net loss potential arising from large amounts of risk. FBLIC reinsures initial amounts of risk on any one life in excess of $75,000 for individual life insurance with Optimum Re. TLIC and FBLIC also reinsure its accidental death benefit portion of their life policies under a bulk agreement with Optimum Re.

To the extent that the reinsurance companies are unable to meet their obligations under the reinsurance agreements, TLIC and FBLIC remain primarily liable for the entire amount at risk.

7

Competition 

The U.S. life insurance industry is a mature industry that, in recent years, has experienced little to no growth. Competition is intense because the life insurance industry is consolidating, with larger, more efficient and more effective organizations emerging from consolidation. In addition, legislation became effective in the United States that permits commercial banks, insurance companies and investment banks to combine. These factors have increased competitive pressures in general.

Many domestic life insurance companies have significantly greater financial, marketing and other resources, longer business histories and more diversified lines of insurance products than we do. We also face competition from companies marketing in person as well as with direct mail and internet sales campaigns. Although we may be at a competitive disadvantage to these entities, we believe that our premium rates, policy features, marketing approaches and policyholder services are generally competitive with those of other life insurance companies selling similar types of products and provide us with niche marketing opportunities not actively pursued by other life insurance companies.

Governmental Regulation

TLIC and FBLIC, respectively, are subject to regulation and supervision by the OID and the Missouri Department of Insurance (“MDOI”). The insurance laws of Oklahoma and Missouri give the OID and MDOI broad regulatory authority, including powers to: (i) grant and revoke licenses to transact business; (ii) regulate and supervise trade practices and market conduct; (iii) establish guaranty associations; (iv) license agents; (v) approve policy forms; (vi) approve premium rates for some lines of business; (vii) establish reserve requirements; (viii) prescribe the form and content of required financial statements and reports; (ix) determine the reasonableness and adequacy of statutory capital and surplus and (x) regulate the type and amount of permitted investments.

TLIC and FBLIC can be required, under the solvency or guaranty laws of most states in which they do business, to pay assessments (up to prescribed limits) to fund policyholder losses or liabilities of other insurance companies that become insolvent. These assessments may be deferred or foregone under most guaranty laws if they would threaten an insurer's financial strength and, in certain instances, may be offset against future premium taxes.

TLIC is subject to Oklahoma laws and FBLIC is subject to Missouri laws that limit the amount of dividends insurance companies can pay to stockholders without approval of the respective Departments of Insurance. The maximum dividend, which may be paid in any twelve-month period without notification or approval, is limited to the greater of 10% of statutory surplus as of December 31 of the preceding year or the net gain from operations of the preceding calendar year. Cash dividends may only be paid out of surplus derived from realized net profits. Based on these limitations, there is capacity for TLIC to pay a dividend up to $1,124,823 in 2018 without prior approval. In addition, based on those limitations, there is the capacity for FBLIC to pay a dividend up to $760,348 in 2018 without prior approval. FBLIC paid a dividend of $1,000,000 to TLIC in 2016 but none in 2017. Dividends paid by FBLIC are eliminated in consolidation. TLIC has paid no dividends to FTFC.

There are certain factors particular to the life insurance business which may have an adverse effect on the statutory operating results of TLIC and FBLIC. One such factor is that the costs associated with issuing a new policy in force is usually greater than the first year’s policy premium. Accordingly, in the early years of a new life insurance company, these initial costs and the required provisions for reserves often have an adverse effect on statutory operating results.

Premium Finance Operations

FTCC was incorporated in 2006 and provided financing for casualty insurance premiums for individuals and companies and was licensed to conduct premium financing business in the states of Alabama, Arkansas, Louisiana, Mississippi and Oklahoma. FTCC has made no premium financing loans since June 30, 2012.

Employees

As of March 5, 2018, the Company had ten full-time employees and one part-time employee.

8

Item 2. Properties

The Company leases 6,769 square feet of office space pursuant to an original five-year lease that began October 1, 2010 and was amended on October 1, 2015 for another five-year term. Under the terms of the original home office lease, the monthly rent was $7,897 from October 1, 2010 through September 30, 2015. Under the terms of the amended home office lease, the monthly rent is $8,461 from October 1, 2015 through September 30, 2016, $8,630 from October 1, 2016 through September 30, 2017 and $8,805 from October 1, 2017 through September 30, 2018 with increases of two percent each twelve month period from October 1, 2018 through September 30, 2020. The Company incurred rent expense (including charges for the lessor’s building operating expenses above those specified in the lease agreement less monthly amortization of the leasehold improvement allowance received from the lessor) of $92,041 and $93,415 for the years ended December 31, 2017 and 2016, respectively, under this lease.

On January 1, 2011, the Company received a $120,000 leasehold improvement allowance from the lessor related to the original lease that was fully amortized by September 30, 2015. In accordance with the amended lease on October 1, 2015, the Company was provided an allowance of $54,152 for leasehold improvements. The leasehold improvement allowance is amortized over the remaining amended non-cancellable lease term and reduced rent expense by $14,491 and $8,627 for the years ended December 31, 2017 and 2016, respectively. The future minimum lease payments to be paid under the amended non-cancellable lease agreement are $106,189, $108,304 and $82,446 for the years 2018 through 2020, respectively.

TLIC owns approximately six and one-half acres of land located in Topeka, Kansas. A 20,000 square foot office building has been constructed on approximately one-fourth of this land.

TLIC executed a two year lease agreement effective January 1, 2015, for 7,500 square feet of its building in Topeka, Kansas. Effective January 1, 2017, this lease was renewed for two years. The terms of the lease leave TLIC responsible for paying real estate taxes, building insurance and building and ground maintenance. The monthly lease payments are $8,696 for 2015, 2016, 2017 and 2018.

TLIC renewed a five year lease agreement effective June 1, 2011, for 10,000 square feet in the Topeka, Kansas office building. Beginning June 1, 2014, the lessee can terminate the lease with a 180 day written notice. The terms of the lease leave TLIC responsible for paying real estate taxes, building insurance and building and ground maintenance with partial reimbursement from the lessee. The lease agreement calls for minimum monthly base lease payments of $17,750.

This 10,000 square feet lease was renewed for five years to be effective from June 1, 2016 through May 31, 2021, with an option for an additional five years from June 1, 2021 through May 31, 2026. Beginning June 1, 2021, the lessee can terminate the lease with a 120 day written notice. The terms of the lease leave TLIC responsible for paying real estate taxes, building insurance and building and ground maintenance with partial reimbursement from the lessee. The lease agreement calls for a monthly lease payment of $16,598 from June 1, 2016 through June 30, 2016. Starting July 1, 2016, the lease agreement includes an $88,833 tenant improvement allowance that is amortized over 59 months with interest at 5.00%. The monthly lease payments are $18,299 from July 1, 2016 through June 30, 2017 and $18,376 from July 1, 2017 through May 31, 2021.

A five year lease agreement effective September 1, 2010 automatically renewed on 2,500 square feet of the Topeka, Kansas office building with a 90 day notice by the lessee to terminate the lease. This lease was renewed on September 1, 2015 to run through August 31, 2017 with an option for an additional three years through August 31, 2020. Beginning September 1, 2017, the lessee can terminate the lease with a 120 day written notice. The terms of the lease leave TLIC responsible for paying real estate taxes, building insurance and building and ground maintenance with partial reimbursement from the lessee. The lease payments are $4,236 per month from September 1, 2015 through August 31, 2016, $4,242 from September 1, 2016 through September 30, 2017 and $4,263 from October 1, 2017 through December 31, 2017.

The future minimum lease payments to be received under the non-cancellable lease agreements are $324,858, $220,512, $220,512 and $91,880 for the years 2018 through 2021, respectively.

FBLIC owns approximately one-half acre of undeveloped land located in Jefferson City, Missouri with a carrying value of $131,000.

9

During 2017 the Company foreclosed on residential mortgage loans of real estate totaling $207,482 and transferred those properties to investment real estate held for sale. The Company’s policy is to reduce the carrying value of this residential real estate obtained through foreclosure to the lower of acquisition cost or net realizable value. During 2017, the Company sold investment real estate property with an aggregate carrying value of $185,701. The Company recorded a gross realized investment gain on sale of $4,382 based on an aggregate sales price of $190,083.

During 2016 the Company foreclosed on seven residential mortgage loans of real estate totaling $394,427 and transferred those properties to investment real estate held for sale. The Company’s policy is to reduce the carrying value of this residential real estate obtained through foreclosure to the lower of acquisition cost or net realizable value. During 2016 the Company sold investment real estate property with an aggregate carrying value of $63,931. The Company recorded a gross realized investment loss on sale of $20,662 based on an aggregate sales price of $43,269.

Item 3. Legal Proceedings

A lawsuit filed by the Company and Chairman, President and Chief Executive Officer, Gregg E. Zahn, against former Company Board of Directors member Wayne Pettigrew and Mr. Pettigrew's company, Group & Pension Planners, Inc. (the "Defendants"), concluded on February 17, 2017. The lawsuit was filed in the District Court of Tulsa County, Oklahoma (Case No. CJ-2013-03385). In the lawsuit, the Company alleged that Mr. Pettigrew had defamed the Company by making untrue statements to certain shareholders of the Company, to the press and to regulators of the state of Oklahoma and had breached his fiduciary duties.

The jury concluded that Mr. Pettigrew, while still a member of the Company’s Board of Directors, did, in fact, make untrue statements regarding the Company and Mr. Zahn and committed breaches of his fiduciary duties to the Company and the jury awarded the Company $800,000 of damages against Mr. Pettigrew. In addition, the jury found that Mr. Pettigrew had defamed Mr. Zahn and intentionally inflicted emotional distress on Mr. Zahn and awarded Mr. Zahn $3,500,000 of damages against Mr. Pettigrew. In addition to the damages awarded by the jury, the Company and Mr. Zahn have initiated steps to aggressively communicate the correction of the untrue statements to outside parties.

Mr. Pettigrew has appealed this decision but has failed to post an appeal bond. As a consequence, the Company and Mr. Zahn are in the process of executing on the judgments against Mr. Pettigrew’s assets. The Company and Mr. Zahn have so far collected some property and money in the execution process and will continue to execute on the judgments. Any money or property collected to date during the execution of the judgments are held in escrow by a third party, have not been reflected in the December 31, 2017 consolidated financial statements, would have to be returned to Mr. Pettigrew in the event the judgments are reversed by the appellate courts.

Prior to being acquired by TLIC, FBLIC developed, marketed, and sold life insurance products known as “Decreasing Term to 95” policies. On January 17, 2013, FBLIC’s Board of Directors voted that, effective March 1, 2013, it was not approving, and therefore was not providing, a dividend for the Decreasing Term to 95 policies. On November 22, 2013, a lawsuit was filed in the Circuit Court of Greene County, Missouri asserting claims against FBLIC relating to this decision. A trial was held November 27, 2017 through December 1, 2017 on the individual claims of two policyholders asserting fraud and negligent misrepresentation and on claims of a class of Missouri residents asking the Court to (1) find that the dividend provisions in the Decreasing Term to 95 policies violate Missouri law, specifically, § 376.360 RSMo.; (2) order that the policies are void ab initio and (3) order that FBLIC return all premiums collected under these policies, plus interest and attorneys’ fees.

Following the conclusion of the trial, subject to the approval of the Court, the parties reached a settlement resolving of both the individual and class claims. If approved by the Court, FBLIC will pay $1.85 million as accrued in the consolidated financial statements to resolve all class and individual claims and all active Decreasing Term to 95 policies for individuals in the class will be cancelled. A hearing date for approval of the settlement has not yet been scheduled.

Item 4. Mine Safety Disclosures

None

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PART II

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

(a)     Market Information

Trading of the Company’s common stock is limited and an established public market does not exist.

(b)     Holders

As of March 5, 2018, there were approximately 4,500 shareholders of the Company’s outstanding common stock.

(c)     Dividends

The Company has not paid any cash dividends since inception (April 19, 2004). The Board of Directors of the Company has not adopted a dividend payment policy; however, dividends must necessarily depend upon the Company's earnings and financial condition, applicable legal restrictions, and other factors relevant at the time the Board of Directors considers a dividend policy. Cash available for dividends to shareholders of the Company must initially come from income and capital gains earned on its investment portfolio and dividends paid by the Company’s subsidiaries.

Provisions of the Oklahoma Insurance Code relating to insurance holding companies subject transactions between the Company and TLIC and the Company and FBLIC, including dividend payments, to certain standards generally intended to prevent such transactions from adversely affecting the adequacy of life insurance subsidiaries' capital and surplus available to support policyholder obligations. In addition, under the Oklahoma General Corporation Act, the Company may not pay dividends if, after giving effect to a dividend, it would not be able to pay its debts as they become due in the usual course of business or if its total liabilities would exceed its total assets.

On January 10, 2011, the Company’s Board of Directors approved a 5% share dividend by which shareholders received a share of common stock for each 20 shares of common stock of the Company they hold. The dividend was payable to the holders of shares of the Corporation as of March 10, 2011. Fractional shares were rounded to the nearest whole number of shares. The Company issued 323,777 shares in connection with the stock dividend that resulted in accumulated deficit being charged $2,428,328 with an offsetting credit of $2,428,328 to common stock and additional paid-in capital.

On January 11, 2012, the Company’s Board of Directors approved another 5% share dividend by which shareholders received a share of common stock for each 20 shares of common stock of the Company they hold. The dividend was payable to the holders of shares of the Corporation as of March 10, 2012. Fractional  shares were rounded to the nearest whole number of shares. The Company issued 378,908 shares in connection with the stock dividend that resulted in accumulated deficit being charged $2,841,810 with an offsetting credit of $2,841,810 to common stock and additional paid-in capital.

(d)      Securities Authorized for Issuance Under Equity Compensation Plans

 There are no plans under which equity securities are authorized for issuance.

(e)Performance Graph - Not Required

(f)       Purchases of Equity Securities by Issuer

The Company repurchased 185,313 shares of its common stock at a cost of $648,595 during 2012 from former members of the Board of Directors; repurchased 12,896 shares of its common stock at a cost of $45,136 from a former member of the Board of Directors and a charitable organization for which that former Director had donated 10,250 shares of the Company’s common stock during 2013, repurchased 39,946 shares of its common stock at a cost of $161,573 from a former agent, the former spouse of the Company’s Chairman, Chief Executive Officer and the former Chairman of the Board of Directors during 2014 and repurchased 9,425 shares of its common stock at a cost of $38,643 from the former Chairman of the Board of Directors during 2015.

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

Overview

First Trinity Financial Corporation (“we” “us”, “our”, “FTFC” or the “Company”) conducts operations as an insurance holding company emphasizing ordinary life insurance products and annuity contracts in niche markets. We are no longer operating a premium finance company that financed casualty insurance premiums. As an insurance provider, we collect premiums and annuity considerations in the current period to pay future benefits to our policy and contract holders. Our core TLIC operations include issuing modified premium whole life insurance with a flexible premium deferred annuity, ordinary whole life, final expense and term products and annuity contracts to predominately middle income households in the states of Illinois, Kansas, Kentucky, Nebraska, North Dakota, Ohio, Oklahoma and Texas through independent agents.

With the acquisition of FBLIC in late 2011, we expanded into Arizona, Colorado, Missouri and New Mexico. FBLIC also had initial licenses in Kansas, Nebraska and Oklahoma where TLIC was also licensed. In late 2012, FBLIC was licensed in Arkansas, Indiana, Kentucky, North Dakota, South Dakota, Texas and West Virginia. In 2013, FBLIC was licensed in Illinois and Pennsylvania. In 2014, FBLIC was licensed in Georgia, Louisiana, Michigan, Mississippi, North Carolina, Ohio, Tennessee and Virginia. In 2015, FBLIC was licensed in Alabama and Utah.

We also realize revenues from our investment portfolio, which is a key component of our operations. The revenues and funds we collect as premiums and annuity considerations from policyholders are invested to ensure future benefit payments under the policy contracts. Life insurance companies earn profits on the investment spread, which reflects the investment income earned on the premiums and annuity considerations paid to the insurer between the time of receipt and the time benefits are paid out under our policies and contracts. Changes in interest rates, changes in economic conditions and volatility in the capital markets can all impact the amount of earnings that we realize from our investment portfolio.

Prior to June 30, 2012, we provided financing for casualty insurance premiums for individuals and companies through independent property and casualty insurance agents through our wholly owned subsidiary FTCC. FTCC was licensed to conduct premium financing business in the states of Alabama, Arkansas, Louisiana, Mississippi and Oklahoma. FTCC has made no premium financing loans since June 30, 2012.

Acquisitions

The Company expects to facilitate growth through acquisitions of other life insurance companies and/or blocks of life insurance and annuity business. In late December 2008, the Company completed its acquisition of 100% of the outstanding stock of First Life America Corporation for $2,500,000 and had additional acquisition related expenses of $195,234.

In late December 2011, the Company completed its acquisition of 100% of the outstanding stock of FBLIC for $13,855,129.

In late April 2015, the Company acquired a block of life insurance policies and annuity contracts according to the terms of an assumption reinsurance agreement. The Company acquired assets of $3,644,839 (including cash), assumed liabilities of $3,055,916 and recorded a gain on reinsurance assumption of $588,923.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition, results of operations and liquidity and capital resources is based on our consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. We evaluate our estimates and assumptions continually, including those related to investments, deferred acquisition costs, value of insurance business acquired and policy liabilities. We base our estimates on historical experience and on various other factors and assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following accounting policies, judgments and estimates are the most critical to the preparation of our consolidated financial statements.

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Investments in Fixed Maturities and Equity Securities

We hold fixed maturities and equity interests in a variety of companies. We continuously evaluate all of our investments based on current economic conditions, credit loss experience and other developments. We evaluate the difference between the cost/amortized cost and estimated fair value of our investments to determine whether any decline in fair value is other-than-temporary in nature. This determination involves a degree of uncertainty. If a decline in the fair value of a security is determined to be temporary, the decline is recognized in other comprehensive income (loss) within shareholders’ equity. If a decline in a security’s fair value is considered to be other-than-temporary, we then determine the proper treatment for the other-than-temporary impairment.

For fixed maturities, the amount of any other-than-temporary impairment related to a credit loss is recognized in earnings and reflected as a reduction in the cost basis of the security. The amount of any other-than-temporary impairment related to other factors is recognized in other comprehensive income (loss) with no change to the cost basis of the security. For equity securities, the amount of any other-than-temporary impairment is recognized in earnings and reflected as a reduction in the cost basis of the security.

The assessment of whether a decline in fair value is considered temporary or other-than-temporary includes management’s judgment as to the financial position and future prospects of the entity issuing the security. It is not possible to accurately predict when it may be determined that a specific security will become impaired. Future adverse changes in market conditions, poor operating results of underlying investments and defaults on interest and principal payments could result in losses or an inability to recover the current carrying value of the investments, thereby possibly requiring an impairment charge in the future.

In addition, if a change occurs in our intent to sell temporarily impaired securities prior to maturity or recovery in value, or if it becomes more likely than not that we will be required to sell such securities prior to recovery in value or maturity, a future impairment charge could result. If an other-than-temporary impairment related to a credit loss occurs with respect to a bond, we amortize the reduced book value back to the security’s expected recovery value over the remaining term of the bond. We continue to review the security for further impairment that would prompt another write-down in the book value.

Mortgage Loans on Real Estate

We carry mortgage loans on real estate at unpaid balances, net of unamortized premium or discounts. Interest income and the amortization of premiums or discounts are included in net investment income. Mortgage loan fees, certain direct loan origination costs and purchase premiums and discounts on loans are recognized as an adjustment of yield by the interest method based on the contractual terms of the loan. In certain circumstances, prepayments may be anticipated. We have established a valuation allowance for mortgage loans on real estate that are not supported by funds held in escrow.

This allowance for possible loan losses from investments in mortgage loans on real estate is a reserve established through a provision for possible loan losses charged to expense which represents, in our judgment, the known and inherent credit losses existing in the residential and commercial and industrial mortgage loan portfolio. This allowance, in our judgment, is necessary to reserve for estimated loan losses inherent in the residential and commercial and industrial mortgage loan portfolio and reduces the carrying value of investments in mortgage loans on real estate to the estimated net realizable value on the consolidated statement of financial position.

While we utilize our best judgment and information available, the ultimate adequacy of this allowance is dependent upon a variety of factors beyond our control, including the performance of the residential and commercial and industrial mortgage loan portfolio, the economy and changes in interest rates. Our allowance for possible mortgage loan losses consists of specific valuation allowances established for probable losses on specific loans and a portfolio reserve for probable incurred but not specifically identified loans.

We consider mortgage loans on real estate impaired when, based on current information and events, it is probable that we will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the mortgage loan agreement. Factors that we consider in determining impairment include payment status, collateral value of the real estate subject to the mortgage loan and the probability of collecting scheduled principal and interest payments when due. Mortgage loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.

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We determine the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the mortgage loan on real estate and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis.

Deferred Policy Acquisition Costs

Commissions and other acquisition costs which vary with and are primarily related to the successful production of new and renewal insurance contracts are deferred and amortized in a systematic manner based on the related contract revenues or gross profits as appropriate. The recovery of deferred acquisition costs is dependent on the future profitability of the underlying business for which acquisition costs were incurred. Each reporting period, we evaluate the recoverability of the unamortized balance of deferred acquisition costs. We consider estimated future gross profits or future premiums; expected mortality or morbidity; interest earned and credited rates; persistency and expenses in determining whether the balance is recoverable.

If we determine a portion of the unamortized balance is not recoverable, it is immediately charged to amortization expense. The assumptions we use to amortize and evaluate the recoverability of the deferred acquisition costs involve significant judgment. A revision to these assumptions may impact future financial results. Deferred acquisition costs related to the successful production of new and renewal insurance business for traditional life insurance contracts are deferred to the extent deemed recoverable and amortized over the premium paying period of the related policies using assumptions consistent with those used in computing future policy benefit liabilities.

Deferred acquisition costs related to the successful production of new and renewal insurance and annuity products that subject us to mortality or morbidity risk over a period that extends beyond the period or periods in which premiums are collected and that have terms that are fixed and guaranteed (i.e., limited-payment long-duration annuity contracts) are deferred to the extent deemed recoverable and amortized in relation to the present value of actual and expected gross profits on the policies. To the extent that realized gains and losses on securities result in adjustments to deferred acquisition costs related to insurance and annuity products, such adjustments are reflected as a component of the amortization of deferred acquisition costs.

Deferred acquisition costs related to limited-payment long-duration insurance and annuity contracts are also adjusted, net of tax, for the change in amortization that would have been recorded if the unrealized gains (losses) from securities had actually been realized. This adjustment is included in the change in net unrealized appreciation (depreciation) on available-for-sale securities, a component of “Accumulated Other Comprehensive Income (Loss)” in the shareholders’ equity section of the statement of financial position.

Value of Insurance Business Acquired

As a result of our purchases of FLAC and FBLIC, an asset was recorded in the application of purchase accounting to recognize the value of acquired insurance in force.  The Company’s value of acquired insurance in force is an intangible asset with a definite life and is amortized under FASB guidance.

The value of acquired insurance in force is amortized primarily over the emerging profit of the related policies using the same assumptions that were used in computing liabilities for future policy benefits. The recovery of the value of insurance business acquired is dependent on the future profitability of the underlying business that was initially recorded in the purchases of FLAC and FBLIC. Each reporting period, we evaluate the recoverability of the unamortized balance of the value of insurance business acquired.

For the amortization of the value of acquired insurance in force, the Company reviews its estimates of gross profits each reporting period. The most significant assumptions involved in the estimation of gross profits include interest rate spreads; future financial market performance; business surrender and lapse rates; mortality and morbidity; expenses and the impact of realized investment gains and losses. In the event actual experience differs significantly from assumptions or assumptions are significantly revised, the Company is required to record a charge or credit to amortization expense for the period in which an adjustment is made.

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As of December 31, 2017 and 2016, there was $3,213,233 and $2,831,043, respectively, of accumulated amortization of the value of insurance business acquired due to the purchases of FLAC and FBLIC. The Company expects to amortize the value of insurance business acquired by the following amounts over the next five years: $306,567 in 2018, $286,076 in 2019, $264,029 in 2020, $244,791 in 2021 and $227,007 in 2022.

Future Policy Benefits

Our liability for future policy benefits is primarily comprised of the present value of estimated future payments to or on behalf of policyholders, where the timing and amount of payment depends on policyholder mortality or morbidity, less the present value of future net premiums. For life insurance and annuity products, expected mortality and morbidity is generally based on the Company’s historical experience or standard industry tables including a provision for the risk of adverse deviation.

Interest rate assumptions are based on factors such as market conditions and expected investment returns. Although mortality and morbidity and interest rate assumptions are “locked-in” upon the issuance of new insurance with fixed and guaranteed terms, significant changes in experience or assumptions may require the Company to provide for expected future losses on a product by establishing premium deficiency reserves.

Estimating liabilities for our long-duration insurance contracts requires management to make various assumptions, including policyholder persistency; mortality rates; investment yields; discretionary benefit increases; new business pricing and operating expense levels. We evaluate historical experience for these factors when assessing the need for changing current assumptions.

Since many of these factors are interdependent and subject to short-term volatility during the long-duration contract period, substantial judgment is required. Actual experience may emerge differently from that originally estimated. Any such difference would be recognized in the current year’s consolidated statement of operations.

Recent Accounting Pronouncements

Revenue from Contracts with Customers

In May 2014, the FASB issued updated guidance to clarify the principles for recognizing revenue. While insurance contracts are not within the scope of this updated guidance, the Company's fee income related to providing services will be subject to this updated guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services. The following steps are applied in the updated guidance: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when, or as, the entity satisfies a performance obligation.

In July 2015, the FASB deferred the effective date of the updated guidance on revenue recognition by one year to the quarter ending March 31, 2018.  The adoption of this guidance is not expected to have a material effect on the Company’s result of operations, financial position or liquidity.

Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern

In August 2014, the FASB issued guidance to address the diversity in practice in determining when there is substantial doubt about an entity's ability to continue as a going concern and when an entity must disclose certain relevant conditions and events. The new guidance requires an entity to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued). The new guidance allows the entity to consider the mitigating effects of management's plans that will alleviate the substantial doubt and requires certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans.

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If conditions or events raise substantial doubt that is not alleviated, an entity should disclose that there is substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued), along with the principal conditions or events that raise substantial doubt, management's evaluation of the significance of those conditions or events in relation to the entity's ability to meet its obligations and management's plans that are intended to mitigate those conditions. The guidance is effective for annual periods ending after December 15, 2016, and interim and annual periods thereafter. The adoption of this guidance did not have a material effect on the Company's results of operations, financial position or liquidity since there are no uncertainties about the Company’s ability to continue as a going concern.

Recognition and Measurement of Financial Assets and Financial Liabilities

In January 2016, the FASB issued updated guidance regarding financial instruments. This guidance intends to enhance reporting for financial instruments and addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The significant amendments in this update generally require equity investments to be measured at fair value with changes in fair value recognized in net income, require the use of an exit price notion when measuring the fair value of financial instruments for disclosure purposes and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities. This guidance also intends to enhance the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments.

This guidance is effective for fiscal years beginning after December 15, 2017. The recognition and measurement provisions of this guidance will be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption and early adoption is not permitted. The Company is evaluating this guidance but expects the primary impact will be the recognition of unrealized gains and losses on available-for-sale equity securities in net income. Currently, all unrealized gains and losses on available-for-sale equity securities are recognized in other comprehensive income (loss). The effect of the adoption of this guidance on the Company’s results of operations, financial position and liquidity is primarily dependent on the fair value of the available-for-sale equity securities in future periods, the existence of a deferred tax asset related to available-for-sale securities in future periods and the economic conditions at the time of that future adoption.

Leases

In February 2016, the FASB issued updated guidance regarding leases that generally requires the lessee and lessor to recognize lease assets and lease liabilities on the statement of financial position. A lessee should recognize on the statement of financial position a liability to make lease payments and an asset representing its right-to-use the underlying assets for the lease term. Optional payments to extend the lease or purchase the underlying leased asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise the option(s).

If the lease has a term of 12 months or less, a lessee can make an election to recognize lease expenses for such leases on a straight-line basis over the lease term. There is a differentiation between finance leases and operating leases for the lessee in the statements of operations and cash flows. Finance leases recognize interest on the lease liability separately from the right-to-use the asset whereas an operating lease recognizes a single lease cost allocated over the lease term on a generally straight-line basis. All cash payments are within operating activities in the statement of cash flows except finance leases classify repayments of the principal portion of the lease liability within financing activities.

The accounting applied by the lessor is largely unchanged from that applied under previous U.S. GAAP. Key aspects of the lessor accounting model, however, were aligned with the revenue recognition guidance of Codification Topic 606. The previous accounting model for leverage leases continues to apply only to those leveraged leases that commenced before the effective date of Codification Update 2016-02 Leases (Topic 842).

Entities will generally continue to account for leases that commenced before the effective date of this update in accordance with previous U.S. GAAP unless the lease is modified. Lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimal rental payments that were tracked and disclosed under previous U.S. GAAP. The updated guidance is to be applied using a modified retrospective approach effective for annual and interim periods beginning after December 15, 2018. Early adoption is permitted.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

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Investments — Equity Method and Joint Ventures:  Simplifying the Transition to the Equity Method of Accounting

In March 2016, the FASB issued updated guidance that eliminates the requirement to retroactively apply the equity method of accounting when an investment that was previously accounted for using another method of accounting becomes qualified to apply the equity method due to an increase in the level of ownership interest or degree of influence.  If the investment was previously accounted for as an available-for-sale security, any related unrealized gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for the equity method is recognized through earnings.  The updated guidance is effective for reporting periods beginning after December 15, 2016, and is to be applied prospectively. Early adoption was permitted.  The adoption of this guidance did not have an impact on the Company’s results of operations, financial position or liquidity.

Derivatives and Hedging:  Contingent Put and Call Options in Debt Instruments

In March 2016, the FASB issued updated guidance clarifying that when a call (put) option in a debt instrument is contingently exercisable, the event that triggers the ability to exercise the option is considered to be clearly and closely related to the debt instrument (i.e., the economic characteristics and risks of the option are related to interest rates or credit risks) and the entity does not have to assess whether the option should be accounted for separately.

The updated guidance is effective for reporting periods beginning after December 15, 2016. Early adoption was permitted. The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

Financial Instruments — Credit Losses:  Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued updated guidance for the accounting for credit losses for financial instruments. The updated guidance applies a new credit loss model (current expected credit losses or CECL) for determining credit-related impairments for financial instruments measured at amortized cost (e.g. mortgage loans and reinsurance amounts recoverable) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses should consider historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. The expected credit losses, and subsequent adjustments to such losses, will be recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected.

The updated guidance also amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists.

The updated guidance is effective for reporting periods beginning after December 15, 2019. Early adoption is permitted for reporting periods beginning after December 15, 2018. Based on the financial instruments currently held by the Company, the Company expects there would not be a material effect on the Company’s results of operations, financial position or liquidity if the new guidance were able to be adopted in the current accounting period. The impact on the Company’s results of operations, financial position or liquidity at the date of adoption of the updated guidance will be determined by the financial instruments held by the Company and the economic conditions at that time.

Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments

In August 2016, the FASB issued specific guidance to reduce the existing diversity in practice in how eight specific cash flow issues of certain cash receipts and cash payments are presented and classified in the statement of cash flows. The updated guidance is effective for annual and interim periods beginning after December 15, 2017, and is to be applied retrospectively. Early adoption is permitted.  The adoption of this guidance is not expected to have a material effect on the Company’s cash flows statement.

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Consolidation – Interests Held through Related Parties that Are Under Common Control

In October 2016, the FASB issued further guidance that makes targeted amendments to consolidation accounting. This update changes how a reporting entity that is the primary beneficiary of a variable interest entity treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The updated guidance is effective for annual and interim periods beginning after December 15, 2016, and is to be applied retrospectively. Early adoption was permitted.  The adoption of this guidance did not have an impact on the Company’s results of operations, financial position or liquidity.

Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments

In November 2016, the FASB issued specific guidance on the cash flow classification and presentation of changes in restricted cash or restricted cash equivalents when there are transfers between cash, cash equivalents and restricted cash or restricted cash equivalents and when there are direct cash receipts into restricted cash or restricted cash equivalents or direct cash payments made from restricted cash or restricted cash equivalents. The updated guidance is effective for annual and interim periods beginning after December 15, 2017, and is to be applied retrospectively. Early adoption is permitted.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Business Combinations – Clarifying the Definition of a Business

In January 2017, the FASB issued guidance to clarify the definition of a business to assist reporting entities in evaluating whether transactions should be accounted for as an acquisition or disposal of assets or businesses. This update provides a screen to determine when an integrated set of assets or activities is not a business and the requirements to be met to be considered a business.

The updated guidance is effective for annual and interim periods beginning after December 15, 2017, and is to be applied retrospectively. Early adoption is permitted in certain situations.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Intangibles – Goodwill and Other - Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued guidance to modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. Reporting entities will no longer determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. The updated guidance is effective for annual and interim periods beginning after December 15, 2017, and is to be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Compensation — Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

In March 2017, the FASB issued updated guidance to improve the presentation of net periodic pension cost and net periodic post retirement cost (net benefit costs). Net benefit costs comprise several components that reflect different aspects of an employer’s financial arrangements as well as the cost of benefits provided to employees.  The update requires that theemployer service cost component be reported in the same lines as other employee compensation cost and that the other components (non-service costs) be presented separately from the service cost and outside of a subtotal of income from operations if one is presented.  The update also allows only the service cost component to be eligible for capitalization in assets when applicable.

The updated guidance is effective for reporting periods beginning after December 15, 2017. The update is to be applied retrospectively with respect to the presentation of service cost and non-service cost and prospectively with respect to applying the service cost only eligible for capitalization in assets guidance. Early adoption is permitted as of the first interim period of an annual period if an entity issues interim financial statements. This pronouncement will not impact the Company since it does not have any pension or postretirement benefit plans and has no intention to adopt such plans.

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Compensation — Stock Compensation: Scope of Modification Accounting

In May 2017, the FASB issued updated guidance related to a change to the terms or conditions (modification) of a share-based payment award.  The updated guidance provides that an entity should account for the effects of a modification unless the fair value and vesting conditions of the modified award and the classification of the modified award (equity or liability instrument) are the same as the original award immediately before the modification.

The updated guidance is effective for the quarter ending March 31, 2018.  The update is to be applied prospectively to an award modified on or after the adoption date. Early adoption is permitted in any interim periods for which financial statements have not yet been made available for issuance. The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Target Improvement to Accounting for Hedging Activities

In August 2017, the FASB issued updated authoritative guidance for the application of hedge accounting. The updated guidance updates certain recognition and measurement requirements for hedge accounting. The objective of the guidance is to more closely align the economics of a company’s risk management activities in its financial results and reduce the complexity of applying hedge accounting. The updates include the expansion of hedging strategies that are eligible for hedge accounting, elimination of the separate measurement and reporting of hedge ineffectiveness, presentation of the changes in the fair value of the hedging instrument in the same consolidated statement of operations line as the earnings effect of the hedged item and simplification of hedge effectiveness assessments. This guidance also includes new disclosures and will be applied using a modified retrospective approach by recording a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption.

The updated guidance is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted for reporting periods beginning before December 15, 2018. The Company does not currently and does not intend to participate in hedging activities and there is therefore no impact on the Company’s results of operations, financial position or liquidity. This pronouncement would be adopted if the Company begins to participate in hedging activities in the future.

Business Segments

The FASB guidance requires a "management approach" in the presentation of business segments based on how management internally evaluates the operating performance of business units. The discussion of segment operating results that follows is being provided based on segment data prepared in accordance with this methodology.

Our business segments are as follows:

● Life insurance operations, consisting of the life insurance operations of TLIC and FBLIC;

● Annuity operations, consisting of the annuity operations of TLIC and FBLIC and

● Corporate operations, which includes the results of the parent company and FTCC after the elimination of intercompany amounts.

Please see below and Note 11 to the Consolidated Financial Statements for the years ended December 31, 2017 and 2016 and as of December 31, 2017 and 2016 for additional information regarding segment information.

19

The following is a discussion and analysis of our financial condition, results of operations and liquidity and capital resources.

FINANCIAL HIGHLIGHTS

Consolidated Condensed Results of Operations for the Years Ended December 31, 2017 and 2016

	Years Ended December 31,						Amount Change
	2017			2016			2017 less 2016
Premiums	$	15,855,686		$	12,870,483		$	2,985,203
Net investment income		16,710,408			13,190,643			3,519,765
Net realized investment gains		271,470			729,739			(458,269	)
Loss on other-than-temporary impairments		(224,250	)		(212,342	)		(11,908	)
Other income		116,523			139,967			(23,444	)
Total revenues		32,729,837			26,718,490			6,011,347
Benefits and claims		19,868,790			16,602,839			3,265,951
Expenses		10,518,164			7,695,869			2,822,295
Total benefits, claims and expenses		30,386,954			24,298,708			6,088,246
Income before federal income tax expense (benefit)		2,342,883			2,419,782			(76,899	)
Federal income tax expense (benefit)		1,373,519			(170,957	)		1,544,476
Net income	$	969,364		$	2,590,739		$	(1,621,375	)
Net income per common share basic and diluted	$	0.12		$	0.33		$	(0.21	)

Consolidated Condensed Financial Position as of December 31, 2017 and 2016

					Amount Change
	December 31, 2017		December 31, 2016		2017 less 2016
Investment assets	$	313,257,430	$	255,214,510	$	58,042,920
Other assets		77,870,244		78,038,103		(167,859	)
Total assets	$	391,127,674	$	333,252,613	$	57,875,061
Policy liabilities	$	343,789,864	$	290,680,384	$	53,109,480
Deferred federal income taxes		2,961,929		693,470		2,268,459
Other liabilities		3,123,702		5,598,484		(2,474,782	)
Total liabilities		349,875,495		296,972,338		52,903,157
Shareholders' equity		41,252,179		36,280,275		4,971,904
Total liabilities and shareholders' equity	$	391,127,674	$	333,252,613	$	57,875,061
Shareholders' equity per common share	$	5.29	$	4.65	$	0.64

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Results of Operations – Years Ended December 31, 2017 and 2016

Revenues

Our primary sources of revenue are life insurance premium income and investment income. Premium payments are classified as first-year, renewal and single. In addition, realized gains and losses on investment holdings can significantly impact revenues from period to period.

Our revenues for the years ended December 31, 2017 and 2016 are summarized as follows:

	Years Ended December 31,						Amount Change
	2017			2016			2017 less 2016
Premiums	$	15,855,686		$	12,870,483		$	2,985,203
Net investment income		16,710,408			13,190,643			3,519,765
Net realized investment gains		271,470			729,739			(458,269	)
Loss on other-than-temporary impairments		(224,250	)		(212,342	)		(11,908	)
Other income		116,523			139,967			(23,444	)
Total revenues	$	32,729,837		$	26,718,490		$	6,011,347

The $6,011,347 increase in total revenues for the year ended December 31, 2017 is discussed below.

Premiums

Our premiums for the years ended December 31, 2017 and 2016 are summarized as follows:

	Years Ended December 31,				Amount Change
	2017		2016		2017 less 2016
Whole life and term first year	$	171,220	$	224,607	$	(53,387	)
Whole life and term renewal		2,292,825		2,478,252		(185,427	)
Final expense first year		4,694,380		3,521,136		1,173,244
Final expense renewal		8,658,393		6,267,914		2,390,479
Supplementary contracts with life contingencies		38,868		378,574		(339,706	)
Total premiums	$	15,855,686	$	12,870,483	$	2,985,203

The $2,985,203 increase in premiums for the year ended December 31, 2017 is primarily due to the following: $2,390,479 increase in final expense renewal premiums, $1,173,244 increase in final expense first year premiums and $339,706 decrease in supplementary contracts with life contingencies considerations.

The increase in final expense first year premiums represents management’s focus on expanding final expense production by contracting new, independent agents in expanded locations. The increase in final expense renewal premiums reflects the persistency of prior years’ final expense production. Our marketing efforts are focused on final expense and annuity production and we have not been focused on whole life and term production the past few years. The decrease in supplementary contracts with life contingencies reflects policyholder decisions to receive future payment streams during their remaining life instead of a lump sum payment.

21

Net Investment Income

The major components of our net investment income for the years ended December 31, 2017 and 2016 are summarized as follows:

	Years Ended December 31,						Amount Change
	2017			2016			2017 less 2016
Fixed maturity securities	$	6,504,233		$	5,970,940		$	533,293
Equity securities		20,167			27,364			(7,197	)
Other long-term investments		3,645,043			2,685,639			959,404
Mortgage loans		8,364,448			5,774,229			2,590,219
Policy loans		114,246			107,541			6,705
Real estate		375,369			340,032			35,337
Short-term and other investments		141,259			44,013			97,246
Gross investment income		19,164,765			14,949,758			4,215,007
Investment expenses		(2,454,357	)		(1,759,115	)		695,242
Net investment income	$	16,710,408		$	13,190,643		$	3,519,765

The $4,215,007 increase in gross investment income for the year ended December 31, 2017 is primarily due to increases in investments in mortgage loans, other long-term investments and fixed maturity securities. In the twelve months since December 31, 2016, we have increased investments in mortgage loans on real estate by $28.1 million, available-for-sale fixed maturity securities by $20.4 million and other long-term investments by $9.0 million.

The $695,242 increase in investment expense is primarily related to increased production of investments in mortgage loans on real estate including the costs of the Company’s mortgage loan department that were fully assigned to investment expenses beginning in 2017.

22

Net Realized Investment Gains (Losses)

Our net realized investment gains (losses) result from sales of available–for-sale fixed maturity and equity securities, early payoffs of mortgage loans on real estate, sales of investment real estate and sales of other long-term investments.

Our net realized investment gains (losses) for the years ended December 31, 2017 and 2016 are summarized as follows:

	Years Ended December 31,					Amount Change
	2017		2016			2017 less 2016
Fixed maturity securities available-for-sale:
Sale proceeds	$	20,230,756	$	20,532,968		$	(302,212	)
Amortized cost at sale date		20,025,943		19,954,481			71,462
Net realized gains	$	204,813	$	578,487		$	(373,674	)
Equity securities available-for-sale:
Sale proceeds	$	-	$	324,556		$	(324,556	)
Cost at sale date		-		225,155			(225,155	)
Net realized gains	$	-	$	99,401		$	(99,401	)
Mortgage loans on real estate:
Payments and sale proceeds on mortgage loans	$	25,670,590	$	17,550,870		$	8,119,720
Principal collections		25,670,590		17,478,357			8,192,233
Net realized gains	$	-	$	72,513		$	(72,513	)
Investment real estate:
Sale proceeds	$	190,083	$	43,269		$	146,814
Carrying value at sale date		185,701		63,931			121,770
Net realized gains (losses)	$	4,382	$	(20,662	)	$	25,044
Other long-term investments
Sale proceeds	$	792,012	$	-		$	792,012
Carrying value at sale date		729,737		-			729,737
Net realized gains (losses)	$	62,275	$	-		$	62,275
Net realized investment gains	$	271,470	$	729,739		$	(458,269	)

During 2017 and 2016 the Company foreclosed on residential mortgage loans of real estate totaling $207,482 and $394,427, respectively, and transferred those properties to investment real estate held for sale.

During 2017, the Company sold investment real estate property with an aggregate carrying value of $185,701. The Company recorded a gross realized investment gain on sale of $4,382 based on an aggregate sales price of $190,083.

During 2016, the Company sold investment real estate property with an aggregate carrying value of $63,931. The Company recorded a gross realized investment loss on this sale of $20,662 based on an aggregate sales price of $43,269.

Loss on Other-Than-Temporary Impairments

The Company has recorded other-than-temporary impairments on its available-for-sale fixed maturity investment in an energy corporation with a total par value of $650,000 as a result of continuing unrealized losses. During fourth quarter 2016 this security was initially impaired by a $207,450 charge to the statement of operations. During second quarter 2017 this security was further impaired by a $224,250 charge to the statement of operations. These impairments were considered fully credit-related and represent the difference between the amortized cost basis of the security and its fair value. The Company has experienced no additional other-than-temporary impairments on fixed maturity available-for-sale securities during 2017.

23

During 2016 management also impaired FBLIC’s one-half acre of undeveloped land located in Jefferson City, Missouri by $4,892 from its carrying value to its net realizable value expected at the time of ultimate resale.

Total Benefits, Claims and Expenses

Our benefits, claims and expenses are primarily generated from benefit payments, surrenders, interest credited to policyholders, change in reserves, commissions and other underwriting, insurance and acquisition expenses. Benefit payments can significantly impact expenses from period to period. Our benefits, claims and expenses for the years ended December 31, 2017 and 2016 are summarized as follows:

	Years Ended December 31,						Amount Change
	2017			2016			2017 less 2016
Benefits and claims
Increase in future policy benefits	$	5,402,902		$	4,786,377		$	616,525
Death benefits		4,463,854			3,814,049			649,805
Surrenders		878,361			728,122			150,239
Interest credited to policyholders		8,840,019			6,977,306			1,862,713
Dividend, endowment and supplementary life contract benefits		283,654			296,985			(13,331	)
Total benefits and claims		19,868,790			16,602,839			3,265,951
Expenses
Policy acquisition costs deferred		(9,321,726	)		(7,445,304	)		(1,876,422	)
Amortization of deferred policy acquisition costs		2,870,412			2,202,367			668,045
Amortization of value of insurance business acquired		382,190			379,365			2,825
Commissions		8,585,278			6,882,311			1,702,967
Other underwriting, insurance and acquisition expenses		8,002,010			5,677,130			2,324,880
Total expenses		10,518,164			7,695,869			2,822,295
Total benefits, claims and expenses	$	30,386,954		$	24,298,708		$	6,088,246

The $6,088,246 increase in total benefits, claims and expenses for the year ended December 31, 2017 is discussed below.

Benefits and Claims

The $3,265,951 increase in total benefits and claims for the year ended December 31, 2017 is primarily due to the following:

● $1,862,713 increase in interest credited to policyholders is primarily due to an increase of approximately $47,600,000 in the amount of policyholders’ account balances in the consolidated statement of financial position (increased deposits and interest credited in excess of withdrawals) since December 31, 2016.

● $649,805 increase in death benefits is primarily due to approximately $783,000 of increased final expense settlements, $119,000 of increased ordinary life settlements and $252,000 of increased ceded claims. The increase in final expense incurred claims is expected by the Company due to the continued growth in the number and amount of final expense policies in force.

● $616,525 increase in future policy benefits is primarily due to the increased number of life policies in force and the aging of existing life policies.

● $150,239 increase in surrenders is based upon policyholder election and corresponds to the growth in the number of policies in force.

24

Deferral and Amortization of Deferred Acquisition Costs

Certain costs related to the successful acquisition of traditional life insurance policies are capitalized and amortized over the premium-paying period of the policies. Certain costs related to the successful acquisition of insurance and annuity policies that subject us to mortality or morbidity risk over a period that extends beyond the period or periods in which premiums are collected and that have terms that are fixed and guaranteed (i.e., limited-payment long-duration annuity contracts) are capitalized and amortized in relation to the present value of actual and expected gross profits on the policies. These acquisition costs, which are referred to as deferred policy acquisition costs, include commissions and other successful costs of acquiring life insurance, which vary with, and are primarily related to, the successful production of new and renewal insurance and annuity contracts.

For the years ended December 31, 2017 and 2016, capitalized costs were $9,321,726 and $7,445,304, respectively. During 2017, $8,009,758 of commissions (93.3% of total 2017 commissions of $8,585,278) and $1,311,968 of expenses (16.4% of total 2017 other underwriting, insurance and acquisition expenses of $8,002,010) were eligible for deferral and were capitalized. During 2016, $6,420,934 of commissions (93.3% of total 2016 commissions of $6,882,311) and $1,024,370 of expenses (18.0% of total 2016 other underwriting, insurance and acquisition expenses of $5,677,130) were eligible for deferral and were capitalized. The $1,876,422 increase in the 2017 acquisition costs deferred primarily relates to increased final expense and annuity production and deferral and capitalization of the increased eligible commissions and expenses.

Amortization of deferred policy acquisition costs for the years ended December 31, 2017 and 2016 were $2,870,412 and $2,202,367, respectively. The $668,045 increase in the 2017 amortization of deferred acquisition costs is primarily due to an increased number and amount of final expense policies and annuity contracts in force and lapsation of ordinary life policies reflected by increased death benefits, surrenders and annuity withdrawals.

Amortization of Value of Insurance Business Acquired

The cost of acquiring insurance business is amortized over the emerging profit of the related policies using the same assumptions that were used in computing liabilities for future policy benefits. Amortization of the value of insurance business acquired was $382,190 and $379,365 for the years ended December 31, 2017 and 2016, respectively.

Commissions

Our commissions for the years ended December 31, 2017 and 2016 are summarized as follows:

	Years Ended December 31,				Amount Change
	2017		2016		2017 less 2016
Annuity	$	1,912,429	$	1,896,150	$	16,279
Whole life and term first year		151,739		125,467		26,272
Whole life and term renewal		81,295		100,247		(18,952	)
Final expense first year		5,612,755		4,195,896		1,416,859
Final expense renewal		827,060		564,551		262,509
Total commissions	$	8,585,278	$	6,882,311	$	1,702,967

The $1,702,967 increase in commissions for the year ended December 31, 2017 is primarily due to a $1,416,859 increase in final expense first year commissions that correspond to the $1,173,244 increase in final expense first year premiums and a $262,509 increase in final expense renewal commissions that corresponds to the $2,390,479 increase in final expense renewal premiums.

25

Other Underwriting, Insurance and Acquisition Expenses

The $2,324,880 increase in other underwriting, insurance and acquisition expenses for the year ended December 31, 2017 was primarily related to the accrual of a $1.85 million settlement of FBLIC Term to 95 lawsuit, increased acquisition and maintenance costs associated with increased final expense and annuity production, increased third party administration fees primarily related to the increased number of policies in force and increased service requests, increased salaries and benefits due to increased salary and bonus levels that exceeded the costs of the Company’s mortgage loan department that were fully assigned to investment expenses beginning in 2017 and the 2016 recording of bad debt expense against uncollectible receivables for financed casualty premiums for individuals and companies by FTCC.

Federal Income Taxes

FTFC files a consolidated federal income tax return with FTCC but does not file a consolidated tax return with TLIC or FBLIC. TLIC and FBLIC are taxed as life insurance companies under the provisions of the Internal Revenue Code. Life insurance companies must file separate tax returns until they have been a member of the consolidated filing group for five years. However, we filed consolidated life insurance company federal tax returns for TLIC and FBLIC for 2016 and 2015 and intend to also file a consolidated life insurance company federal tax return for TLIC and FBLIC for 2017 during 2018.

Certain items included in income reported for financial statement purposes are not included in taxable income for the current period, resulting in deferred income taxes.

For the years ended December 31, 2017 and 2016, current income tax expense was $105,696 and $37,404, respectively. Deferred federal income tax expense (benefit) was $1,267,823 and ($208,361) for the years ended December 31, 2017 and 2016, respectively.

Net Income Per Common Share Basic and Diluted

Net income was $969,364 ($0.12 per common share basic and diluted) and $2,590,739 ($0.33 per common share basic and diluted) for the years ended December 31, 2017 and 2016, respectively.

Net income per common share basic and diluted is calculated using the weighted average number of common shares outstanding and subscribed during the year. The weighted average outstanding and subscribed common shares basic and diluted were 7,802,593 for both of the years ended December 31, 2017 and 2016.

Business Segments

The Company has a life insurance segment, consisting of the life insurance operations of TLIC and FBLIC, an annuity segment, consisting of the annuity operations of TLIC and FBLIC and a corporate segment. Results for the parent company and the operations of FTCC, after elimination of intercompany amounts, are allocated to the corporate segment.

The revenues and income (loss) before federal income taxes from our business segments for the years ended December 31, 2017 and 2016 are summarized as follows:

	Years Ended December 31,					Amount Change
	2017			2016		2017 less 2016
Revenues:
Life insurance operations	$	18,308,660		$	14,996,543	$	3,312,117
Annuity operations		14,061,953			11,135,950		2,926,003
Corporate operations		359,224			585,997		(226,773	)
Total	$	32,729,837		$	26,718,490	$	6,011,347
Income (loss) before federal income taxes:
Life insurance operations	$	(207,655	)	$	866,648	$	(1,074,303	)
Annuity operations		2,280,615			1,271,600		1,009,015
Corporate operations		269,923			281,534		(11,611	)
Total	$	2,342,883		$	2,419,782	$	(76,899	)

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Life Insurance Operations

The $3,312,117 increase in revenues from Life Insurance Operations for the year ended December 31, 2017 is primarily due to the following:

● $2,985,203 increase in premiums

● $417,467 increase in net investment income

● $17,209 decrease in other income

● $73,344 decrease in net realized investment gains (that also includes a loss on other-than-temporary impairment)

The $1,074,303 decreased profitability from Life Insurance Operations for the year ended December 31, 2017 is primarily due to the following:

● $2,778,377 increase in other underwriting, insurance and acquisition expenses

● $1,686,688 increase in commissions

● $649,805 increase in death benefits

● $616,525 increase in future policy benefits

● $150,239 increase in surrenders

● $73,344 decrease in net realized investment gains (that also includes a loss on other-than-temporary impairment)

● $17,209 decrease in other income

● $1,413 increase in amortization of value of insurance business acquired

● $13,331 decrease in dividend, endowment and supplementary life contract benefits

● $417,467 increase in net investment income

● $1,483,296 increase in policy acquisition costs deferred net of amortization

● $2,985,203 increase in premiums

Annuity Operations

The $2,926,003 increase in revenues from Annuity Operations for the year ended December 31, 2017 is due to the following:

● $3,322,836 increase in net investment income

● $396,833 decrease in net realized investment gains (that also includes a loss on other-than-temporary impairment)

27

The $1,009,015 increased profitability from Annuity Operations for the year ended December 31, 2017 is due to the following:

● $3,322,836 increase in net investment income

● $238,335 decrease in other underwriting, insurance and acquisition expenses

● $1,412 increase in amortization of value of insurance business acquired

● $16,279 increase in commissions

● $274,919 decrease in policy acquisition costs deferred net of amortization

● $396,833 decrease in net realized investment gains (that also includes a loss on other-than-temporary impairment)

● $1,862,713 increase in interest credited to policyholders

Corporate Operations

The $226,773 decrease in revenues from Corporate Operations for the year ended December 31, 2017 is primarily due to $220,538 decreased net investment income and $6,235 decreased other income.

The $11,611 decrease in Corporate Operations profitability for the year ended December 31, 2017 is primarily due to $220,538 decreased net investment income, $6,235 decreased other income and $215,162 decreased operating expenses.

Consolidated Financial Condition

Our invested assets as of December 31, 2017 and 2016 are summarized as follows:

					Amount Change
	December 31, 2017		December 31, 2016		2017 less 2016
Assets
Investments
Available-for-sale fixed maturity securities at fair value (amortized cost: $143,621,947 and $128,310,625 as of December 31, 2017 and 2016, respectively)	$	149,683,139	$	129,311,155	$	20,371,984
Available-for-sale equity securities at fair value (cost: $602,864 and $599,400 as of December 31, 2017 and 2016, respectively)		672,147		638,407		33,740
Mortgage loans on real estate		102,496,451		74,371,286		28,125,165
Investment real estate		2,382,966		2,506,673		(123,707	)
Policy loans		1,660,175		1,598,116		62,059
Short-term investments		547,969		-		547,969
Other long-term investments		55,814,583		46,788,873		9,025,710
Total investments	$	313,257,430	$	255,214,510	$	58,042,920

28

The $20,371,984 increase and $5,244,872 decrease in fixed maturity available-for-sale securities for the years ended December 31, 2017 and 2016, respectively, are summarized as follows:

	Years Ended December 31,
	2017			2016
Fixed maturity securities, available-for-sale, beginning	$	129,311,155		$	134,556,027
Purchases		37,095,248			11,338,377
Unrealized appreciation		5,060,303			4,473,318
Net realized investment gains (losses)		(19,437	)		371,037
Sales proceeds		(12,389,756	)		(14,933,968	)
Maturities		(7,841,000	)		(5,599,000	)
Transfer to other long-term investments		(729,737	)		-
Premium amortization		(803,637	)		(894,636	)
Increase (decrease)		20,371,984			(5,244,872	)
Fixed maturity securities, available-for-sale, ending	$	149,683,139		$	129,311,155

Fixed maturity securities available-for-sale are reported at fair value with unrealized gains and losses, net of applicable income taxes, reflected as a separate component in shareholders' equity within “Accumulated Other Comprehensive Income (Loss).” The available-for-sale fixed maturity securities portfolio is invested primarily in a variety of companies, U. S. government and government agencies, states and political subdivisions and foreign securities.

The $33,740 increase and $254,393 decrease in equity securities available-for-sale for the years ended December 31, 2017 and 2016, respectively, are summarized as follows:

	Years Ended December 31,
	2017		2016
Equity securities, available-for-sale, beginning	$	638,407	$	892,800
Purchases		3,465		34,340
Sales proceeds		-		(324,556	)
Unrealized appreciation (depreciation)		30,275		(63,578	)
Net realized investment gains		-		99,401
Increase (decrease)		33,740		(254,393	)
Equity securities, available-for-sale, ending	$	672,147	$	638,407

Equity securities available-for-sale are also reported at fair value with unrealized gains and losses, net of applicable income taxes, reflected as a separate component in shareholders' equity within “Accumulated Other Comprehensive Income (Loss).” The available-for-sale equity securities portfolio is invested in a small number of companies.

29

The $28,125,165 and $15,596,368 increases in mortgage loans on real estate for the years ended December 31, 2017 and 2016, respectively, are summarized as follows:

	Years Ended December 31,
	2017			2016
Mortgage loans on real estate, beginning	$	74,371,286		$	58,774,918
Purchases		53,913,277			33,480,579
Capitalization of loan origination fees		-			4,531
Discount accretion		252,903			157,424
Net realized investment gains		-			72,513
Payments		(25,670,590	)		(17,550,870	)
Foreclosed - transferred to real estate		(207,482	)		(394,427	)
Increase in allowance for bad debts		(98,388	)		(61,079	)
Amortization of loan origination fees		(64,555	)		(112,303	)
Increase		28,125,165			15,596,368
Mortgage loans on real estate, ending	$	102,496,451		$	74,371,286

The $123,707 decrease and $180,115 increase in investment real estate for the years ended December 31, 2017 and 2016, respectively, are summarized as follows:

	Years Ended December 31,
	2017			2016
Investment real estate, beginning	$	2,506,673		$	2,326,558
Real estate acquired through mortgage loan foreclosure		207,482			394,427
Sales proceeds		(190,083	)		(43,269	)
Depreciation of building		(145,488	)		(145,489	)
Net realized investment gains (losses)		4,382			(25,554	)
Increase (decrease)		(123,707	)		180,115
Investment real estate, ending	$	2,382,966		$	2,506,673

The $9,025,710 and $15,221,946 increases in other long-term investments (comprised primarily of lottery receivables) for the years ended December 31, 2017 and 2016, respectively, are summarized as follows:

	Years Ended December 31,
	2017			2016
Other long-term investments, beginning	$	46,788,873		$	31,566,927
Purchases		14,036,082			17,973,300
Transfer from fixed maturity available for-sale securities		729,737			-
Accretion of discount		3,652,776			2,685,635
Net realized investment gains		62,275			-
Sales proceeds		(792,012	)		-
Payments		(8,663,148	)		(5,436,989	)
Increase		9,025,710			15,221,946
Other long-term investments, ending	$	55,814,583		$	46,788,873

30

The $547,969 increase in short-term investments is due to management’s decision to increase our investment in funds that have a maturity of more than 90 days but less than one year at the date of purchase.

Our assets other than invested assets as of December 31, 2017 and 2016 are summarized as follows:

					Amount Change
	December 31, 2017		December 31, 2016		2017 to 2016
Cash and cash equivalents	$	31,496,159	$	34,223,945	$	(2,727,786	)
Accrued investment income		2,544,963		2,176,770		368,193
Recoverable from reinsurers		1,340,700		1,258,938		81,762
Agents' balances and due premiums		1,485,305		1,419,250		66,055
Deferred policy acquisition costs		24,555,902		18,191,990		6,363,912
Value of insurance business acquired		5,526,645		5,908,835		(382,190	)
Other assets		10,920,570		14,858,375		(3,937,805	)
Assets other than investment assets	$	77,870,244	$	78,038,103	$	(167,859	)

The $2,727,786 decrease in cash and cash equivalents for the year ended December 31, 2017 and the corresponding amount for the year ended December 31, 2016 are summarized in the Company’s consolidated statements of cash flows.

The increase in deferred policy acquisition costs for the years ended December 31, 2017 and 2016, respectively, are summarized as follows:

	2017			2016
Balance, beginning of year	$	18,191,990		$	13,015,679
Capitalization of commissions, sales and issue expenses		9,321,726			7,445,304
Amortization		(2,870,412	)		(2,202,367	)
Deferred acquisition costs allocated to investments		(87,402	)		(66,626	)
Balance, end of year	$	24,555,902		$	18,191,990

The $368,193 increase (16.9% increase) in accrued investment income in 2017 corresponds to the $58,042,920 increase (22.7% increase) in invested assets during 2017.

Our other assets as of December 31, 2017 and December 31, 2016 are summarized as follows:

					Amount Change
	December 31, 2017		December 31, 2016		2017 less 2016
Advances to mortgage loan originator	$	4,925,259	$	5,207,380	$	(282,121	)
Federal and state income taxes recoverable		2,504,494		2,220,566		283,928
Notes receivable		448,006		464,366		(16,360	)
Accrual of mortgage loan and long-term investment payments due		2,516,490		511,585		2,004,905
Receivable for securities sold		364,611		6,288,274		(5,923,663	)
Guaranty funds		73,151		78,711		(5,560	)
Other receivables, prepaid assets and deposits		88,559		87,493		1,066
Total other assets	$	10,920,570	$	14,858,375	$	(3,937,805	)

As of December 31, 2017, the Company had $364,611 in security sales where the trade date and settlement date were in different financial reporting periods compared to $6,288,274 of security sales overlapping financial reporting periods as of December 31, 2016.

There was a $282,121 decrease in advances to one mortgage loan originator who acquires residential mortgage loans for our life companies.   

31

There was a $283,928 increase in federal and state income taxes recoverable primarily due to federal and state tax withholdings on lottery receivables.

There was a $2,004,905 increase in the accrual of mortgage loans and long-term investment payments due based upon the scheduled timing of investment payments remitted by the third party servicers. Those cash payments were received in January 2018.

On April 15, 2017, the Company renewed its previous one-year loan of $400,000 to its former Chairman. The renewed loan also has a term of one year and a contractual interest rate of 5.00%. The loan is collateralized by 100,000 shares of the Company’s Class A Common stock owned by the former Chairman and is included in notes receivable.

Our liabilities as of December 31, 2017 and 2016 are summarized as follows:

					Amount Change
	December 31, 2017		December 31, 2016		2017 less 2016
Policy liabilities
Policyholders' account balances	$	292,909,762	$	245,346,489	$	47,563,273
Future policy benefits		49,663,099		44,266,227		5,396,872
Policy claims		1,148,513		997,814		150,699
Other policy liabilities		68,490		69,854		(1,364	)
Total policy liabilities		343,789,864		290,680,384		53,109,480
Deferred federal income taxes		2,961,929		693,470		2,268,459
Other liabilities		3,123,702		5,598,484		(2,474,782	)
Total liabilities	$	349,875,495	$	296,972,338	$	52,903,157

The $47,563,273 and $47,657,873 increases in policyholders’ account balances for the years ended December 31, 2017 and 2016, respectively, are summarized as follows:

	Years Ended December 31,
	2017			2016
Policyholders' account balances, beginning	$	245,346,489		$	197,688,616
Deposits		56,666,113			53,989,462
Withdrawals		(17,942,859	)		(13,308,895	)
Interest credited		8,840,019			6,977,306
Increase		47,563,273			47,657,873
Policyholders' account balances, ending	$	292,909,762		$	245,346,489

The $5,396,872 increase in future policy benefits during the year ended December 31, 2017 is primarily related to the production of new life insurance policies, initial sales of policies to older age bands (resulting in increased mortality reserve charges) and the aging of existing policies.

The $2,268,459 increase in deferred federal income taxes during the year ended December 31, 2017 was due to $1,060,901 of increased deferred federal income taxes on the unrealized appreciation of fixed maturity and equity securities available-for-sale, $1,267,823 of operating deferred federal tax expense and $60,265 from a 1% change in the statutory tax rate to 21% compared to the 20% historically used to compute deferred federal income taxes on the unrealized appreciation (depreciation) of fixed maturity and equity securities available-for-sale.

32

Our other liabilities as of December 31, 2017 and December 31, 2016 are summarized as follows:

							Amount Change
	December 31, 2017			December 31, 2016			2017 less 2016
Suspense accounts payable	$	42,901		$	4,684,726		$	(4,641,825	)
Accounts payable		1,898,817			-			1,898,817
Accrued expenses payable		776,000			527,938			248,062
Payable for securities purchased		462,598			234,225			228,373
Guaranty fund assessments		43,000			60,000			(17,000	)
Unearned investment income		62,326			48,466			13,860
Deferred revenue		29,784			29,632			152
Unclaimed funds		23,622			23,057			565
Other payables, withholdings and escrows		(215,346	)		(9,560	)		(205,786	)
Total other liabilities	$	3,123,702		$	5,598,484		$	(2,474,782	)

The $4,641,825 decrease in suspense accounts payable is primarily due to decreased deposits on policy applications that had not been issued as of the financial reporting date.

The $205,786 decline in other payables, withholdings and escrows is primarily due to an increase in escrows on commercial mortgage loans.

As of December 31, 2017, the Company had $462,598 in security purchases where the trade date and settlement date were in different financial reporting periods compared to $234,225 of security purchases overlapping financial reporting periods as of December 31, 2016.

The $248,062 increase in accrued expenses payable is primarily due to an increase in FBLIC Term to 95 lawsuit legal fees as of December 31, 2017.

The $1,898,817 increase in accounts payable is primarily due to the $1.85 million settlement of the FBLIC Term to 95 lawsuit.   

Liquidity and Capital Resources

Our operations have been financed primarily through the private placement of equity securities and intrastate public stock offerings. Through December 31, 2017, we have received $27,119,480 from the sale of our shares.

The Company raised $1,450,000 from two private placements during 2004 and $25,669,480 from two public stock offerings and one private placement stock offering from June 22, 2005 through February 23, 2007; June 29, 2010 through April 30, 2012; and August 15, 2012 through March 8, 2013. The Company issued 7,347,488 shares of its common stock and incurred $3,624,518 of offering costs during these private placements and public stock offerings.

The Company also issued 702,685 shares of its common stock in connection with two stock dividends paid to shareholders in 2011 and 2012 that resulted in accumulated earnings being charged $5,270,138 with an offsetting credit of $5,270,138 to common stock and additional paid-in capital.

The Company has also purchased 247,580 shares of treasury stock at a cost of $893,947 from former members of the Board of Directors including the former Chairman of the Board of Directors, a former agent, the former spouse of the Company’s Chairman, Chief Executive Officer and President and a charitable organization where a former member of the Board of Directors had donated shares of the Company’s common stock.

33

As of December 31, 2017, we had cash and cash equivalents totaling $31,496,159. As of December 31, 2017, cash and cash equivalents of $10,734,154 and $18,636,600, respectively, were held by FBLIC and TLIC and may not be available for use by FTFC due to the required pre-approval by the MDOI and OID of any dividend or intercompany transaction to transfer funds to FTFC. The maximum dividend, which may be paid in any twelve-month period without notification or approval, is limited to the greater of 10% of statutory surplus as of December 31 of the preceding year or the net gain from operations of the preceding calendar year.

Cash dividends may only be paid out of surplus derived from realized net profits. Based on these limitations, there is capacity for TLIC to pay a dividend up to $1,124,823 in 2018 without prior approval. In addition, based on those limitations, there is the capacity for FBLIC to pay a dividend up to $760,348 in 2018 without prior approval. FBLIC paid dividends of $1,000,000 to TLIC in 2016 but none in 2017. Dividends paid by FBLIC are eliminated in consolidation. TLIC has paid no dividends to FTFC.

The Company maintains cash and cash equivalents at multiple institutions. The Federal Deposit Insurance Corporation insures interest and non-interest bearing accounts up to $250,000. Uninsured balances aggregate $21,835,216 and $22,117,921 as of December 31, 2017 and December 31, 2016, respectively. Other funds are invested in mutual funds that invest in U.S. government securities. We monitor the solvency of all financial institutions in which we have funds to minimize the exposure for loss. The Company has not experienced any losses in such accounts.

On September 1, 2017, the Company agreed to a $1.0 million line of credit with a bank to provide working capital and funds for expansion.  The terms of the line of credit allow for advances, repayments and re-borrowings through the maturity date of July 1, 2018.  The outstanding advances incur interest at a variable interest rate of the prime rate set forth in the Wall Street Journal plus 1% per annum adjusting monthly based on a 360 day year.  This line of credit is subject to annual renewal based upon the discretion of both the Company and the bank.   The Company did not utilize the line of credit during 2017.

Our cash flows for the years ended December 31, 2017 and 2016 are summarized as follows:

	Years Ended December 31,						Amount Change
	2017			2016			2017 less 2016
Net cash provided by operating activities	$	1,898,407		$	9,485,884		$	(7,587,477	)
Net cash used in investing activities		(43,349,447	)		(24,990,092	)		(18,359,355	)
Net cash provided by financing activities		38,723,254			40,680,567			(1,957,313	)
Increase (decrease) in cash		(2,727,786	)		25,176,359			(27,904,145	)
Cash and cash equivalents, beginning of period		34,223,945			9,047,586			25,176,359
Cash and cash equivalents, end of period	$	31,496,159		$	34,223,945		$	(2,727,786	)

34

The $1,898,407 and $9,485,884 of cash provided by operating activities for the years ended December 31, 2017 and 2016, respectively, are summarized as follows:

	Years Ended December 31,						Amount Change
	2017			2016			2017 less 2016
Premiums collected	$	15,861,633		$	12,854,146		$	3,007,487
Net investment income collected		11,249,130			11,414,304			(165,174	)
Death benefits paid		(4,394,917	)		(3,546,483	)		(848,434	)
Surrenders paid		(878,361	)		(728,122	)		(150,239	)
Commissions paid		(8,656,921	)		(7,219,722	)		(1,437,199	)
Other underwriting, insurance and acquisition expenses paid		(5,747,916	)		(5,037,607	)		(710,309	)
Taxes paid		(389,622	)		(992,518	)		602,896
Increased (decreased) advances to mortgage loan originator		282,121			(2,112,317	)		2,394,438
Increased (decreased) deposits of pending policy applications		(4,641,825	)		4,509,592			(9,151,417	)
(Increased) decreased short-term investment		(547,969	)		599,855			(1,147,824	)
Other		(236,946	)		(255,244	)		18,298
Increase in cash provided by operating activities	$	1,898,407		$	9,485,884		$	(7,587,477	)

Please see the statements of cash flows for the years ended December 31, 2017 and 2016 for a summary of the components of net cash used in investing activities and net cash provided by financing activities.

Our shareholders’ equity as of December 31, 2017 and 2016 is summarized as follows:

							Amount Change
	December 31, 2017			December 31, 2016			2017 less 2016
Common stock, par value $.01 per share (20,000,000 shares authorized, 8,050,173 issued as of December 31, 2017 and 2016 and 7,802,593 outstanding as of December 31, 2017 and 2016)	$	80,502		$	80,502		$	-
Additional paid-in capital		28,684,598			28,684,598			-
Treasury stock, at cost (247,580 shares as of December 31, 2017 and 2016)		(893,947	)		(893,947	)		-
Accumulated other comprehensive income (loss)		4,760,951			818,676			3,942,275
Accumulated earnings		8,620,075			7,590,446			1,029,629
Total shareholders' equity	$	41,252,179		$	36,280,275		$	4,971,904

The increase in shareholders’ equity of $4,971,904 for the year ended December 31, 2017 is due to other comprehensive income of $3,942,275, net income of $969,364 and $60,265 for a 1% increase in the statutory tax rate to 21% compared to the 20% historically used to compute deferred federal income taxes on the unrealized appreciation (depreciation) of fixed maturity and equity securities available-for-sale. Shareholders’ equity per common share outstanding increased 13.8% from $4.65 per share as of December 31, 2016 to $5.29 per share as of December 31, 2017, based upon 7,802,593 common shares outstanding as of both December 31, 2016 and 2017.

The liquidity requirements of our life insurance companies are met primarily by funds provided from operations. Premium and annuity consideration deposits, investment income and investment maturities are the primary sources of funds, while investment purchases, policy benefits, and operating expenses are the primary uses of funds. There were no liquidity issues in 2017 or 2016. Our investments include marketable debt securities that could be readily converted to cash for liquidity needs.

We are subject to various market risks. The quality of our investment portfolio and the current level of shareholders’ equity continue to provide a sound financial base as we strive to expand our marketing to offer competitive products.

Our investment portfolio had unrealized appreciation on available-for-sale securities of $6,130,475 and $1,039,897 as of December 31, 2017 and 2016, respectively, prior to the impact of income taxes and deferred acquisition cost adjustments. An increase of $5,071,141 in unrealized gains arising for the year ended December 31, 2017 includes 2017 net realized investment losses of $19,437 originating from the sale and call activity for fixed maturity and equity securities available-for-sale resulting in a net increase in net unrealized appreciation for the year ended December 31, 2017 of $5,090,578.

35

A primary liquidity concern is the risk of an extraordinary level of early policyholder withdrawals. We include provisions within our insurance policies, such as surrender charges, that help limit and discourage early withdrawals. Individual life insurance policies are less susceptible to withdrawal than annuity reserves and deposit liabilities because policyholders may incur surrender charges and undergo a new underwriting process in order to obtain a new insurance policy. Cash flow projections and cash flow tests under various market interest rate scenarios are also performed annually to assist in evaluating liquidity needs and adequacy. We currently anticipate that available liquidity sources and future cash flows will be adequate to meet our needs for funds.

One of our significant risks relates to the fluctuations in interest rates. Regarding interest rates, the value of our available-for-sale fixed maturity securities investment portfolio will increase or decrease in an inverse relationship with fluctuations in interest rates, while net investment income earned on newly acquired available-for-sale fixed maturity securities increases or decreases in direct relationship with interest rate changes.

From an income perspective, we are exposed to rising interest rates which could be a significant risk, as TLIC's and FBLIC’s annuity business is impacted by changes in interest rates. Life insurance company policy liabilities bear fixed rates. From a liquidity perspective, our fixed rate policy liabilities are relatively insensitive to interest rate fluctuations. We believe gradual increases in interest rates do not present a significant liquidity exposure for the life insurance policies and annuity contracts. We maintain conservative durations in our fixed maturity portfolio.

As of December 31, 2017, cash and cash equivalents, short-term investments, the fair value of fixed maturity available-for-sale securities with maturities of less than one year and the fair value of lottery receivables with maturities of less than one year equaled 13.3% of total policy liabilities. If interest rates rise significantly in a short time frame, there can be no assurance that the life insurance industry, including the Company, would not experience increased levels of surrenders and reduced sales, and thereby be materially adversely affected.

In addition to the measures described above, TLIC and FBLIC must comply with the National Association of Insurance Commissioners promulgated Standard Valuation Law ("SVL") which specifies minimum reserve levels and prescribes methods for determining them, with the intent of enhancing solvency. Upon meeting certain tests, which TLIC and FBLIC met during 2017, the SVL also requires the Company to perform annual cash flow testing for TLIC and FBLIC. This testing is designed to ensure that statutory reserve levels will maintain adequate protection in a variety of potential interest rate scenarios. The Actuarial Standards Board of the American Academy of Actuaries also requires cash flow testing as a basis for the actuarial opinion on the adequacy of the reserves which is a required part of the annual statutory reporting process.

Our marketing plan could be modified to emphasize certain product types and reduce others. New business levels could be varied in order to find the optimum level. We believe that our current liquidity, current bond portfolio maturity distribution and cash position give us substantial resources to administer our existing business and fund growth generated by direct sales.

The operations of TLIC and FBLIC may require additional capital contributions to meet statutory capital and surplus requirements mandated by state insurance departments. Life insurance contract liabilities are generally long term in nature and are generally paid from future cash flows or existing assets and reserves. We will service other expenses and commitments by: (1) using available cash, (2) dividends from TLIC and FBLIC that are limited by law to the greater of prior year net operating income or 10% of prior year-end surplus unless specifically approved by the controlling insurance department, (3) public and private offerings of our common stock and (4) corporate borrowings, if necessary.

Effective January 1, 2017, the Company entered into a revised advance agreement with one loan originator. As of December 31, 2017, the Company has outstanding advances to this loan originator totaling $4,925,259. The advances are secured by $6,375,214 of residential mortgage loans on real estate that are assigned to the Company. The Company has committed to fund up to an additional $574,741 to the loan originator that would result in additional security in the form of residential mortgage loans on real estate to be assigned to the Company. Effective January 1, 2017, the Company also entered into a revised escrow agreement with the same loan originator. According to the revised terms of the escrow agreement, as of December 31, 2017, $564,479 of additional and secured residential mortgage loan balances on real estate are held in escrow by the loan originator.  As of December 31, 2017, $394,978 of that escrow amount is available to the Company as additional collateral on $4,925,259 of advances to the loan originator. The remaining December 31, 2017 escrow amount of $169,501 is available to the Company as additional collateral on its investment of $33,900,260 in residential mortgage loans on real estate.

36

We are not aware of any commitments or unusual events that could materially affect our capital resources. We are not aware of any current recommendations by any regulatory authority which, if implemented, would have a material adverse effect on our liquidity, capital resources or operations. We believe that our existing cash and cash equivalents as of December 31, 2017 will be sufficient to fund our anticipated operating expenses.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements contained herein are forward-looking statements. The forward-looking statements are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, and include estimates and assumptions related to economic, competitive and legislative developments. Forward-looking statements may be identified by words such as “expects,” “intends,” “anticipates,” “plans,” “believes,” “estimates,” “will” or words of similar meaning; and include, but are not limited to, statements regarding the outlook of our business and financial performance. These forward-looking statements are subject to change and uncertainty, which are, in many instances, beyond our control and have been made based upon our expectations and beliefs concerning future developments and their potential effect upon us. There can be no assurance that future developments will be in accordance with our expectations, or that the effect of future developments on us will be as anticipated. These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties. There are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements. These factors include among others:

● general economic conditions and financial factors, including the performance and fluctuations of fixed income, equity, real estate, credit capital and other financial markets;

● differences between actual experience regarding mortality, morbidity, persistency, surrenders, investment returns, and our pricing assumptions establishing liabilities and reserves or for other purposes;

● the effect of increased claims activity from natural or man-made catastrophes, pandemic disease, or other events resulting in catastrophic loss of life;

● adverse determinations in litigation or regulatory matters and our exposure to contingent liabilities, including and in connection with our divestiture or winding down of businesses such as FTCC;

● inherent uncertainties in the determination of investment allowances and impairments and in the determination of the valuation allowance on the deferred income tax asset;

● investment losses and defaults;

● competition in our product lines;

● attraction and retention of qualified employees and agents;

● ineffectiveness of risk management policies and procedures in identifying, monitoring and managing risks;

● the availability, affordability and adequacy of reinsurance protection;

● the effects of emerging claim and coverage issues;

● the cyclical nature of the insurance business;

● interest rate fluctuations;

● changes in our experiences related to deferred policy acquisition costs;

● the ability and willingness of counterparties to our reinsurance arrangements and derivative instruments to pay balances due to us;

● impact of medical epidemics and viruses;

● domestic or international military actions;

● the effects of extensive government regulation of the insurance industry;

● changes in tax and securities law;

● changes in statutory or U.S. generally accepted accounting principles (“GAAP”), practices or policies;

● regulatory or legislative changes or developments;

● the effects of unanticipated events on our disaster recovery and business continuity planning;

● failures or limitations of our computer, data security and administration systems;

● risks of employee error or misconduct;

● the assimilation of life insurance businesses we acquire and the sound management of these businesses; and

● the availability of capital to expand our business.

37

It is not our corporate policy to make specific projections relating to future earnings, and we do not endorse any projections regarding future performance made by others. In addition, we do not publicly update or revise forward-looking statements based on the outcome of various foreseeable or unforeseeable developments.

38

FIRST TRINITY FINANCIAL CORPORATION AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

Consolidated Financial Statements	Page Numbers
Report of Independent Registered Public Accounting Firm	40
Consolidated Statements of Financial Position	41
Consolidated Statements of Operations	42
Consolidated Statements of Comprehensive Income	43
Consolidated Statements of Changes in Shareholders’ Equity	44
Consolidated Statements of Cash Flows	45
Notes to Consolidated Financial Statements	47

39

Report of Independent Registered Public Accounting Firm

To the Board of Directors and

Shareholders of First Trinity Financial Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial position of First Trinity Financial Corporation and Subsidiaries (the Company) as of December 31, 2017, and the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the two-year period ended, and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, 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.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Kerber, Eck & Braeckel LLP

We have served as the Company’s auditor since 2004.

Springfield, Illinois

March 7, 2018

40

First Trinity Financial Corporation and Subsidiaries

Consolidated Statements of Financial Position

	December 31, 2017			December 31, 2016
Assets
Investments
Available-for-sale fixed maturity securities at fair value (amortized cost: $143,621,947 and $128,310,265 as of December 31, 2017 and 2016, respectively)	$	149,683,139		$	129,311,155
Available-for-sale equity securities at fair value (cost: $602,864 and $599,400 as of December 31, 2017 and 2016, respectively)		672,147			638,407
Mortgage loans on real estate		102,496,451			74,371,286
Investment real estate		2,382,966			2,506,673
Policy loans		1,660,175			1,598,116
Short-term investments		547,969			-
Other long-term investments		55,814,583			46,788,873
Total investments		313,257,430			255,214,510
Cash and cash equivalents		31,496,159			34,223,945
Accrued investment income		2,544,963			2,176,770
Recoverable from reinsurers		1,340,700			1,258,938
Agents' balances and due premiums		1,485,305			1,419,250
Deferred policy acquisition costs		24,555,902			18,191,990
Value of insurance business acquired		5,526,645			5,908,835
Other assets		10,920,570			14,858,375
Total assets	$	391,127,674		$	333,252,613
Liabilities and Shareholders' Equity
Policy liabilities
Policyholders' account balances	$	292,909,762		$	245,346,489
Future policy benefits		49,663,099			44,266,227
Policy claims		1,148,513			997,814
Other policy liabilities		68,490			69,854
Total policy liabilities		343,789,864			290,680,384
Deferred federal income taxes		2,961,929			693,470
Other liabilities		3,123,702			5,598,484
Total liabilities		349,875,495			296,972,338
Shareholders' equity
Common stock, par value $.01 per share (20,000,000 shares authorized, 8,050,173 issued as of December 31, 2017 and 2016 and 7,802,593 outstanding as of December 31, 2017 and 2016)		80,502			80,502
Additional paid-in capital		28,684,598			28,684,598
Treasury stock, at cost (247,580 shares as of December 31, 2017 and 2016)		(893,947	)		(893,947	)
Accumulated other comprehensive income		4,760,951			818,676
Accumulated earnings		8,620,075			7,590,446
Total shareholders' equity		41,252,179			36,280,275
Total liabilities and shareholders' equity	$	391,127,674		$	333,252,613

See notes to consolidated financial statements.

41

First Trinity Financial Corporation and Subsidiaries

Consolidated Statements of Operations

	Years Ended December 31,
	2017			2016
Revenues
Premiums	$	15,855,686		$	12,870,483
Net investment income		16,710,408			13,190,643
Net realized investment gains		271,470			729,739
Loss on other-than-temporary impairments		(224,250	)		(212,342	)
Other income		116,523			139,967
Total revenues		32,729,837			26,718,490
Benefits, Claims and Expenses
Benefits and claims
Increase in future policy benefits		5,402,902			4,786,377
Death benefits		4,463,854			3,814,049
Surrenders		878,361			728,122
Interest credited to policyholders		8,840,019			6,977,306
Dividend, endowment and supplementary life contract benefits		283,654			296,985
Total benefits and claims		19,868,790			16,602,839
Policy acquisition costs deferred		(9,321,726	)		(7,445,304	)
Amortization of deferred policy acquisition costs		2,870,412			2,202,367
Amortization of value of insurance business acquired		382,190			379,365
Commissions		8,585,278			6,882,311
Other underwriting, insurance and acquisition expenses		8,002,010			5,677,130
Total expenses		10,518,164			7,695,869
Total benefits, claims and expenses		30,386,954			24,298,708
Income before total federal income tax expense (benefit)		2,342,883			2,419,782
Current federal income tax expense		105,696			37,404
Deferred federal income tax expense (benefit)		1,267,823			(208,361	)
Total federal income tax expense (benefit)		1,373,519			(170,957	)
Net income	$	969,364		$	2,590,739
Net income per common share basic and diluted	$	0.12		$	0.33

See notes to consolidated financial statements.

42

First Trinity Financial Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

	Years Ended December 31,
	2017			2016
Net income	$	969,364		$	2,590,739
Other comprehensive income
Total net unrealized investment gains arising during the period		5,071,141			4,880,178
Less net realized investment gains (losses)		(19,437	)		470,438
Net unrealized investment gains		5,090,578			4,409,740
Less adjustment to deferred acquisition costs		87,402			66,626
Other comprehensive income before federal income tax expense		5,003,176			4,343,114
Federal income tax expense		1,060,901			868,621
Total other comprehensive income		3,942,275			3,474,493
Total comprehensive income	$	4,911,639		$	6,065,232

See notes to consolidated financial statements.

43

First Trinity Financial Corporation and Subsidiaries

Consolidated Statements of Changes in Shareholders' Equity

Years Ended December 31, 2017 and 2016

								Accumulated
	Common		Additional					Other					Total
	Stock		Paid-in		Treasury			Comprehensive			Accumulated		Shareholders'
	$.01 Par Value		Capital		Stock			Income (Loss)			Earnings		Equity
Balance as of January 1, 2016	$	80,502	$	28,684,598	$	(893,947	)	$	(2,655,817	)	$	4,999,707	$	30,215,043
Comprehensive income:
Net income		-		-		-			-			2,590,739		2,590,739
Other comprehensive income		-		-		-			3,474,493			-		3,474,493
Balance as of December 31, 2016	$	80,502	$	28,684,598	$	(893,947	)	$	818,676		$	7,590,446	$	36,280,275
Comprehensive income:
Net income		-		-		-			-			969,364		969,364
Federal tax rate change to 21%		-		-		-			-			60,265		60,265
Other comprehensive income		-		-		-			3,942,275			-		3,942,275
Balance as of December 31, 2017	$	80,502	$	28,684,598	$	(893,947	)	$	4,760,951		$	8,620,075	$	41,252,179

See notes to consolidated financial statements.

44

 First Trinity Financial Corporation and Subsidiaries

 Consolidated Statements of Cash Flows

	Years Ended December 31,
	2017			2016
Operating activities
Net income	$	969,364		$	2,590,739
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for depreciation		145,804			146,122
Accretion of discount on investments		(3,102,042	)		(1,948,423	)
Net realized investment gains		(271,470	)		(729,739	)
Loss on other-than-temporary impairments		224,250			212,342
Amortization of policy acquisition cost		2,870,412			2,202,367
Policy acquisition cost deferred		(9,321,726	)		(7,445,304	)
Mortgage loan origination fees deferred		-			(4,531	)
Amortization of loan origination fees		64,555			112,303
Amortization of value of insurance business acquired		382,190			379,365
Allowance for mortgage loan losses		98,388			61,079
Provision for deferred federal income tax expense (benefit)		1,267,823			(208,361	)
Interest credited to policyholders		8,840,019			6,977,306
Change in assets and liabilities:
Accrued investment income		(368,193	)		28,699
Policy loans		(62,059	)		(111,799	)
Short-term investments		(547,969	)		599,855
Recoverable from reinsurers		(81,762	)		(15,320	)
Agents' balances and due premiums		(66,055	)		(349,200	)
Other assets (excludes depreciation of $316 and $633 in 2017 and 2016, respectively, and change in receivable for securities sold of ($5,923,663) and $6,286,370 in 2017 and 2016, respectively)		(1,986,174	)		(2,516,800	)
Future policy benefits		5,396,872			4,802,103
Policy claims		150,699			282,886
Other policy liabilities		(1,364	)		(6,700	)
Other liabilities (excludes change in payable of securities purchased of $228,373 and $234,222 in 2017 and 2016, respectively)		(2,703,155	)		4,426,895
Net cash provided by operating activities		1,898,407			9,485,884
Investing activities
Purchases of fixed maturity securities		(37,095,248	)		(11,338,377	)
Maturities of fixed maturity securities		7,841,000			5,599,000
Sales of fixed maturity securities		12,389,756			14,933,968
Purchases of equity securities		(3,465	)		(34,340	)
Sales of equity securities		-			324,556
Purchases of mortgage loans		(53,913,277	)		(33,480,579	)
Payments on mortgage loans		25,670,590			17,550,870
Purchases of other long-term investments		(14,036,082	)		(17,973,300	)
Collections on other long-term investments		8,663,148			5,436,989
Sale of other long-term investments		792,012			-
Sales of real estate		190,083			43,269
Net change in receivable and payable for securities sold and purchased		6,152,036			(6,052,148	)
Net cash used in investing activities		(43,349,447	)		(24,990,092	)
Financing activities
Policyholders' account deposits		56,666,113			53,989,462
Policyholders' account withdrawals		(17,942,859	)		(13,308,895	)
Net cash provided by financing activities		38,723,254			40,680,567
Increase (decrease) in cash and cash equivalents		(2,727,786	)		25,176,359
Cash and cash equivalents, beginning of period		34,223,945			9,047,586
Cash and cash equivalents, end of period	$	31,496,159		$	34,223,945

See notes to consolidated financial statements.

45

First Trinity Financial Corporation and Subsidiaries

Consolidated Statements of Cash Flows (continued)

Supplemental Disclosure – Cash and Non-Cash Impact on Operating, Investing and Financing Activities

During 2017, the Company reclassified an available-for-sale fixed maturity security totaling $729,737 to other long-term investments due to a recent third party information change indicating the security does not qualify for available-for-sale treatment.

In conjunction with this reclassification, the non-cash impact on investing activities is summarized as follows:

	Year Ended
	December 31, 2017
Reduction in available-for-securities fixed maturity securities	$	729,737
Other long-term investments		(729,737	)
Net cash provided (used) in investing activities	$	-

During 2017 and 2016, the Company foreclosed on residential mortgage loans of real estate totaling $207,482 and $394,427, respectively, and transferred those properties to investment real estate that are now held for sale.

In conjunction with these foreclosures, the non-cash impact on investing activities is summarized as follows:

	Year Ended			Year Ended
	December 31, 2017			December 31, 2016
Reductions in mortgage loans due to foreclosure	$	207,482		$	394,427
Investment real estate held-for-sale acquired through foreclosure		(207,482	)		(394,427	)
Net cash provided (used) in investing activities	$	-		$	-

See notes to consolidated financial statements.

46

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

1. Organization and Significant Accounting Policies

First Trinity Financial Corporation (the “Company” or “FTFC”) is the parent holding company of Trinity Life Insurance Company (“TLIC”), Family Benefit Life Insurance Company (“FBLIC”) and First Trinity Capital Corporation (“FTCC”). The Company was incorporated in Oklahoma on April 19, 2004, for the primary purpose of organizing a life insurance subsidiary.

The Company owns 100% of TLIC. TLIC owns 100% of FBLIC. TLIC and FBLIC are primarily engaged in the business of marketing, underwriting and distributing a broad range of individual life insurance and annuity products to individuals. TLIC’s and FBLIC’s current product portfolio consists of a modified premium whole life insurance policy with a flexible premium deferred annuity rider, whole life, term, final expense, accidental death and dismemberment and annuity products. The term products are both renewable and convertible and issued for 10, 15, 20 and 30 years. They can be issued with premiums fully guaranteed for the entire term period or with a limited premium guarantee. The final expense is issued as either a simplified issue or as a graded benefit, determined by underwriting. The TLIC and FBLIC products are sold through independent agents. TLIC is licensed in the states of Illinois, Kansas, Kentucky, Nebraska, North Dakota, Ohio, Oklahoma and Texas. FBLIC is licensed in the states of Alabama, Arizona, Arkansas, Colorado, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Nebraska, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Virginia and West Virginia.

The Company owns 100% of FTCC that was incorporated in 2006, and began operations in January 2007. FTCC provided financing for casualty insurance premiums for individuals and companies and was licensed to conduct premium financing business in the states of Alabama, Arkansas, Louisiana, Mississippi and Oklahoma. FTCC has made no premium financing loans since June 30, 2012.

Company Capitalization

The Company raised $1,450,000 from two private placement stock offerings during 2004 and $25,669,480 from two public stock offerings and one private placement stock offering from June 22, 2005 through February 23, 2007; June 29, 2010 through April 30, 2012 and August 15, 2012 through March 8, 2013. The Company issued 7,347,488 shares of its common stock and incurred $3,624,518 of offering costs during these private placements and public stock offerings. The Company also issued 702,685 shares of its common stock in connection with two stock dividends paid to shareholders in 2011 and 2012 that resulted in accumulated earnings being charged $5,270,138 with an offsetting credit of $5,270,138 to common stock and additional paid-in capital.

The Company has also purchased 247,580 shares of treasury stock at a cost of $893,947 from former members of the Board of Directors including the former Chairman of the Board of Directors, a former agent, the former spouse of the Company’s Chairman, Chief Executive Officer and President and a charitable organization where a former member of the Board of Directors had donated shares of the Company’s common stock.

Acquisition of Other Companies

On December 23, 2008, FTFC acquired 100% of the outstanding common stock of First Life America Corporation (“FLAC”) from an unaffiliated company. The acquisition of FLAC was accounted for as a purchase. The aggregate purchase price for FLAC was $2,695,234 including direct costs associated with the acquisition of $195,234. The acquisition of FLAC was financed with the working capital of FTFC.

On December 31, 2008, FTFC made FLAC a 15 year loan in the form of a surplus note in the amount of $250,000 with an interest rate of 6% payable monthly, that was approved by the Oklahoma Insurance Department (“OID”). This surplus note is eliminated in consolidation.

On August 31, 2009, two of the Company’s subsidiaries, Trinity Life Insurance Company (“Old TLIC”) and FLAC, were merged, with FLAC being the surviving company. Immediately following the merger, FLAC changed its name to TLIC.

47

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

1. Organization and Significant Accounting Policies (continued)

On December 28, 2011, TLIC acquired 100% of the outstanding common stock of FBLIC from FBLIC’s shareholders. The acquisition of FBLIC was accounted for as a purchase. The aggregate purchase price for the acquisition of FBLIC was $13,855,129. The acquisition of FBLIC was financed with the working capital of TLIC.

On April 28, 2015, the Company acquired a block of life insurance policies and annuity contracts according to the terms of an assumption reinsurance agreement. The Company acquired assets of $3,644,839 (including cash), assumed liabilities of $3,055,916 and recorded a gain on reinsurance assumption of $588,923.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

Principles of Consolidation

The consolidated financial statements include the accounts and operations of the Company and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results.

Investments

Fixed maturity securities are comprised of bonds that are classified as available-for-sale and are carried at fair value with unrealized gains and losses, net of applicable income taxes, reported in accumulated other comprehensive income. The amortized cost of fixed maturity securities available-for-sale is adjusted for amortization of premium and accretion of discount to maturity.

Interest income, as well as the related amortization of premium and accretion of discount, is included in net investment income under the effective yield method. The amortized cost of fixed maturity securities available-for-sale is written down to fair value when a decline in value is considered to be other-than-temporary.

Equity securities available-for-sale is comprised of mutual funds, common stocks and preferred stocks that are carried at fair value. The associated unrealized gains and losses, net of applicable income taxes, are included in accumulated other comprehensive income. The cost of equity securities available-for-sale is written down to fair value when a decline in value is considered to be other-than-temporary. Dividends from these investments are recognized in net investment income when declared.

The Company evaluates the difference between the cost or amortized cost and estimated fair value of its investments to determine whether any decline in value is other-than-temporary in nature.  This determination involves a degree of uncertainty.  If a decline in the fair value of a security is determined to be temporary, the decline is recorded as an unrealized loss in stockholders' equity. If a decline in a security's fair value is considered to be other-than-temporary, the Company then determines the proper treatment for the other-than-temporary impairment.

48

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

1. Organization and Significant Accounting Policies (continued)

For fixed maturity securities available-for-sale, the amount of any other-than-temporary impairment related to a credit loss is recognized in earnings and reflected as a reduction in the cost basis of the security; and the amount of any other-than-temporary impairment related to other factors is recognized in other comprehensive income (loss) with no change to the cost basis of the security.  For equity securities available-for-sale, the amount of any other-than-temporary impairment is recognized in earnings and reflected as a reduction in the cost basis of the security.

The assessment of whether a decline in fair value is considered temporary or other-than-temporary includes management's judgment as to the financial position and future prospects of the entity issuing the security. It is not possible to accurately predict when it may be determined that a specific security will become impaired.  Future adverse changes in market conditions, poor operating results of underlying investments and defaults on mortgage loan payments could result in losses or an inability to recover the current carrying value of the investments, thereby possibly requiring an impairment charge in the future.

Likewise, if a change occurs in the Company’s intent to sell temporarily impaired securities prior to maturity or recovery in value, or if it becomes more likely than not that the Company will be required to sell such securities prior to recovery in value or maturity, a future impairment charge could result.

If an other-than-temporary impairment related to a credit loss occurs with respect to a bond, the Company amortizes the reduced book value back to the security's expected recovery value over the remaining term of the bond.  The Company continues to review the security for further impairment that would prompt another write-down in the value.

Mortgage loans are carried at unpaid balances, net of unamortized premium or discounts. Interest income and the amortization of premiums or discounts are included in net investment income. Mortgage loan fees, certain direct loan origination costs, and purchase premiums and discounts on loans are recognized as an adjustment of yield by the interest method based on the contractual terms of the loan. In certain circumstances, prepayments may be anticipated. The Company has established a valuation allowance for mortgage loans on real estate that are not supported by funds held in escrow.

Investment real estate in buildings held for the production of income is carried at cost less accumulated depreciation. Depreciation on investment real estate in buildings held for the production of income is calculated over an estimated useful life of 19 years. Investment real estate in land held for both the production of income and for sale is carried at cost. Investment real estate obtained through foreclosure on mortgage loans on real estate is carried at the lower of acquisition cost or net realizable value.

Policy loans are carried at unpaid principal balances. Interest income on policy loans is recognized in net investment income at the contract interest rate when earned.

Other long term investments are comprised of lottery prize receivables and are carried at amortized cost, net of unamortized discount. Interest income and the accretion of discount are included in net investment income.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, amounts due from banks and money market instruments.

Short-term investments

Short-term investments include funds that have a maturity of more than 90 days but less than one year at the date of purchase.

Investment Income and Realized Gains and Losses on Sales of Investments

Interest and dividends earned on investments are included in net investment income. Realized gains and losses on sales of investments are recognized in operations on the specific identification basis.

49

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

1. Organization and Significant Accounting Policies (continued)

Deferred Policy Acquisition Costs

Commissions and other acquisition costs which vary with and are primarily related to the successful production of new business are deferred and amortized in a systematic manner based on the related contract revenues or gross profits as appropriate. Recoverability of deferred acquisition costs is evaluated periodically by comparing the current estimate of the present value of expected pretax future profits to the unamortized asset balance. If this current estimate is less than the existing balance, the difference is charged to expense.

Deferred acquisition costs for the successful production of traditional life insurance contracts are deferred to the extent deemed recoverable and amortized over the premium paying period of the related policies using assumptions consistent with those used in computing future policy benefit liabilities. Deferred acquisition costs related to the successful production of insurance and annuity products that subject the Company to mortality or morbidity risk over a period that extends beyond the period or periods in which premiums are collected and that have terms that are fixed and guaranteed (i.e., limited-payment long-duration annuity contracts) are deferred to the extent deemed recoverable and amortized in relation to the present value of actual and expected gross profits on the policies.

To the extent that realized gains and losses on fixed income securities result in adjustments to deferred acquisition costs related to insurance and annuity products, such adjustments are reflected as a component of the amortization of deferred acquisition costs. Deferred acquisition costs related to limited-payment long-duration insurance and annuity contracts are also adjusted, net of tax, for the change in amortization that would have been recorded if the unrealized gains (losses) from available-for-sale securities had actually been realized. This adjustment is included in the change in net unrealized appreciation (depreciation) on available-for-sale securities, a component of “Accumulated Other Comprehensive Income (Loss)” in the shareholders’ equity section of the statement of financial position.

Allowance for Loan Losses from Mortgage Loans and Premium Financing

The allowance for possible loan losses from investments in mortgage loans on real estate and loans from premium financing is a reserve established through a provision for possible loan losses charged to expense which represents, in the Company’s judgment, the known and inherent credit losses existing in the residential and commercial and industrial mortgage loan and premium financing loan portfolios. The allowance, in the judgment of the Company, is necessary to reserve for estimated loan losses inherent in the residential and commercial and industrial mortgage loan and premium finance loan portfolios and reduces the carrying value of investments in mortgage loans on real estate and premium finance loans to the estimated net realizable value on the consolidated statement of financial position.

While the Company utilizes its best judgment and information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond the Company’s control, including the performance of the residential and commercial and industrial mortgage loan and premium finance loan portfolios, the economy and changes in interest rates. The Company’s allowance for possible mortgage loan and premium finance loan losses consists of specific valuation allowances established for probable losses on specific loans and a portfolio reserve for probable incurred but not specifically identified loans.

Mortgage loans and premium finance loans are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the mortgage loan or premium finance loan agreement. Factors considered by the Company in determining impairment include payment status, collateral value of the real estate subject to the mortgage loan, and the probability of collecting scheduled principal and interest payments when due. Mortgage loans and premium finance loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. The Company determines the significance of payment delays and shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the mortgage loan or premium finance loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis.

50

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

1. Organization and Significant Accounting Policies (continued)

Property and Equipment

Property and equipment are carried at cost less accumulated depreciation or amortization. Office furniture, equipment and computer software is recorded at cost or fair value at acquisition less accumulated depreciation or amortization using the straight-line method over the estimated useful life of the respective assets of three to ten years. Leasehold improvements are recorded at cost and depreciated over the remaining non-cancellable lease term.

Reinsurance

The Company cedes reinsurance under various agreements allowing management to control exposure to potential losses arising from large risks and providing additional capacity for growth. Estimated reinsurance recoverable balances are reported as assets and are recognized in a manner consistent with the liabilities related to the underlying reinsured contracts.

Value of Insurance Business Acquired

As a result of the Company’s purchases of FLAC and FBLIC, an asset was recorded in the application of purchase accounting to recognize the value of acquired insurance in force.  The Company’s value of acquired insurance in force is an intangible asset with a definite life and is amortized under Financial Accounting Standards Board (“FASB”) guidance.  The value of acquired insurance in force is amortized primarily over the emerging profit of the related policies using the same assumptions that were used in computing liabilities for future policy benefits.

For the amortization of the value of acquired insurance in force, the Company periodically reviews its estimates of gross profits. The most significant assumptions involved in the estimation of gross profits include interest rate spreads, future financial market performance, business surrender/lapse rates, mortality and morbidity, expenses and the impact of realized investment gains and losses. In the event actual experience differs significantly from assumptions or assumptions are significantly revised, the Company is required to record a charge or credit to amortization expense for the period in which an adjustment is made.

As of December 31, 2017 and 2016, there was $3,213,233 and $2,831,043, respectively, of accumulated amortization of the value of insurance business acquired due to the purchases of FLAC and FBLIC. The Company expects to amortize the value of insurance business acquired by the following amounts over the next five years:  $306,567 in 2018, $286,076 in 2019, $264,029 in 2020, $244,791 in 2021 and $227,007 in 2022.

Other Assets and Other Liabilities

Other assets consist primarily of advances to mortgage loan originator, receivable for securities sold, federal and state income taxes recoverable, accrual of mortgage loan and long-term investment payments due, guaranty funds, notes receivable, prepaid assets, deposits, other receivables, property and equipment and loans from premium financing.

Other liabilities consist primarily of accrued expenses payable, accounts payable, remittance items not allocated, payable for securities purchased, guaranty fund assessments, unclaimed funds, deferred revenue, unearned investment income, withholdings, escrows and other payables.

Policyholders’ Account Balances

The Company’s liability for policyholders’ account balances represents the contract value that has accrued to the benefit of the policyholder as of the financial statement date. This liability is generally equal to the accumulated account deposits plus interest credited less policyholders’ withdrawals and other charges assessed against the account balance. Interest crediting rates for individual annuities range from 2.25% to 4.50%. Interest crediting rates for deposit-type liabilities range from 2.50% to 4.00%.

51

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

1. Organization and Significant Accounting Policies (continued)

Future Policy Benefits

The Company’s liability for future policy benefits is primarily comprised of the present value of estimated future payments to or on behalf of policyholders, where the timing and amount of payment depends on policyholder mortality or morbidity, less the present value of future net premiums. For life insurance and annuity products, expected mortality and morbidity is generally based on the Company’s historical experience or standard industry tables including a provision for the risk of adverse deviation. Interest rate assumptions are based on factors such as market conditions and expected investment returns. Although mortality, morbidity and interest rate assumptions are “locked-in” upon the issuance of new insurance with fixed and guaranteed terms, significant changes in experience or assumptions may require the Company to provide for expected future losses on a product by establishing premium deficiency reserves.

Policy Claims

Policy claim liabilities represent the estimated liabilities for claims reported plus estimated incurred but not yet reported claims developed from trends of historical market data applied to current exposure.

Federal Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Deferred income taxes are provided for cumulative temporary differences between balances of assets and liabilities determined under U.S. GAAP and balances determined using tax bases. A valuation allowance is established for the amount of the deferred tax asset that exceeds the amount of the estimated future taxable income needed to utilize the future tax benefits.

Common Stock

Common stock is fully paid, non-assessable and has a par value of $.01 per share.

Treasury Stock

Treasury stock, representing shares of the Company’s common stock that have been reacquired after having been issued and fully paid, is recorded at the reacquisition cost and the shares are no longer outstanding.

Accumulated Other Comprehensive Income (Loss)

FASB guidance requires the inclusion of unrealized gains or losses on available-for-sale securities, net of tax, as a component of other comprehensive income (loss).  Unrealized gains and losses recognized in accumulated other comprehensive income (loss) that are later recognized in net income through a reclassification adjustment are identified on the specific identification method. In addition, deferred acquisition costs related to limited-payment long-duration insurance and annuity contracts are also adjusted, net of tax, for the change in amortization that would have been recorded if the unrealized gains (losses) from available-for-sale securities had actually been realized. This adjustment is included in the change in net unrealized appreciation (depreciation) on available-for-sale securities, a component of “Accumulated Other Comprehensive Income (loss)” in the shareholders’ equity section of the statement of financial position.

Revenues and Expenses

Revenues on traditional life insurance products consist of direct premiums reported as earned when due. Liabilities for future policy benefits are provided and acquisition costs are amortized in a systematic manner based on the related contract revenues or gross profits as appropriate.

52

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

1. Organization and Significant Accounting Policies (continued)

Acquisition costs for traditional life insurance contracts are deferred to the extent deemed recoverable and are amortized over the premium paying period of the related policies using assumptions consistent with those used in computing future policy benefit liabilities. Traditional life insurance products are treated as long-duration contracts since they are ordinary whole life insurance products, which generally remain in force for the lifetime of the insured.

Deferred acquisition costs related to insurance and annuity products that subject the Company to mortality or morbidity risk over a period that extends beyond the period or periods in which premiums are collected and that have terms that are fixed and guaranteed are deferred to the extent deemed recoverable and amortized in relation to the present value of actual and expected gross profits on the policies. These insurance and annuity contracts are treated as long-duration insurance contracts since the Company is subject to risk from policyholder mortality and morbidity over an extended period.

Net Income per Common Share

Net income per common share basic and diluted is calculated using the weighted average number of common shares outstanding and subscribed during the year. The weighted average outstanding and subscribed common shares basic and diluted were 7,802,593 for both of the years ended December 31, 2017 and 2016.

Subsequent Events

Management has evaluated all events subsequent to December 31, 2017 through the date that these financial statements have been issued.

Recent Accounting Pronouncements

Revenue from Contracts with Customers

In May 2014, the FASB issued updated guidance to clarify the principles for recognizing revenue. While insurance contracts are not within the scope of this updated guidance, the Company's fee income related to providing services will be subject to this updated guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services. The following steps are applied in the updated guidance: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when, or as, the entity satisfies a performance obligation.

In July 2015, the FASB deferred the effective date of the updated guidance on revenue recognition by one year to the quarter ending March 31, 2018.  The adoption of this guidance is not expected to have a material effect on the Company’s result of operations, financial position or liquidity.

Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern

In August 2014, the FASB issued guidance to address the diversity in practice in determining when there is substantial doubt about an entity's ability to continue as a going concern and when an entity must disclose certain relevant conditions and events. The new guidance requires an entity to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued). The new guidance allows the entity to consider the mitigating effects of management's plans that will alleviate the substantial doubt and requires certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans.

53

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

1. Organization and Significant Accounting Policies (continued)

If conditions or events raise substantial doubt that is not alleviated, an entity should disclose that there is substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued), along with the principal conditions or events that raise substantial doubt, management's evaluation of the significance of those conditions or events in relation to the entity's ability to meet its obligations and management's plans that are intended to mitigate those conditions. The guidance is effective for annual periods ending after December 15, 2016, and interim and annual periods thereafter. The adoption of this guidance did not have a material effect on the Company's results of operations, financial position or liquidity since there are no uncertainties about the Company’s ability to continue as a going concern.

Recognition and Measurement of Financial Assets and Financial Liabilities

In January 2016, the FASB issued updated guidance regarding financial instruments. This guidance intends to enhance reporting for financial instruments and addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The significant amendments in this update generally require equity investments to be measured at fair value with changes in fair value recognized in net income, require the use of an exit price notion when measuring the fair value of financial instruments for disclosure purposes and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities. This guidance also intends to enhance the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments.

This guidance is effective for fiscal years beginning after December 15, 2017. The recognition and measurement provisions of this guidance will be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption and early adoption is not permitted. The Company is evaluating this guidance but expects the primary impact will be the recognition of unrealized gains and losses on available-for-sale equity securities in net income. Currently, all unrealized gains and losses on available-for-sale equity securities are recognized in other comprehensive income (loss). The effect of the adoption of this guidance on the Company’s results of operations, financial position and liquidity is primarily dependent on the fair value of the available-for-sale equity securities in future periods, the existence of a deferred tax asset related to available-for-sale securities in future periods and the economic conditions at the time of that future adoption.

Leases

In February 2016, the FASB issued updated guidance regarding leases that generally requires the lessee and lessor to recognize lease assets and lease liabilities on the statement of financial position. A lessee should recognize on the statement of financial position a liability to make lease payments and an asset representing its right-to-use the underlying assets for the lease term. Optional payments to extend the lease or purchase the underlying leased asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise the option(s).

If the lease has a term of 12 months or less, a lessee can make an election to recognize lease expenses for such leases on a straight-line basis over the lease term. There is a differentiation between finance leases and operating leases for the lessee in the statements of operations and cash flows. Finance leases recognize interest on the lease liability separately from the right-to-use the asset whereas an operating lease recognizes a single lease cost allocated over the lease term on a generally straight-line basis. All cash payments are within operating activities in the statement of cash flows except finance leases classify repayments of the principal portion of the lease liability within financing activities.

The accounting applied by the lessor is largely unchanged from that applied under previous U.S. GAAP. Key aspects of the lessor accounting model, however, were aligned with the revenue recognition guidance of Codification Topic 606. The previous accounting model for leverage leases continues to apply only to those leveraged leases that commenced before the effective date of Codification Update 2016-02 Leases (Topic 842).

54

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

1. Organization and Significant Accounting Policies (continued)

Entities will generally continue to account for leases that commenced before the effective date of this update in accordance with previous U.S. GAAP unless the lease is modified. Lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimal rental payments that were tracked and disclosed under previous U.S. GAAP. The updated guidance is to be applied using a modified retrospective approach effective for annual and interim periods beginning after December 15, 2018. Early adoption is permitted.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Investments — Equity Method and Joint Ventures:  Simplifying the Transition to the Equity Method of Accounting

In March 2016, the FASB issued updated guidance that eliminates the requirement to retroactively apply the equity method of accounting when an investment that was previously accounted for using another method of accounting becomes qualified to apply the equity method due to an increase in the level of ownership interest or degree of influence.  If the investment was previously accounted for as an available-for-sale security, any related unrealized gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for the equity method is recognized through earnings.  The updated guidance is effective for reporting periods beginning after December 15, 2016, and is to be applied prospectively. Early adoption was permitted.  The adoption of this guidance did not have an impact on the Company’s results of operations, financial position or liquidity.

Derivatives and Hedging:  Contingent Put and Call Options in Debt Instruments

In March 2016, the FASB issued updated guidance clarifying that when a call (put) option in a debt instrument is contingently exercisable, the event that triggers the ability to exercise the option is considered to be clearly and closely related to the debt instrument (i.e., the economic characteristics and risks of the option are related to interest rates or credit risks) and the entity does not have to assess whether the option should be accounted for separately.

The updated guidance is effective for reporting periods beginning after December 15, 2016. Early adoption was permitted. The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

Financial Instruments — Credit Losses:  Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued updated guidance for the accounting for credit losses for financial instruments. The updated guidance applies a new credit loss model (current expected credit losses or CECL) for determining credit-related impairments for financial instruments measured at amortized cost (e.g. mortgage loans and reinsurance amounts recoverable) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses should consider historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. The expected credit losses, and subsequent adjustments to such losses, will be recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected.

The updated guidance also amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists.

The updated guidance is effective for reporting periods beginning after December 15, 2019. Early adoption is permitted for reporting periods beginning after December 15, 2018. Based on the financial instruments currently held by the Company, the Company expects there would not be a material effect on the Company’s results of operations, financial position or liquidity if the new guidance were able to be adopted in the current accounting period. The impact on the Company’s results of operations, financial position or liquidity at the date of adoption of the updated guidance will be determined by the financial instruments held by the Company and the economic conditions at that time.

55

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

1. Organization and Significant Accounting Policies (continued)

Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments

In August 2016, the FASB issued specific guidance to reduce the existing diversity in practice in how eight specific cash flow issues of certain cash receipts and cash payments are presented and classified in the statement of cash flows. The updated guidance is effective for annual and interim periods beginning after December 15, 2017, and is to be applied retrospectively. Early adoption is permitted.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Consolidation – Interests Held through Related Parties that Are Under Common Control

In October 2016, the FASB issued further guidance that makes targeted amendments to consolidation accounting. This update changes how a reporting entity that is the primary beneficiary of a variable interest entity treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The updated guidance is effective for annual and interim periods beginning after December 15, 2016, and is to be applied retrospectively. Early adoption was permitted.  The adoption of this guidance did not have an impact on the Company’s results of operations, financial position or liquidity.

Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments

In November 2016, the FASB issued specific guidance on the cash flow classification and presentation of changes in restricted cash or restricted cash equivalents when there are transfers between cash, cash equivalents and restricted cash or restricted cash equivalents and when there are direct cash receipts into restricted cash or restricted cash equivalents or direct cash payments made from restricted cash or restricted cash equivalents. The updated guidance is effective for annual and interim periods beginning after December 15, 2017, and is to be applied retrospectively. Early adoption is permitted.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Business Combinations – Clarifying the Definition of a Business

In January 2017, the FASB issued guidance to clarify the definition of a business to assist reporting entities in evaluating whether transactions should be accounted for as an acquisition or disposal of assets or businesses. This update provides a screen to determine when an integrated set of assets or activities is not a business and the requirements to be met to be considered a business.

The updated guidance is effective for annual and interim periods beginning after December 15, 2017, and is to be applied retrospectively. Early adoption is permitted in certain situations.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Intangibles – Goodwill and Other - Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued guidance to modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. Reporting entities will no longer determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. The updated guidance is effective for annual and interim periods beginning after December 15, 2017, and is to be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

56

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

1. Organization and Significant Accounting Policies (continued)

Compensation — Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

In March 2017, the FASB issued updated guidance to improve the presentation of net periodic pension cost and net periodic post retirement cost (net benefit costs). Net benefit costs comprise several components that reflect different aspects of an employer’s financial arrangements as well as the cost of benefits provided to employees.  The update requires that theemployer service cost component be reported in the same lines as other employee compensation cost and that the other components (non-service costs) be presented separately from the service cost and outside of a subtotal of income from operations if one is presented.  The update also allows only the service cost component to be eligible for capitalization in assets when applicable.

The updated guidance is effective for reporting periods beginning after December 15, 2017. The update is to be applied retrospectively with respect to the presentation of service cost and non-service cost and prospectively with respect to applying the service cost only eligible for capitalization in assets guidance. Early adoption is permitted as of the first interim period of an annual period if an entity issues interim financial statements. This pronouncement will not impact the Company since it does not have any pension or postretirement benefit plans and has no intention to adopt such plans.

Compensation — Stock Compensation: Scope of Modification Accounting

In May 2017, the FASB issued updated guidance related to a change to the terms or conditions (modification) of a share-based payment award.  The updated guidance provides that an entity should account for the effects of a modification unless the fair value and vesting conditions of the modified award and the classification of the modified award (equity or liability instrument) are the same as the original award immediately before the modification.

The updated guidance is effective for the quarter ending March 31, 2018.  The update is to be applied prospectively to an award modified on or after the adoption date. Early adoption is permitted in any interim periods for which financial statements have not yet been made available for issuance. The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Target Improvement to Accounting for Hedging Activities

In August 2017, the FASB issued updated authoritative guidance for the application of hedge accounting. The updated guidance updates certain recognition and measurement requirements for hedge accounting. The objective of the guidance is to more closely align the economics of a company’s risk management activities in its financial results and reduce the complexity of applying hedge accounting. The updates include the expansion of hedging strategies that are eligible for hedge accounting, elimination of the separate measurement and reporting of hedge ineffectiveness, presentation of the changes in the fair value of the hedging instrument in the same consolidated statement of operations line as the earnings effect of the hedged item and simplification of hedge effectiveness assessments. This guidance also includes new disclosures and will be applied using a modified retrospective approach by recording a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption.

The updated guidance is effective for reporting periods beginning after December 15, 2018. Early adoption is permitted for reporting periods beginning before December 15, 2018. The Company does not currently and does not intend to participate in hedging activities and there is therefore no impact on the Company’s results of operations, financial position or liquidity. This pronouncement would be adopted if the Company begins to participate in hedging activities in the future.

57

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

2. Investments

Fixed Maturity and Equity Securities Available-For-Sale

Investments in fixed maturity and equity securities available-for-sale as of December 31, 2017 and 2016 are summarized as follows:

			Gross		Gross
	Amortized Cost		Unrealized		Unrealized		Fair
	or Cost		Gains		Losses		Value
	December 31, 2017
Fixed maturity securities
U.S. government and U.S. government agencies	$	2,989,688	$	48,720	$	65,341	$	2,973,067
States and political subdivisions		9,368,393		337,442		20,148		9,685,687
Residential mortgage-backed securities		29,573		41,736		-		71,309
Corporate bonds		109,340,273		5,248,291		491,556		114,097,008
Foreign bonds		21,894,020		1,134,999		172,951		22,856,068
Total fixed maturity securities		143,621,947		6,811,188		749,996		149,683,139
Equity securities
Mutual funds		347,942		1,124		-		349,066
Corporate preferred stock		99,945		775		-		100,720
Corporate common stock		154,977		67,384		-		222,361
Total equity securities		602,864		69,283		-		672,147
Total fixed maturity and equity securities	$	144,224,811	$	6,880,471	$	749,996	$	150,355,286

	December 31, 2016
Fixed maturity securities
U.S. government and U.S. government agencies	$	3,157,889	$	99,086	$	71,592	$	3,185,383
States and political subdivisions		9,172,533		144,947		66,584		9,250,896
Residential mortgage-backed securities		33,970		36,757		-		70,727
Corporate bonds		100,268,424		2,324,712		1,613,095		100,980,041
Foreign bonds		15,677,449		394,742		248,083		15,824,108
Total fixed maturity securities		128,310,265		3,000,244		1,999,354		129,311,155
Equity securities
Mutual funds		344,783		-		2,869		341,914
Corporate preferred stock		99,945		-		3,585		96,360
Corporate common stock		154,672		45,461		-		200,133
Total equity securities		599,400		45,461		6,454		638,407
Total fixed maturity and equity securities	$	128,909,665	$	3,045,705	$	2,005,808	$	129,949,562

58

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

2. Investments (continued)

All securities in an unrealized loss position as of the financial statement dates, the estimated fair value, pre-tax gross unrealized loss and number of securities by length of time that those securities have been continuously in an unrealized loss position as of December 31, 2017 and 2016 are summarized as follows:

			Unrealized		Number of
	Fair Value		Loss		Securities
	December 31, 2017
Fixed maturity securities
Less than 12 months
U.S. government and U.S. government agencies	$	326,163	$	3,897		2
States and political subdivisions		608,342		6,889		3
Corporate bonds		5,995,898		130,337		23
Foreign bonds		2,061,178		98,520		7
Total less than 12 months		8,991,581		239,643		35
More than 12 months
U.S. government and U.S. government agencies		1,338,617		61,444		5
States and political subdivisions		579,008		13,259		4
Corporate bonds		5,139,898		361,219		20
Foreign bonds		501,875		74,431		3
Total more than 12 months		7,559,398		510,353		32
Total fixed maturity securities in an unrealized loss position	$	16,550,979	$	749,996		67

	December 31, 2016
Fixed maturity securities
Less than 12 months
U.S. government and U.S. government agencies	$	1,878,308	$	71,592	6
States and political subdivisions		2,532,653		66,584	14
Corporate bonds		23,721,217		696,066	92
Foreign bonds		5,087,133		155,833	16
Total less than 12 months		33,219,311		990,075	128
More than 12 months
Corporate bonds		8,004,923		917,029	36
Foreign bonds		1,024,548		92,250	6
Total more than 12 months		9,029,471		1,009,279	42
Total fixed maturity securities in an unrealized loss position		42,248,782		1,999,354	170
Equity securities
Less than 12 months
Corporate preferred stock		96,360		3,585	2
Total less than 12 months		96,360		3,585	2
More than 12 months
Mutual funds		89,113		2,869	1
Total more than 12 months		89,113		2,869	1
Total equity securities in an unrealized loss position		185,473		6,454	3
Total fixed maturity and equity securities in an unrealized loss position	$	42,434,255	$	2,005,808	173

As of December 31, 2017, the Company held 67 available-for-sale fixed maturity securities with an unrealized loss of $749,996, fair value of $16,550,979 and amortized cost of $17,300,975. These unrealized losses were primarily due to market interest rate movements in the bond market as of December 31, 2017. The ratio of the fair value to the amortized cost of these 67 securities is 96%.

59

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

2. Investments (continued)

As of December 31, 2016, the Company held 170 available-for-sale fixed maturity securities with an unrealized loss of $1,999,354, fair value of $42,248,782 and amortized cost of $44,248,136. These unrealized losses were primarily due to market interest rate movements in the bond market as of December 31, 2016. The ratio of the fair value to the amortized cost of these 170 securities is 95%.

As of December 31, 2016, the Company had three available-for-sale equity securities with an unrealized loss of $6,454, fair value of $185,473 and cost of $191,927. The ratio of fair value to cost of these securities is 97%.

Fixed maturity securities were 93% and 92% investment grade as rated by Standard & Poor’s as of December 31, 2017 and December 31, 2016, respectively.

The Company’s decision to record an impairment loss is primarily based on whether the security’s fair value is likely to remain significantly below its book value based on all of the factors considered. Factors that are considered include the length of time the security’s fair value has been below its carrying amount, the severity of the decline in value, the credit worthiness of the issuer, and the coupon and/or dividend payment history of the issuer. The Company also assesses whether it intends to sell or whether it is more likely than not that it may be required to sell the security prior to its recovery in value.

For any fixed maturity securities that are other-than-temporarily impaired, the Company determines the portion of the other-than-temporary impairment that is credit-related and the portion that is related to other factors. The credit-related portion is the difference between the expected future cash flows and the amortized cost basis of the fixed maturity security, and that difference is charged to earnings. The non-credit-related portion representing the remaining difference to fair value is recognized in other comprehensive income (loss). Only in the case of a credit-related impairment where management has the intent to sell the security, or it is more likely than not that it will be required to sell the security before recovery of its cost basis, is a fixed maturity security adjusted to fair value and the resulting losses recognized in realized gains (losses) in the consolidated statements of operations. Any other-than-temporary impairments on equity securities are recorded in the consolidated statements of operations in the periods incurred as the difference between fair value and cost.

The Company has recorded other-than-temporary impairments on its fixed maturity available-for-sale investment in an energy corporation with a total par value of $650,000 as a result of continuing unrealized losses. During fourth quarter 2016 this security was initially impaired by a $207,450 charge to the statement of operations. During second quarter 2017 this security was further impaired by a $224,250 charge to the statement of operations. These impairments were considered fully credit-related and represent the difference between the amortized cost basis of the security and its fair value. The Company experienced no additional other-than-temporary impairments on fixed maturity available-for-sale securities for the years ended December 31, 2017 and 2016.

Management believes that the Company will fully recover its cost basis in the securities held as of December 31, 2017, and management does not have the intent to sell nor is it more likely than not that the Company will be required to sell such securities until they recover or mature.  The remaining temporary impairments shown herein are primarily the result of the current interest rate environment rather than credit factors that would imply other-than-temporary impairment. 

60

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

2. Investments (continued)

Net unrealized gains included in other comprehensive income for investments classified as available-for-sale, net of the effect of deferred income taxes and deferred acquisition costs assuming that the appreciation had been realized as of December 31, 2017 and 2016 are summarized as follows:

	December 31, 2017			December 31, 2016
Unrealized appreciation on available-for-sale securities	$	6,130,475		$	1,039,897
Adjustment to deferred acquisition costs		(103,955	)		(16,553	)
Deferred income taxes		(1,265,569	)		(204,668	)
Net unrealized appreciation on available-for-sale securities	$	4,760,951		$	818,676

The amortized cost and fair value of fixed maturity available-for-sale securities as of December 31, 2017, by contractual maturity, are summarized as follows:

	December 31, 2017
	Amortized Cost		Fair Value
Due in one year or less	$	5,567,133	$	5,598,493
Due in one year through five years		32,033,219		32,937,704
Due after five years through ten years		39,235,251		40,412,131
Due after ten years		66,756,771		70,663,502
Due at multiple maturity dates		29,573		71,309
	$	143,621,947	$	149,683,139

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

61

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

2. Investments (continued)

Proceeds and gross realized gains (losses) from the sales, calls and maturities of fixed maturity and equity securities available-for-sale, mortgage loans on real estate, investment real estate and other long-term investments for the years ended December 31, 2017 and 2016 are summarized as follows:

	Years Ended December 31,
	Fixed Maturity Securities						Equity Securities					Mortgage Loans on Real Estate					Investment Real Estate
	2017			2016			2017		2016			2017		2016			2017			2016
Proceeds	$	20,230,756		$	20,532,968		$	-	$	324,556		$	25,670,590	$	17,550,870		$	190,083		$	43,269
Gross realized gains		594,337			643,041			-		100,869			-		101,104			6,050			-
Gross realized losses		(389,524	)		(64,554	)		-		(1,468	)		-		(28,591	)		(1,668	)		(20,662	)
Loss on other-than- temporary impairment		(224,250	)		(207,450	)		-		-			-		-			-			(4,892	)

	Years Ended December 31,
	Other Long-Term Investments
	2017		2016
Proceeds	$	792,012	$	-
Gross realized gains		62,275		-
Gross realized losses		-		-
Loss on other-than- temporary impairment		-		-

The accumulated change in net unrealized investment gains (losses) for fixed maturity and equity securities available-for-sale for the years ended December 31, 2017 and 2016 and the amount of realized investment gains (losses) on fixed maturity and equity securities available-for-sale, mortgage loans on real estate, investment real estate and other long-term investments for the years ended December 31, 2017 and 2016 are summarized as follows:

	Years Ended December 31,
	2017		2016
Change in unrealized investment gains (losses):
Available-for-sale securities:
Fixed maturity securities	$	5,060,302	$	4,473,318
Equity securities		30,276		(63,578	)
Net realized investment gains (losses):
Available-for-sale securities:
Fixed maturity securities		204,813		578,487
Equity securities		-		99,401
Mortgage loans on real estate		-		72,513
Investment real estate		4,382		(20,662	)
Other long-term investments		62,275		-

62

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

2. Investments (continued)

Mortgage Loans on Real Estate

The Company’s mortgage loans by property type as of December 31, 2017 and 2016 are summarized as follows:

	December 31, 2017		December 31, 2016
Commercial and industrial mortgage loans
Retail stores	$	1,227,894	$	1,075,324
Office buildings		137,703		179,484
Industrial		430,613		-
Total commercial and industrial mortgage loans		1,796,210		1,254,808
Residential mortgage loans		100,700,241		73,116,478
Total mortgage loans	$	102,496,451	$	74,371,286

The Company utilizes the ratio of the carrying value of individual residential and commercial and industrial mortgage loans compared to the individual appraisal value to evaluate the credit quality of its mortgage loans on real estate (commonly referred to as the loan-to-value ratio). The Company’s residential and commercial and industrial mortgage loans on real estate by credit quality using this ratio as of December 31, 2017 and 2016 are summarized as follows:

			As of December 31,
			Residential Mortgage Loans				Commercial and Industrial Mortgage Loans				Total Mortgage Loans
Loan-To-Value Ratio			2017		2016		2017		2016		2017		2016
Over 70%	to	80%	$	19,515,632	$	14,559,541	$	-	$	-	$	19,515,632	$	14,559,541
Over 60%	to	70%		36,192,035		29,738,887		-		-		36,192,035		29,738,887
Over 50%	to	60%		25,121,248		15,440,364		835,093		1,051,155		25,956,341		16,491,519
Over 40%	to	50%		12,923,381		10,399,031		-		-		12,923,381		10,399,031
Over 30%	to	40%		4,303,273		2,184,351		658,296		203,653		4,961,569		2,388,004
Over 20%	to	30%		1,867,670		467,410		159,671		-		2,027,341		467,410
Over 10%	to	20%		727,245		317,936		143,150		-		870,395		317,936
10%	or	less		49,757		8,958		-		-		49,757		8,958
	Total		$	100,700,241	$	73,116,478	$	1,796,210	$	1,254,808	$	102,496,451	$	74,371,286

63

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

2. Investments (continued)

The outstanding principal balance of mortgage loans, by the most significant states, as of December 31, 2017 and 2016 are summarized as follows:

	December 31, 2017					December 31, 2016
	Amount		Percentage			Amount		Percentage
Alabama	$	796,489		0.78	%	$	123,940		0.17	%
Arizona		1,666,684		1.63	%		735,704		0.99	%
California		3,973,810		3.88	%		3,516,796		4.73	%
Colorado		206,490		0.20	%		846,964		1.14	%
Connecticut		307,716		0.30	%		245,547		0.33	%
Florida		18,773,474		18.32	%		14,157,109		19.04	%
Georgia		8,019,796		7.82	%		6,761,450		9.09	%
Hawaii		236,758		0.23	%		-		0.00	%
Illinois		11,165,357		10.89	%		10,984,320		14.77	%
Indiana		966,491		0.94	%		548,783		0.74	%
Kansas		421,362		0.41	%		114,098		0.15	%
Kentucky		101,022		0.10	%		104,490		0.14	%
Louisiana		252,457		0.25	%		256,971		0.35	%
Maryland		437,705		0.43	%		-		0.00	%
Massachusetts		293,933		0.29	%		-		0.00	%
Michigan		199,661		0.19	%		491,692		0.66	%
Minnesota		351,397		0.34	%		216,640		0.29	%
Missouri		2,628,265		2.56	%		2,466,872		3.32	%
Nevada		492,840		0.48	%		554,223		0.75	%
New Jersey		334,804		0.33	%		-		0.00	%
New York		2,236,894		2.18	%		419,620		0.56	%
North Carolina		1,009,279		0.98	%		1,048,442		1.41	%
Ohio		2,425,787		2.37	%		1,737,406		2.34	%
Oklahoma		356,203		0.35	%		354,890		0.48	%
Oregon		1,416,750		1.38	%		-		0.00	%
Pennsylvania		211,147		0.21	%		224,879		0.30	%
South Carolina		718,897		0.70	%		345,682		0.46	%
Tennessee		1,465,126		1.43	%		1,190,701		1.60	%
Texas		40,414,632		39.43	%		26,141,950		35.14	%
Washington		239,998		0.23	%		247,125		0.33	%
Wisconsin		282,869		0.28	%		286,319		0.38	%
All other states		92,358		0.09	%		248,673		0.34	%
	$	102,496,451		100	%	$	74,371,286		100	%

There were 23 loans with a remaining principal balance of $3,094,155 that were more than 90 days past due as of December 31, 2017. There were 11 loans with a remaining principal balance of $1,208,379 that were more than 90 days past due as of December 31, 2016.

There were no mortgage loans in default and in the foreclosure process as of December 31, 2017 and 2016.

During 2017 the Company foreclosed on residential mortgage loans of real estate totaling $207,482 and transferred those properties to investment real estate held for sale. During 2016 the Company foreclosed on residential mortgage loans of real estate totaling $394,427 and transferred those properties to investment real estate held for sale.

The principal balances of the 986 residential mortgage loans owned by the Company as of December 31, 2017 that aggregated to $100,700,241 ranged from a low of $84 to a high of $852,011 and the interest rates ranged from 4.13% to 16.07%. The principal balances of the six commercial and two industrial mortgage loans owned by the Company as of December 31, 2017 that aggregated to $1,796,210 ranged from a low of $90,431 to a high of $432,798 and the interest rates ranged from 5.75% to 9.99%.

64

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

2. Investments (continued)

The principal balances of the 755 residential mortgage loans owned by the Company as of December 31, 2016 that aggregated to $73,116,478 ranged from a low of $2,148 to a high of $864,562 and the interest rates ranged from 5.40% to 20.78%. The principal balances of the four commercial mortgage loans owned by the Company as of December 31, 2016 that aggregated to $1,254,808 ranged from a low of $180,386 to a high of $451,554 and the interest rates ranged from 5.75% to 8.25%.

There are allowances for losses on mortgage loans of $342,815 and $244,427 as of December 31, 2017 and 2016, respectively. As of December 31, 2017, $564,479 of independent mortgage loan balances are held in escrow by a third party for the benefit of the Company related to its investment in mortgage loans on real estate with one loan originator. As of December 31, 2016, $525,063 of independent mortgage loan balances were held in escrow by a third party for the benefit of the Company related to its investment in mortgage loans on real estate with one loan originator.

In 2017 and 2016 the Company did not experience any impairment on mortgage loan investments.

Investment real estate

During 2017 the Company foreclosed on residential mortgage loans of real estate totaling $207,482 and transferred those properties to investment real estate held for sale. During 2017, the Company sold investment real estate property with an aggregate carrying value of $185,701. The Company recorded a gross realized investment gain on sale of $4,382 based on an aggregate sales price of $190,083.

During 2016 the Company foreclosed on seven residential mortgage loans of real estate totaling $394,427 and transferred those properties to investment real estate held for sale. During 2016 the Company sold investment real estate property with an aggregate carrying value of $63,931. The Company recorded a gross realized investment loss on sale of $20,662 based on an aggregate sales price of $43,269.

TLIC owns approximately six and one-half acres of land located in Topeka, Kansas that includes a 20,000 square foot office building on approximately one-fourth of this land. This building and land on one of the four lots is held for the production of income. The other three lots of land owned in Topeka, Kansas are held for investment. In addition, FBLIC owns one-half acre of undeveloped land located in Jefferson City, Missouri. During 2016 management impaired the undeveloped land by $4,892 from its carrying value to its net realizable value expected at the time of ultimate resale.

The Company’s investment real estate as of December 31, 2017 and 2016 is summarized as follows:

	December 31,
	2017			2016
Land - held for the production of income	$	213,160		$	213,160
Land - held for investment		745,155			745,155
Total land		958,315			958,315
Building - held for the production of income		2,267,557			2,267,557
Less - accumulated depreciation		(1,195,183	)		(1,049,695	)
Buildings net of accumulated depreciation		1,072,374			1,217,862
Residential real estate - held for sale		352,277			330,496
Total residential real estate		352,277			330,496
Investment real estate, net of accumulated depreciation	$	2,382,966		$	2,506,673

65

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

2. Investments (continued)

Other Long-Term Investments

The Company’s investment in lottery prize cash flows was $55,814,583 and $46,788,873 as of December 31, 2017 and 2016, respectively. The lottery prize cash flows are assignments of the future rights from lottery winners purchased at a discounted price. Payments on these investments are made by state run lotteries.

The amortized cost and estimated fair value of lottery prize cash flows, by contractual maturity, as of December 31, 2017 are summarized as follows:

	December 31, 2017
	Amortized Cost		Fair Value
Due in one year or less	$	8,020,313	$	8,162,983
Due in one year through five years		22,512,241		24,685,185
Due after five years through ten years		15,839,830		19,684,133
Due after ten years		9,442,199		15,766,284
	$	55,814,583	$	68,298,585

The outstanding balance of lottery prize cash flows, by state lottery, as of December 31, 2017 and 2016 are summarized as follows:

	December 31, 2017					December 31, 2016
	Amount		Percentage			Amount		Percentage
Arizona	$	314,056		0.56	%	$	67,009		0.14	%
California		4,892,381		8.77	%		3,725,329		7.96	%
Connecticut		1,734,926		3.11	%		1,554,844		3.32	%
Florida		47,641		0.09	%		92,721		0.20	%
Georgia		3,209,769		5.75	%		1,179,442		2.52	%
Illinois		512,415		0.92	%		565,667		1.21	%
Indiana		1,282,229		2.30	%		1,303,314		2.79	%
Kentucky		-		0.00	%		28,411		0.06	%
Maine		204,839		0.37	%		239,011		0.51	%
Massachusetts		13,613,341		24.39	%		10,262,521		21.93	%
Michigan		294,385		0.53	%		307,892		0.66	%
Missouri		115,906		0.21	%		122,945		0.26	%
New Jersey		12,842		0.02	%		61,823		0.13	%
New York		21,742,899		38.93	%		19,633,916		41.97	%
Ohio		3,125,819		5.60	%		3,476,857		7.43	%
Oregon		107,035		0.19	%		-		0.00	%
Pennsylvania		1,700,591		3.05	%		1,027,361		2.20	%
Texas		2,320,411		4.16	%		2,540,038		5.43	%
Vermont		282,896		0.51	%		293,573		0.63	%
Washington		300,202		0.54	%		306,199		0.65	%
	$	55,814,583		100.00	%	$	46,788,873		100.00	%

66

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

2. Investments (continued)

Major categories of net investment income for the years ended December 31, 2017 and 2016 are summarized as follows:

	Years Ended December 31,
	2017			2016
Fixed maturity securities	$	6,504,233		$	5,970,940
Equity securities		20,167			27,364
Other long-term investments		3,645,043			2,685,639
Mortgage loans		8,364,448			5,774,229
Policy loans		114,246			107,541
Real estate		375,369			340,032
Short-term and other investments		141,259			44,013
Gross investment income		19,164,765			14,949,758
Investment expenses		(2,454,357	)		(1,759,115	)
Net investment income	$	16,710,408		$	13,190,643

3. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) on the measurement date.  The Company also considers the impact on fair value of a significant decrease in volume and level of activity for an asset or liability when compared with normal activity.

The Company holds fixed maturity and equity securities that are measured and reported at fair market value on the consolidated statements of financial position. The Company determines the fair market values of its financial instruments based on the fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value, as follows:

Level 1 - Quoted prices in active markets for identical assets or liabilities. The Company’s Level 1 assets include equity securities that are traded in an active exchange market.

Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. The Company’s Level 2 assets and liabilities include fixed maturity securities with quoted prices that are traded less frequently than exchange-traded instruments or assets and liabilities whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes U.S. Government and agency mortgage-backed debt securities, state and political subdivision securities, corporate debt securities and foreign debt securities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This category generally includes certain private equity investments where independent pricing information was not able to be obtained for a significant portion of the underlying assets.

67

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

3. Fair Value Measurements (continued)

The Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into the three-level fair value hierarchy. If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the valuation inputs, or their ability to be observed, may result in a reclassification for certain financial assets or liabilities. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in and out of the Level 3 category as of the beginning of the period in which the reclassifications occur.

The Company’s fair value hierarchy for those financial instruments measured at fair value on a recurring basis as of December 31, 2017 and 2016 is summarized as follows:

	Level 1		Level 2		Level 3		Total
	December 31, 2017
Fixed maturity securities, available-for-sale
U.S. government and U.S. government agencies	$	-	$	2,973,067	$	-	$	2,973,067
States and political subdivisions		-		9,685,687		-		9,685,687
Residential mortgage-backed securities		-		71,309		-		71,309
Corporate bonds		-		114,097,008		-		114,097,008
Foreign bonds		-		22,856,068		-		22,856,068
Total fixed maturity securities	$	-	$	149,683,139	$	-	$	149,683,139
Equity securities, available-for-sale
Mutual funds	$	-	$	349,066	$	-	$	349,066
Corporate preferred stock		100,720		-		-		100,720
Corporate common stock		160,861		-		61,500		222,361
Total equity securities	$	261,581	$	349,066	$	61,500	$	672,147

	December 31, 2016
Fixed maturity securities, available-for-sale
U.S. government and U.S. government agencies	$	-	$	3,185,383	$	-	$	3,185,383
States and political subdivisions		-		9,250,896		-		9,250,896
Residential mortgage-backed securities		-		70,727		-		70,727
Corporate bonds		-		100,980,041		-		100,980,041
Foreign bonds		-		15,824,108		-		15,824,108
Total fixed maturity securities	$	-	$	129,311,155	$	-	$	129,311,155
Equity securities, available-for-sale
Mutual funds	$	-	$	341,914	$	-	$	341,914
Corporate preferred stock		96,360		-		-		96,360
Corporate common stock		138,633		-		61,500		200,133
Total equity securities	$	234,993	$	341,914	$	61,500	$	638,407

As of December 31, 2017 and 2016, Level 3 financial instruments consisted of two private placement common stocks that have no active trading. During 2016, additional investments in one of the private placement common stocks were purchased.

68

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

3. Fair Value Measurements (continued)

These private placement stocks represent investments in small insurance holding companies. The fair value for these securities was determined through the use of unobservable assumptions about market participants. The Company has assumed a willing market participant would purchase the securities for the same price as the Company paid.

Fair values for Level 1 and Level 2 assets for the Company’s fixed maturity and equity securities available-for-sale are primarily based on prices supplied by a third party investment service. The third party investment service provides quoted prices in the market which use observable inputs in developing such rates.

The Company analyzes market valuations received to verify reasonableness and to understand the key assumptions used and the sources. Since the fixed maturity securities owned by the Company do not trade on a daily basis, the third party investment service prepares estimates of fair value measurements using relevant market data, benchmark curves, sector groupings and matrix pricing. As the fair value estimates of the Company’s fixed maturity securities are based on observable market information rather than market quotes, the estimates of fair value on these fixed maturity securities are included in Level 2 of the hierarchy. The Company’s Level 2 investments include obligations of U.S. government, U.S. government agencies, state and political subdivisions, mortgage-backed securities, corporate bonds and foreign bonds.

The Company’s equity securities are included in Level 1 and Level 2 and the private placement common stocks are included in Level 3. Level 1 for those equity securities classified as such is appropriate since they trade on a daily basis, are based on quoted market prices in active markets and are based upon unadjusted prices. Level 2 for those equity securities classified as such is appropriate since they are not actively traded.

The Company’s fixed maturity and equity securities available-for-sale portfolio is highly liquid and allows for a high percentage of the portfolio to be priced through pricing services.

The change in the fair value of the Company’s Level 3 equity securities available-for-sale for the years ended December 31, 2017 and 2016 is summarized as follows:

	Year Ended December 31,
	2017		2016
Beginning balance	$	61,500	$	46,500
Purchases		-		15,000
Sales		-		-
Impairment		-		-
Ending balance	$	61,500	$	61,500

69

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

3. Fair Value Measurements (continued)

Fair Value of Financial Instruments

The carrying amount and fair value of the Company’s financial assets and financial liabilities disclosed, but not carried, at fair value as of December 31, 2017 and 2016, and the level within the fair value hierarchy at which such assets and liabilities are measured on a recurring basis are summarized as follows:

	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
	December 31, 2017
Financial assets
Mortgage loans on real estate
Commercial and Industrial	$	1,796,210	$	1,783,385	$	-	$	-	$	1,783,385
Residential		100,700,241		102,192,001		-		-		102,192,001
Policy loans		1,660,175		1,660,175		-		-		1,660,175
Short-term investments		547,969		547,969		547,969		-		-
Other long-term investments		55,814,583		68,298,585		-		-		68,298,585
Cash and cash equivalents		31,496,159		31,496,159		31,496,159		-		-
Accrued investment income		2,544,963		2,544,963		-		-		2,544,963
Total financial assets	$	194,560,300	$	208,523,237	$	32,044,128	$	-	$	176,479,109
Financial liabilities
Policyholders' account balances	$	292,909,762	$	243,234,637	$	-	$	-	$	243,234,637
Policy claims		1,148,513		1,148,513		-		-		1,148,513
Total financial liabilities	$	294,058,275	$	244,383,150	$	-	$	-	$	244,383,150

	December 31, 2016
Financial assets
Mortgage loans on real estate
Commercial	$	1,254,808	$	1,268,140	$	-	$	-	$	1,268,140
Residential		73,116,478		70,383,661		-		-		70,383,661
Policy loans		1,598,116		1,598,116		-		-		1,598,116
Other long-term investments		46,788,873		55,890,429		-		-		55,890,429
Cash and cash equivalents		34,223,945		34,223,945		34,223,945		-		-
Accrued investment income		2,176,770		2,176,770		-		-		2,176,770
Total financial assets	$	159,158,990	$	165,541,061	$	34,223,945	$	-	$	131,317,116
Financial liabilities
Policyholders' account balances	$	245,346,489	$	206,541,702	$	-	$	-	$	206,541,702
Policy claims		997,814		997,814		-		-		997,814
Total financial liabilities	$	246,344,303	$	207,539,516	$	-	$	-	$	207,539,516

70

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

3. Fair Value Measurements (continued)

The estimated fair value amounts have been determined using available market information and appropriate valuation methodologies. However, considerable judgment was required to interpret market data 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 following methods and assumptions were used in estimating the fair value disclosures for financial instruments in the accompanying financial statements and notes thereto:

Fixed Maturity Securities and Equity Securities

The fair value of fixed maturity securities and equity securities are based on the principles previously discussed as Level 1, Level 2 and Level 3.

Mortgage Loans on Real Estate

The fair values for mortgage loans are estimated using discounted cash flow analyses. For residential mortgage loans, the discount rate used was indexed to the LIBOR yield curve adjusted for an appropriate credit spread. For commercial and industrial mortgage loans, the discount rate used was assumed to be the interest rate on the last commercial mortgage acquired by the Company.

Cash and Cash Equivalents, Short-Term Investments, Accrued Investment Income and Policy Loans

The carrying value of these financial instruments approximates their fair values. Cash and cash equivalents and short-term investments are included in Level 1 of the fair value hierarchy due to their highly liquid nature.

Other Long-Term Investments

Other long-term investments are comprised of lottery prize receivables and fair value is derived by using a discounted cash flow approach. Projected cash flows are discounted using the average Citigroup Pension Liability Index in effect at the end of each period.

Investment Contracts – Policyholders’ Account Balances

The fair value for liabilities under investment-type insurance contracts (accumulation annuities) is calculated using a discounted cash flow approach.  Cash flows are projected using actuarial assumptions and discounted to the valuation date using risk-free rates adjusted for credit risk and the nonperformance risk of the liabilities.

The fair values for insurance contracts other than investment-type contracts are not required to be disclosed.

Policy Claims

The carrying amounts reported for these liabilities approximate their fair value.

4. Special Deposits

TLIC and FBLIC are required to hold assets on deposit for the benefit of policyholders and other special deposits in accordance with statutory rules and regulations. As of December 31, 2017 and 2016, these required deposits had amortized costs that totaled $4,308,853 and $4,099,405, respectively. As of December 31, 2017 and 2016, these required deposits had fair values that totaled $4,307,439 and $4,125,116, respectively.

71

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

5. Allowance for Loan Losses from Mortgage Loans on Real Estate and Premium Financing Loans

As of December 31, 2017, $564,479 of independent residential mortgage loans on real estate are held in escrow by a third party for the benefit of the Company.   As of December 31, 2017, $394,978 of that escrow amount is available to the Company as additional collateral on $4,925,259 of advances to the loan originator. The remaining December 31, 2017 escrow amount of $169,501 is available to the Company as additional collateral on its investment of $33,900,260 in residential mortgage loans on real estate. In addition, the Company has an additional $342,815 allowance for possible loan losses in the remaining $68,596,191 of investments in mortgage loans on real estate as of December 31, 2017.

As of December 31, 2016, $525,063 of independent mortgage loan balances were held in escrow by a third party for the benefit of the Company related to its investment in $25,523,757 of mortgage loans on real estate with one loan originator. In addition, the Company had an additional $244,427 allowance for possible loan losses in the remaining $48,847,529 of investments in mortgage loans on real estate as of December 31, 2016.

Through June 30, 2012, FTCC financed amounts up to 80% of the premium on property and casualty insurance policies after a 20% or greater down payment was made by the policy owner. The premiums financed were collateralized by the amount of the unearned premium of the insurance policy. Policies that became delinquent were submitted for cancellation and recovery of the unearned premium, up to the amount of the loan balance, 25 days after a payment became delinquent. As of December 31, 2016 the Company established a full allowance for uncollectible receivables against the premium financing asset. In late December of 2016, the Company wrote off the asset by netting the allowance for uncollectible receivables against the premium financing asset. The Company has made no premium financing loans since June 30, 2012.

The balances of and changes in the Company’s credit losses related to mortgage loans on real estate and loans from premium financing as of and for the years ended December 31, 2017 and 2016 are summarized as follows (excluding $33,900,260 and $25,523,757 of mortgage loans on real estate as of December 31, 2017 and 2016, respectively, with one loan originator where independent mortgage loan balances are held in escrow by a third party for the benefit of the Company):

	Years Ended December 31,
	Residential Mortgage Loans				Commercial and Industrial Mortgage Loans					Premium Finance Loans					Total
	2017		2016		2017		2016			2017		2016			2017		2016
Allowance, beginning	$	238,121	$	175,988	$	6,306	$	7,360		$	-	$	197,172		$	244,427	$	380,520
Charge offs		-		-		-		-			-		(347,885	)		-		(347,885	)
Recoveries		-		-		-		-			-		-			-		-
Provision		95,668		62,133		2,720		(1,054	)		-		150,713			98,388		211,792
Allowance, ending	$	333,789	$	238,121	$	9,026	$	6,306		$	-	$	-		$	342,815	$	244,427
Allowance, ending:
Individually evaluated for impairment	$	-	$	-	$	-	$	-		$	-	$	-		$	-	$	-
Collectively evaluated for impairment	$	333,789	$	238,121	$	9,026	$	6,306		$	-	$	-		$	342,815	$	244,427
Carrying Values:
Individually evaluated for impairment	$	-	$	-	$	-	$	-		$	-	$	-		$	-	$	-
Collectively evaluated for impairment	$	66,799,981	$	47,592,721	$	1,796,210	$	1,254,808		$	-	$	-		$	68,596,191	$	48,847,529

72

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

6. Deferred Policy Acquisition Costs

The balances of and changes in deferred acquisition costs as of and for the years ended December 31, 2017 and 2016 are summarized as follows:

	2017			2016
Balance, beginning of year	$	18,191,990		$	13,015,679
Capitalization of commissions, sales and issue expenses		9,321,726			7,445,304
Amortization		(2,870,412	)		(2,202,367	)
Deferred acquisition costs allocated to investments		(87,402	)		(66,626	)
Balance, end of year	$	24,555,902		$	18,191,990

7. Federal Income Taxes

FTFC files a consolidated federal income tax return with FTCC but does not file a consolidated tax return with TLIC or FBLIC. TLIC and FBLIC are taxed as life insurance companies under the provisions of the Internal Revenue Code. Life insurance companies must file separate tax returns until they have been a member of the consolidated filing group for five years. However, in 2017 and 2016, TLIC and FBLIC filed combined life insurance company 2016 and 2015 federal tax returns and intend to also file a combined life insurance company 2017 federal tax return for TLIC and FBLIC in 2018.

Certain items included in income reported for financial statement purposes are not included in taxable income for the current period, resulting in deferred income taxes.

A reconciliation of federal income tax expense (benefit) computed by applying the federal income tax rate of 34% to income before federal income tax expense for the years ended December 31, 2017 and 2016 is summarized as follows:

	Years Ended December 31,
	2017			2016
Expected tax expense	$	796,580		$	822,726
Net operating losses		649,460			(690,905	)
Loss contingency accrued for lawsuit settlement		385,331			-
Capital gain taxes		185,461			72,249
Future policy benefits		151,017			282,062
Value of life insurance business acquired		108,773			53,111
Deferred policy acquisition costs		(611,407	)		(651,873	)
Small life insurance company deduction		(153,956	)		(62,303	)
Accrual of discount		(68,679	)		(183,393	)
Adjustment of prior years' taxes		(23,068	)		(15,075	)
Difference in book versus tax basis of available-for-sale fixed maturity securities		(7,273	)		159,763
Other		(38,720	)		42,681
Total income tax expense (benefit)	$	1,373,519		$	(170,957	)

73

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

7. Federal Income Taxes (continued)

Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax liabilities and assets as of December 31, 2017 and 2016 are summarized as follows:

	December 31,
	2017			2016
Deferred tax liabilities:
Net unrealized investment gains	$	1,265,569		$	204,668
Available-for-sale fixed maturity securities		89,439			232,889
Deferred policy acquisition costs		4,317,272			2,944,563
Reinsurance recoverable		249,822			251,788
Investment real estate		38,700			35,940
Value of insurance business acquired		1,160,595			1,181,767
Due premiums		26,036			25,914
Other assets		6,962			5,819
Other		2,363			3,798
Total deferred tax liabilities		7,156,758			4,887,146
Deferred tax assets:
Policyholders' account balances and future policy benefits		2,308,001			1,965,397
Policy claims		13,993			25,983
Unearned investment income		12,941			9,491
Available-for-sale equity securities		51,554			48,945
Mortgage loans		42,175			7,578
Alternative minimum tax carryforward		305,538			276,571
Net operating loss carryforward		1,057,511			1,843,238
Net capital loss carryforward		8,925			14,450
Dividend liability		10,823			10,652
Loss contingency accrued for lawsuit settlement		385,331			-
Other		6,962			5,821
Total deferred tax assets		4,203,754			4,208,126
Valuation allowance		(8,925	)		(14,450	)
Net deferred tax assets		4,194,829			4,193,676
Net deferred tax liabilities	$	2,961,929		$	693,470

FTFC has net operating loss carryforwards of $5,035,767 expiring in 2024 through 2033. FTFC has capital loss carryforwards of $42,500 expiring in 2018 that are subject to a full valuation allowance as of December 31, 2017 and 2016 since it is not probable that the capital loss carryforwards will be utilized. During 2017, FTFC utilized $284,560 of the net operating loss carryforward existing as of January 1, 2017 to offset 2017 federal taxable income. During 2016, FTFC utilized $299,347 of the net operating loss carryforward existing as of January 1, 2016 to offset 2016 federal taxable income.

Due to FTFC’s taxable income generated in 2017, 2016, 2015 and 2014 and FTFC’s projected taxable income in future years, the valuation allowance on FTFC’s net operating loss carryforward was reduced by $1,699,953 during 2016 since it is probable the entire net operating loss carryforwards will be utilized.

74

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

7. Federal Income Taxes (continued)

During 2017, TLIC utilized the remaining $116,225 net operating loss carryforwards originated from the acquisition of FLAC and existing as of January 1, 2017 to offset a portion of 2017 federal taxable income. During 2016, TLIC utilized $135,000 of the net operating loss carryforward existing as of January 1, 2016 to offset a portion of 2016 federal taxable income.

During 2017, FBLIC utilized the remaining $55,409 net operating loss carry forwards generated in 2016 and existing as of January 1, 2017 to offset a portion of 2017 federal taxable income.

The Company has no known uncertain tax benefits within its provision for income taxes beyond the $1,834,910 loss contingency accrued for a lawsuit settlement. In addition, the Company does not believe it would be subject to any penalties or interest relative to any open tax years and, therefore, have not accrued any such amounts. The Company files U.S. federal income tax returns and income tax returns in various state jurisdictions.  The 2015 through 2017 U.S. federal tax years are subject to income tax examination by tax authorities. The Company classifies any interest and penalties (if applicable) as income tax expense in the financial statements.

8. Reinsurance

TLIC participates in reinsurance in order to provide risk diversification, additional capacity for future growth and limit the maximum net loss potential arising from large risks. TLIC reinsures all amounts of risk on any one life in excess of $75,000 for individual life insurance with Investors Heritage Life Insurance Company, Optimum Re Insurance Company (“Optimum Re”) and Wilton Reassurance Company (“Wilton Re”).

TLIC is a party to an Automatic Retrocession Pool Agreement (the “Reinsurance Pool”) with Optimum Re, Catholic Order of Foresters, American Home Life Insurance Company and Woodmen of the World. The agreement provides for automatic retrocession of coverage in excess of Optimum Re’s retention on business ceded to Optimum Re by the other parties to the Reinsurance Pool. TLIC’s maximum exposure on any one insured under the Reinsurance Pool is $75,000. As of January 1, 2008, the Reinsurance Pool stopped accepting new cessions.

Effective September 29, 2005, FLAC and Wilton Re executed a binding letter of intent whereby both parties agreed that FLAC would cede the simplified issue version of its Golden Eagle Whole Life (Final Expense) product to Wilton Re on a 50/50 quota share original term coinsurance basis. The letter of intent was executed on a retroactive basis to cover all applicable business issued by FLAC subsequent to January 1, 2005. Wilton Re agreed to provide various commission and expense allowances to FLAC in exchange for FLAC ceding 50% of the applicable premiums to Wilton Re as they were collected. As of June 24, 2006, Wilton Re terminated the reinsurance agreement for new business issued after the termination date.

FBLIC also participates in reinsurance in order to provide risk diversification, additional capacity for future growth and limit the maximum net loss potential arising from large risks. FBLIC reinsures initial amounts of risk on any one life in excess of $75,000 for individual life insurance with Optimum Re. TLIC and FBLIC also reinsure the accidental death benefit portion of their life policies under a bulk agreement with Optimum Re.

To the extent that the reinsurance companies are unable to meet their obligations under the reinsurance agreements, TLIC and FBLIC remain primarily liable for the entire amount at risk.

75

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

8. Reinsurance (continued)

Reinsurance assumed and ceded amounts for TLIC and FBLIC for 2017 and 2016 are summarized as follows:

	2017		2016
Premiums assumed	$	48,347	$	42,342
Commissions and expense allowances assumed		105		57
Benefits assumed		20,027		21,864
Reserve credits assumed		59,464		59,226
In force amount assumed		16,478,162		17,621,570
Premiums ceded		350,591		375,796
Commissions and expense allowances ceded		3,133		4,716
Benefits ceded		447,988		197,467
Reserve credits ceded		1,057,596		1,057,934
In force amount ceded		48,734,604		53,453,666

9. Leases

The Company leases 6,769 square feet of office space pursuant to an original five-year lease that began October 1, 2010 and was amended on October 1, 2015 for another five-year term. Under the terms of the original home office lease, the monthly rent was $7,897 from October 1, 2010 through September 30, 2015. Under the terms of the amended home office lease, the monthly rent is $8,461 from October 1, 2015 through September 30, 2016, $8,630 from October 1, 2016 through September 30, 2017 and $8,805 from October 1, 2017 through September 30, 2018 with increases of two percent each twelve month period from October 1, 2018 through September 30, 2020. The Company incurred rent expense (including charges for the lessor’s building operating expenses above those specified in the lease agreement less monthly amortization of the leasehold improvement allowance received from the lessor) of $92,041 and $93,415 for the years ended December 31, 2017 and 2016, respectively, under this lease.

On January 1, 2011, the Company received a $120,000 leasehold improvement allowance from the lessor related to the original lease that was fully amortized by September 30, 2015. In accordance with the amended lease on October 1, 2015, the Company was provided an allowance of $54,152 for leasehold improvements. The leasehold improvement allowance is amortized over the remaining amended non-cancellable lease term and reduced rent expense by $14,491, $8,627 and $1,250 for the years ended December 31, 2017, 2016 and 2015, respectively. The future minimum lease payments to be paid under the amended non-cancellable lease agreement are $106,189, $108,304 and $82,446 for the years 2018 through 2020, respectively.

TLIC owns approximately six and one-half acres of land located in Topeka, Kansas. A 20,000 square foot office building has been constructed on approximately one-fourth of this land.

TLIC executed a two year lease agreement effective January 1, 2015, for 7,500 square feet of its building in Topeka, Kansas. Effective January 1, 2017, this lease was renewed for two years. The terms of the lease leave TLIC responsible for paying real estate taxes, building insurance and building and ground maintenance. The monthly lease payments are $8,696 for 2015, 2016, 2017 and 2018.

TLIC renewed a five year lease agreement effective June 1, 2011, for 10,000 square feet in the Topeka, Kansas office building. Beginning June 1, 2014, the lessee can terminate the lease with a 180 day written notice. The terms of the lease leave TLIC responsible for paying real estate taxes, building insurance and building and ground maintenance with partial reimbursement from the lessee. The lease agreement calls for minimum monthly base lease payments of $17,750.

76

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

9. Leases (continued)

This 10,000 square feet lease was renewed for five years to be effective from June 1, 2016 through May 31, 2021, with an option for an additional five years from June 1, 2021 through May 31, 2026. Beginning June 1, 2021, the lessee can terminate the lease with a 120 day written notice. The terms of the lease leave TLIC responsible for paying real estate taxes, building insurance and building and ground maintenance with partial reimbursement from the lessee. The lease agreement calls for a monthly lease payment of $16,598 from June 1, 2016 through June 30, 2016. Starting July 1, 2016, the lease agreement includes an $88,833 tenant improvement allowance that is amortized over 59 months with interest at 5.00%. The monthly lease payments are $18,299 from July 1, 2016 through June 30, 2017 and $18,376 from July 1, 2017 through May 31, 2021.

A five year lease agreement effective September 1, 2010 automatically renewed on 2,500 square feet of the Topeka, Kansas office building with a 90 day notice by the lessee to terminate the lease. This lease was renewed on September 1, 2015 to run through August 31, 2017 with an option for an additional three years through August 31, 2020. Beginning September 1, 2017, the lessee can terminate the lease with a 120 day written notice. The terms of the lease leave TLIC responsible for paying real estate taxes, building insurance and building and ground maintenance with partial reimbursement from the lessee. The lease payments are $4,236 per month from September 1, 2015 through August 31, 2016, $4,242 from September 1, 2016 through September 30, 2017 and $4,263 from October 1, 2017 through December 31, 2017.

The future minimum lease payments to be received under the non-cancellable lease agreements are $324,858, $220,512, $220,512 and $91,880 for the years 2018 through 2021, respectively.

10. Shareholders’ Equity and Statutory Accounting Practices

TLIC is domiciled in Oklahoma and prepares its statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the OID. FBLIC is domiciled in Missouri and prepares its statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the Missouri Department of Insurance. Prescribed statutory accounting practices include publications of the National Association of Insurance Commissioners, state laws, regulations, and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed. Statutory accounting practices primarily differ from U.S. GAAP by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions and valuing investments, deferred taxes, and certain assets on a different basis.

The statutory net income for TLIC amounted to $243,754 and $1,927,154 for the years ended December 31, 2017 and 2016, respectively. The statutory capital and surplus of TLIC was $11,248,234 and $11,129,493 as of December 31, 2017 and 2016, respectively. The statutory net income for FBLIC amounted to ($1,528,459) and $6,645 for the years ended December 31, 2017 and 2016, respectively. The statutory capital and surplus of FBLIC was $7,603,475 and $9,141,799 as of December 31, 2017 and 2016, respectively.

TLIC is subject to Oklahoma laws and FBLIC is subject to Missouri laws that limit the amount of dividends insurance companies can pay to stockholders without approval of the respective Departments of Insurance. The maximum dividend, which may be paid in any twelve-month period without notification or approval, is limited to the greater of 10% of statutory surplus as of December 31 of the preceding year or the net gain from operations of the preceding calendar year. Cash dividends may only be paid out of surplus derived from realized net profits. Based on these limitations, there is capacity for TLIC to pay a dividend up to $1,124,823 in 2018 without prior approval. In addition, based on those limitations, there is the capacity for FBLIC to pay a dividend up to $760,348 in 2018 without prior approval. FBLIC paid dividends of $1,000,000 to TLIC in 2016. These dividends are eliminated in consolidation. TLIC has paid no dividends to FTFC.

77

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

11. Segment Data

The Company has a life insurance segment, consisting of the life insurance operations of TLIC and FBLIC, an annuity segment, consisting of the annuity operations of TLIC and FBLIC and a corporate segment. Results for the parent company and the operations of FTCC, after elimination of intercompany amounts, are allocated to the corporate segment.

These segments as of and for the years ended December 31, 2017 and 2016 are summarized as follows:

	Year Ended December 31,
	2017			2016
Revenues:
Life insurance operations	$	18,308,660		$	14,996,543
Annuity operations		14,061,953			11,135,950
Corporate operations		359,224			585,997
Total	$	32,729,837		$	26,718,490
Income (loss) before income taxes:
Life insurance operations	$	(207,655	)	$	866,648
Annuity operations		2,280,615			1,271,600
Corporate operations		269,923			281,534
Total	$	2,342,883		$	2,419,782
Depreciation and amortization expense:
Life insurance operations	$	2,528,920		$	2,081,066
Annuity operations		934,041			759,091
Total	$	3,462,961		$	2,840,157

	December 31,
	2017		2016
Assets:
Life insurance operations	$	56,780,793	$	50,577,282
Annuity operations		328,727,443		275,745,766
Corporate operations		5,619,438		6,929,565
Total	$	391,127,674	$	333,252,613

12.          Concentrations of Credit Risk

Credit risk is limited by diversifying the Company’s investments. The Company maintains cash and cash equivalents at multiple institutions. The Federal Deposit Insurance Corporation insures accounts up to $250,000. Uninsured balances aggregate $21,835,216 as of December 31, 2017. Other funds are invested in mutual funds that invest in U.S. government securities. The Company monitors the solvency of all financial institutions in which it has funds to minimize the exposure for loss. The Company has not experienced any losses in such accounts. The Company’s lottery prize receivables due from various states and the geographical distribution of the Company’s mortgage loans by state are summarized in Note 2.

78

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

13.      Contingent Liabilities

A lawsuit filed by the Company and Chairman, President and Chief Executive Officer, Gregg E. Zahn, against former Company Board of Directors member Wayne Pettigrew and Mr. Pettigrew's company, Group & Pension Planners, Inc. (the "Defendants"), concluded on February 17, 2017. The lawsuit was filed in the District Court of Tulsa County, Oklahoma (Case No. CJ-2013-03385). In the lawsuit, the Company alleged that Mr. Pettigrew had defamed the Company by making untrue statements to certain shareholders of the Company, to the press and to regulators of the state of Oklahoma and had breached his fiduciary duties.

The jury concluded that Mr. Pettigrew, while still a member of the Company’s Board of Directors, did, in fact, make untrue statements regarding the Company and Mr. Zahn and committed breaches of his fiduciary duties to the Company and the jury awarded the Company $800,000 of damages against Mr. Pettigrew. In addition, the jury found that Mr. Pettigrew had defamed Mr. Zahn and intentionally inflicted emotional distress on Mr. Zahn and awarded Mr. Zahn $3,500,000 of damages against Mr. Pettigrew. In addition to the damages awarded by the jury, the Company and Mr. Zahn have initiated steps to aggressively communicate the correction of the untrue statements to outside parties.

Mr. Pettigrew has appealed this decision but has failed to post an appeal bond. As a consequence, the Company and Mr. Zahn are in the process of executing on the judgments against Mr. Pettigrew’s assets. The Company and Mr. Zahn have so far collected some property and money in the execution process and will continue to execute on the judgments. Any money or property collected to date during the execution of the judgments are held in escrow by a third party, have not been reflected in the December 31, 2017 consolidated financial statements, would have to be returned to Mr. Pettigrew in the event the judgments are reversed by the appellate courts.

Prior to being acquired by TLIC, FBLIC developed, marketed, and sold life insurance products known as “Decreasing Term to 95” policies. On January 17, 2013, FBLIC’s Board of Directors voted that, effective March 1, 2013, it was not approving, and therefore was not providing, a dividend for the Decreasing Term to 95 policies. On November 22, 2013, a lawsuit was filed in the Circuit Court of Greene County, Missouri asserting claims against FBLIC relating to this decision. A trial was held November 27, 2017 through December 1, 2017 on the individual claims of two policyholders asserting fraud and negligent misrepresentation and on claims of a class of Missouri residents asking the Court to (1) find that the dividend provisions in the Decreasing Term to 95 policies violate Missouri law, specifically, § 376.360 RSMo.; (2) order that the policies are void ab initio; and (3) order that FBLIC return all premiums collected under these policies, plus interest and attorneys’ fees.

Following the conclusion of the trial, subject to the approval of the Court, the parties reached a settlement resolving of both the individual and class claims. If approved by the Court, FBLIC will pay $1.85 million as accrued in the consolidated financial statements to resolve all class and individual claims and all active Decreasing Term to 95 policies for individuals in the class will be cancelled. A hearing date for approval of the settlement has not yet been scheduled.

Guaranty fund assessments, brought about by the insolvency of life and health insurers, are levied at the discretion of the various state guaranty fund associations to cover association obligations. In most states, guaranty fund assessments may be taken as a credit against premium taxes, typically over a five-year period.

14. Related Party Transactions

On April 15, 2017, the Company renewed its previous one-year loan of $400,000 to its former Chairman. The renewed loan has a term of one year and a contractual interest rate of 5.00%. The loan is collateralized by 100,000 shares of the Company’s Class A Common stock owned by the former Chairman. This loan is included in other assets in the consolidated statements of financial position.

79

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

15. Other Comprehensive Income and Accumulated Other Comprehensive Income (Loss)

The changes in the components of the Company’s accumulated other comprehensive income (loss) for the years ended December 31, 2017 and 2016 are summarized as follows:

	Years Ended December 31, 2017 and 2016
	Unrealized
	Appreciation						Accumulated
	(Depreciation) on			Adjustment to			Other
	Available-For-Sale			Deferred Acquisition			Comprehensive
	Securities			Costs			Income (Loss)
Balance as of January 1, 2017	$	831,917		$	(13,241	)	$	818,676
Other comprehensive income before reclassifications, net of tax		3,995,829			(68,869	)		3,926,960
Less amounts reclassified from accumulated other comprehensive income, net of tax		(15,315	)		-			(15,315	)
Other comprehensive income		4,011,144			(68,869	)		3,942,275
Balance as of December 31, 2017	$	4,843,061		$	(82,110	)	$	4,760,951
Balance as of January 1, 2016	$	(2,695,876	)	$	40,059		$	(2,655,817	)
Other comprehensive income before reclassifications, net of tax		3,904,143			(53,300	)		3,850,843
Less amounts reclassified from accumulated other comprehensive income, net of tax		376,350			-			376,350
Other comprehensive income		3,527,793			(53,300	)		3,474,493
Balance as of December 31, 2016	$	831,917		$	(13,241	)	$	818,676

The pretax components of the Company’s other comprehensive income and the related income tax expense (benefit) for each component for the years ended December 31, 2017 and 2016 are summarized as follows:

	Year Ended December 31, 2017
				Income Tax
				Expense
	Pretax			(Benefit)			Net of Tax
Other comprehensive income:
Change in net unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	$	5,071,141		$	1,075,312		$	3,995,829
Less reclassification adjustment for net losses included in income		(19,437	)		(4,122	)		(15,315	)
Net unrealized gains on investments		5,090,578			1,079,434			4,011,144
Adjustment to deferred acquisition costs		(87,402	)		(18,533	)		(68,869	)
Total other comprehensive income	$	5,003,176		$	1,060,901		$	3,942,275

Other comprehensive income:		Year Ended December 31, 2016
Change in net unrealized gains on available-for-sale securities:
Unrealized holding gains arising during the period	$	4,880,178		$	976,035		$	3,904,143
Less reclassification adjustment for net gains included in income		470,438			94,088			376,350
Net unrealized gains on investments		4,409,740			881,947			3,527,793
Adjustment to deferred acquisition costs		(66,626	)		(13,326	)		(53,300	)
Total other comprehensive income	$	4,343,114		$	868,621		$	3,474,493

Realized gains and losses on the sales of investments are determined based upon the specific identification method and include provisions for other-than-temporary impairments where appropriate.

80

First Trinity Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2017 and 2016

15. Other Comprehensive Income and Accumulated Other Comprehensive Income (Loss) (continued)

The pretax and the related income tax components of the amounts reclassified from the Company’s accumulated other comprehensive income (loss) to the Company’s consolidated statements of operations for the years ended December 31, 2017 and 2016 are summarized as follows:

	Years Ended December 31,
Reclassification Adjustments	2017			2016
Unrealized gains (losses) on available-for-sale securities:
Realized gains (losses) on sales of securities (a)	$	(19,437	)	$	470,438
Income tax expense (benefit) (b)		(4,122	)		94,088
Total reclassification adjustments	$	(15,315	)	$	376,350

(a) These items appear within net realized investment gains and loss on other-than-temporaryimpairments in the consolidated statements of operations.

(b) These items appear within federal income taxes in the consolidated statements of operations.

81

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

None

Item 9A. Controls and Procedures. (This report shall not be deemed to be filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section).

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (“Certifying Officers”), has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934 as amended (“Exchange Act”) as of the end of the fiscal period covered by this Annual Report on Form 10-K. Based upon such evaluation, the Certifying Officers have concluded that the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is made known to management, including our Certifying Officers, as appropriate, to allow timely decisions regarding disclosure and that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operating, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Management’s Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. As of the end of the period covered by this annual report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Certifying Officers, of the effectiveness of the design and operation of the Company’s internal controls over financial reporting as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. The standard measures adopted by management in making its evaluation are the measures in the Internal-Control Integrated Framework (2013) published by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon such evaluation, management has determined that internal control over financial reporting was effective as of December 31, 2017.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to the attestation by the Company’s 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.

Limitations on the Effectiveness of Controls

The Company’s management, including the Certifying Officers, does not expect that the disclosure controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.

82

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes to Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the twelve months ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information

None

Part III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this Item is incorporated by reference from the Company’s proxy statement for the 2018 annual meeting of shareholders to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934.

Item 11. Executive Compensation

The information required by this Item is incorporated by reference from the Company’s proxy statement for the 2018 annual meeting of shareholders to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934.

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

The information required by this Item is incorporated by reference from the Company’s proxy statement for the 2018 annual meeting of shareholders to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this Item is incorporated by reference from the Company’s proxy statement for the 2018 annual meeting of shareholders to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934.

Item 14. Principal Accounting Fees and Services

The information required by this Item is incorporated by reference from the Company’s proxy statement for the 2018 annual meeting of shareholders to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934.

Item 15. Exhibits

The exhibits are listed in the Exhibit Index, which is incorporated herein by reference.

83

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FIRST TRINITY FINANCIAL CORPORATION
Date March 8, 2018	By	/s/ Gregg E. Zahn
		Gregg E. Zahn
		President, Chief Executive Officer and Director

In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FIRST TRINITY FINANCIAL CORPORATION
Date March 8, 2018	By	/s/ Jeffrey J. Wood
		Jeffrey J. Wood
		Chief Financial Officer

SIGNATURES

In accordance with the requirements of the Exchange Act, 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/ Gregg E. Zahn	Date  March 8, 2018
	Gregg E. Zahn
	Chairman of the Board, President, Chief Executive Officer and Director
By	/s/ William S. Lay	Date  March 8, 2018
	William S. Lay
	Vice President, Chief Investment Officer and Director
By	/s/ Bill H. Hill	Date  March 8, 2018
	Bill H. Hill, Director
By	/s/ Will W. Klein	Date  March 8, 2018
	Will W. Klein, Director
By	/s/ Gerald J. Kohout	Date  March 8, 2018
	Gerald J. Kohout, Director
By	/s/ Charles W, Owens	Date  March 8, 2018
	Charles W. Owens, Director
By	/s/ George E. Peintner	Date  March 8, 2018
	George E, Peintner, Director
By	/s/ Gary L. Sherrer	Date  March 8, 2018
	Gary L. Sherrer, Director

84

EXHIBIT INDEX

Exhibit Number		Description of Exhibit
	3.1	Amended Certificate of Incorporation, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed June 17, 2009.

3.2 By-laws, as amended and restated, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed May 1, 2009.

4.1 Specimen Stock Certificate, incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form 10SB12G filed April 30, 2007.

5.1 Opinion of Cooper & Newsome PLLP, incorporated by reference to Exhibit 5.1 of the Pre-Effective Amendment No. 2 to the Registration Statement on Form S-1/A filed June 23, 2010.

5.2 Opinion of Hall, Estill, Hardwick, Gable, Golden & Nelson, P.C., incorporated by reference to Exhibit 5.2 of the Pre-Effective Amendment No. 3 to the Registration Statement on Form POS AM filed March 31, 2011.

5.3 Opinion of Hall, Estill, Hardwick, Gable, Golden & Nelson, P.C., incorporated by reference to Exhibit 5.3 of the Pre-Effective Amendment No. 3 to the Registration Statement on Form POS AM filed April 3, 2012.

10.1 Administrative Service Agreement between TLIC (formerly FLAC) and Investors Heritage Life Insurance Company, incorporated by reference as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed June 17, 2009.

10.2 Lease Agreement, incorporated by reference as Exhibit 10.2 to the Company’s Registration Statement on Form 10SB12G filed April 30, 2007.

10.3 Reinsurance Agreement with Investors Heritage Life Insurance Company is incorporated by reference as Exhibit 10.3 to the Company’s Registration Statement on Form 10SB12G/A filed July 23, 2007.

10.4 Reinsurance Agreement with Munich American Reinsurance Company is incorporated by reference as Exhibit 10.4 to the Company’s registration statement on Form 10SB12G/A filed July 23, 2007.

10.5 First Amendment to Lease Agreement between First Trinity Financial Corporation and Amejak Limited Partnership dated July 1, 2008, incorporated by reference as Exhibit 10.6 to the Company’s Annual report on Form 10-K filed April 14, 2009.

10.6 Supplemental Lease Agreement dated July 10, 2006 between First Life America Corporation and the United States of America, incorporated by reference as Exhibit 10.7 of the Company’s Annual Report on Form 10-K filed April 14, 2009.

10.7 Supplemental Lease Agreement dated August 2, 2006 between First Life America Corporation and the United States of America, incorporated by reference as Exhibit 10.8 of the Company’s Annual Report on Form 10-K filed April 14, 2009.

10.8 Employment Agreement of William S. Lay, dated April 18, 2009, incorporated by reference as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 22, 2009.

10.9 Loan agreement between First Trinity Capital Corporation and First National Bank of Muskogee dated March 12, 2009, incorporated by reference as Exhibit 10.1 to the company’s Quarterly Report on Form 10-Q filed May 15, 2009.

85

EXHIBIT INDEX (continued)

Exhibit Number		Description of Exhibit
	10.10	Loan guaranty agreement between First Trinity Capital Corporation and First National Bank of Muskogee dated March 12, 2009, incorporated by reference as Exhibit 10.2 to the company’s Quarterly Report on Form 10-Q filed May 15, 2009.

10.11 Administrative Services Agreement between First Life America Corporation and Investors Heritage Life Insurance Company dated June 16, 2009, incorporated by reference as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed June 17, 2009.

10.12 First Amendment to Administrative Services Agreement between Trinity Life Insurance Company and Investors Heritage Life Insurance Company incorporated by reference as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed June 17, 2009.

10.13 Amendment to Employment Agreement of William S. Lay dated April 23, 2010, incorporated by reference as Exhibit 10.1 of the Company’s Current Report on Form 8-K filed April 28, 2010.

10.14 Employment Agreement of Gregg E. Zahn, President, dated June 7, 2010, incorporated by reference as Exhibit 10.1 of the Company’s Current Report on Form 8-K filed June 11, 2010.

10.15 Second Amendment to Lease Agreement between First Trinity Financial Corporation and Amejak Limited Partnership dated June 16, 2010, incorporated by reference as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed June 22, 2010.

10.16 Amendment to Employment Agreement of Gregg E. Zahn, President, dated December 8, 2011, incorporated by reference as Exhibit 10.6 of the Company’s Current Report on Form 8-K filed December 13, 2011.

10.17 Employment Agreement of William S. Lay, dated December 8, 2011, incorporated by reference as Exhibit 10.5 of the Company’s Current Report on Form 8-K filed December 13, 2011.

10.18 Employment Agreement of Jeffrey J. Wood, dated December 8, 2011, incorporated by reference as Exhibit 10.4 of the Company’s Current Report on Form 8-K filed December 13, 2011.

10.19 Not Used

10.20 Amendment to Employment Agreement of Gregg E. Zahn, President, dated April 9, 2013, incorporated by reference as Exhibit 10.20 of the Company’s Current Report on Form 8-K filed April 11, 2013.

10.21 Employment Agreement of Jeffrey J. Wood, dated April 9, 2013, incorporated by reference as Exhibit 10.21 of the Company’s Current Report on Form 8-K filed April 11, 2013.

10.22 Employment Agreement of William S. Lay, dated December 12, 2013, incorporated by reference as Exhibit 10.22 of the Company’s Current Report on Form 8-K filed December 12, 2013.

10.23 Employment Agreement of William S. Lay, dated December 12, 2015, incorporated by reference as Exhibit 10.23 of the Company’s Current Report on Form 8-K filed December 14, 2015.

10.24 Employment Agreement of Jeffrey J. Wood, dated December 23, 2015, incorporated by reference as Exhibit 10.24 of the Company’s Current Report on Form 8-K filed December 28, 2015.

86

EXHIBIT INDEX (continued)

Exhibit Number		Description of Exhibit
	10.25	Amendment to Employment Agreement of Jeffrey J. Wood, dated February 26, 2016, incorporated by reference as Exhibit 10.25 of the Company’s Current Report on Form 8-K filed February 29, 2016.

10.26 Amendment to Employment Agreement of Gregg E. Zahn, President, dated September 5, 2017, incorporated by reference as Exhibit 10.26 of the Company’s Current Report on Form 8-K filed September 8, 2017.

17.1 Resignation Letter of Board of Director Member Shannon B. Young dated August 5, 2012, incorporated by reference as Exhibit 17.1 of the Company’s Current Report on Form 8-K filed August 10, 2012.

17.2 Addendum 1 dated August 9, 2012 to Resignation Letter of Board of Director Member Shannon B. Young dated August 4, 2012, incorporated by reference as Exhibit 17.2 of the Company’s Current Report on Form 8-K/A filed August 10, 2012.

17.3 Addendum 2 dated August 10, 2012 to Resignation Letter of Board of Director Member Shannon B. Young dated August 5, 2012, incorporated by reference as Exhibit 17.3 of the Company’s Current Report on Form 8-K/A filed August 10, 2012.

17.4 Resignation Letter of Board of Director Member G. Wayne Pettigrew dated April 8, 2013 (received by mail on April 10, 2013), incorporated by reference as Exhibit 17.4 of the Company’s Current Report on Form 8-K filed April 15, 2013.

17.5 Addendum dated April 16, 2013 to Resignation Letter of Board of Director Member G. Wayne Pettigrew dated April 8, 2013 (received by mail on April 10, 2013), incorporated by reference as Exhibit 17.5 of the Company’s Current Report on Form 8-K/A filed April 17, 2013.

21.1^* Subsidiaries of First Trinity Financial Corporation.

21.2 Letter to Jeffrey Reidler, Division of Corporate Finance, United States Securities and Exchange Commission, incorporated by reference as Exhibit 21.2 of the Company’s Pre-Effective Amendment No. 4 to the Registration Statement on Form POS AM filed April 3, 2012.

23.1 Consent of Cooper & Newsome PLLP (included as part of its opinion), incorporated by reference as Exhibit 5.1 of the Pre-Effective Amendment No. 2 to the Registration Statement on Form S-1/A filed June 23, 2010.

23.2 Consent of Kerber, Eck and Braeckel, LLP, incorporated by reference as Exhibit 23.2 of the Pre-Effective Amendment No. 1 to the Registration Statement on Form S-1/A filed May 17, 2010.

23.3 Consent of Hall, Estill, Hardwick, Gable, Golden & Nelson, P.C., (included as part of its opinion), incorporated by reference as Exhibit 5.2 of the Pre-Effective Amendment No. 3 to the Registration Statement on Form POS AM filed March 31, 2011.

23.4 Consent of Kerber, Eck and Braeckel, LLP, incorporated by reference as Exhibit 23.4 of the Company’s Pre-Effective Amendment No. 3 to Registration Statement on Form POS AM filed March 31, 2011.

* Filed herewith

87

EXHIBIT INDEX (continued)

Exhibit Number		Description of Exhibit
	23.5	Consent of Seaver & Forck, CPAs, incorporated by reference to Exhibit 23.1 of the Company’s Current Report on Form 8-K/A filed March 9, 2012.

23.6 Consent of Kerber, Eck and Braeckel, LLP, incorporated by reference to Exhibit 23.4 of the Company’s Pre-Effective Amendment No. 4 to Registration Statement on Form POS AM filed April 3, 2012.

24.1* Powers of Attorney (included in the signature pages hereto, and incorporated herein by reference).

31.1* Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.

31.2* Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.

32.1* Section 1350 Certification of Principal Executive Officer.

32.2* Section 1350 Certification of Principal Financial Officer.

99.1 Oklahoma Insurance Holding Company Disclaimer of Control of Gregg Zahn, incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form 10SB12G filed on April 30, 2007.

99.2 Form of Promotional Shares Escrow Agreement (six year restriction), is incorporated by reference to Exhibit 99.2 to the Company’s Registration Statement on Form 10SB12G filed April 30, 2007.

99.3 Form of Promotional Shares Escrow Agreement (four year restriction), is incorporated by reference to Exhibit 99.3 to the Company’s Registration Statement on Form 10SB12G filed on April 30, 2007.

99.4 Termination of Oklahoma Insurance Holding Company Disclaimer of Control between the Oklahoma Department of Insurance and Gregg Earl Zahn dated August 2, 2007 is incorporated by reference to Exhibit 99.4 to the Company’s Form 10KSB filed on March 31, 2008.

99.5 First Life America Corporation unaudited financial statements for the period ending September 30, 2008, incorporated by reference to Exhibit 99.5 to the Company’s Form 10-K filed on April 14, 2009.

99.6 First Life America Corporation audited financial statements for the years ended December 31, 2007 and 2006, incorporated by reference to Exhibit 99.6 to the Company’s Form 10-K filed on April 14, 2009.

99.7 Pro forma condensed financial information for the acquisition of First Life America Corporation on December 23, 2008, incorporated by reference to Exhibit 99.7 to the Company’s Form 10-K filed on April 14, 2009.

99.8 Form R Oklahoma Redomestication Application of First Life America Corporation, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed June 17, 2009.

99.9 Completion of acquisition of First Life America Corporation, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed January 27, 2009.

* Filed herewith

88

EXHIBIT INDEX (continued)

Exhibit Number		Description of Exhibit
	99.10	Subscription Agreement, incorporated by reference to Exhibit 99.10 of the Pre-Effective Amendment No. 2 to the Registration Statement on Form S-1/A filed June 23, 2010.

99.11 Subscription Escrow Agreement, as amended on March 31, 2011, incorporated by reference to Exhibit 99.10 to the Company’s Form POS AM filed on March 31, 2011.

99.12 Form A Application Missouri Statement Regarding the Acquisition of Control or Merger of Domestic Insurer Family Benefit Life Insurance Company on August 25, 2011, incorporated by reference to Exhibit 99.13 to the Company’s Form 8-K filed on August 31, 2011.

99.13 Missouri Approval Regarding the Acquisition of Control or Merger of Domestic Insurer Family Benefit Life Insurance Company on October 14, 2011, incorporated by reference to the Company’s Form 8-K filed on October 19, 2011.

99.14 Completion of acquisition of Family Benefit Life Insurance Company, incorporated by reference to Exhibit 99.18 to the Company’s Current Report on Form 8-K filed December 28, 2011.

99.15 Family Benefit Life Insurance Company audited financial statements for the years ended December 31, 2010 and 2011, incorporated by reference to Exhibit 99.19 to the Company’s Form 8-K/A filed on March 9, 2012.

99.16 Unaudited Pro forma financial statements for the acquisition of Family Benefit Life Insurance Company as of and for the year ended December 31, 2011, incorporated by reference to Exhibit 99.20 to the Company’s Form 8-K/A filed on March 9, 2012.

101.INS** XBRL Instance

101.SCH** XBRL Taxonomy Extension Schema

101.CAL** XBRL Taxonomy Extension Calculation

101.DEF** XBRL Taxonomy Extension Definition

101.LAB** XBRL Taxonomy Extension Labels

101.PRE** XBRL Taxonomy Extension Presentation

**XBRL Information is furnished and not filed as part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under These sections.

89

EX-21.1

EXHIBIT NO. 21.1

SUBSIDIARIES OF FIRST TRINITY FINANCIAL CORPORATION
AN OKLAHOMA CORPORATION

Company Name	State of Incorporation	Ownership
First Trinity Capital Corporation	Oklahoma	100% Direct
Trinity Life Insurance Company	Oklahoma	100% Direct
Family Benefit Life Insurance Company	Missouri	100% Indirect

EX-31.1

EXHIBIT NO. 31.1

CERTIFICATION

I, Gregg Zahn, Chief Executive Officer, certify that:

1. I have reviewed this annual report on Form 10-K, for the year ended December 31, 2017, of First Trinity Financial Corporation;

2. Based on my knowledge, this 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)) for the registrant, 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 annual 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 annual 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 change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter, the registrant’s fourth 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 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 the 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 control over financial reporting.

Date: March 8, 2018	By: /s/ Gregg E. Zahn
	Gregg E. Zahn, President and Chief Executive Officer

EX-31.2

EXHIBIT NO. 31.2

CERTIFICATION

I, Jeffrey J. Wood, Chief Financial Officer, certify that:

1. I have reviewed this annual report on Form 10-K, for the year ended December 31, 2017, of First Trinity Financial Corporation;

2. Based on my knowledge, this 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)) for the registrant, 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 annual 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 annual 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 change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter, the registrant’s fourth 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 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 the 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 control over financial reporting.

Date: March 8, 2018	By: /s/ Jeffrey J. Wood
	Jeffrey J. Wood, Chief Financial Officer

EX-32.1

EXHIBIT NO. 32.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. ss. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of First Trinity Financial Corporation, an Oklahoma corporation (the "Company"), hereby certifies that:

To my knowledge, the Annual Report on Form 10-K of the Company for the year ended December 31, 2017 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 8, 2018	By: /s/ Gregg E. Zahn
	Gregg E. Zahn, President and Chief Executive Officer

EX-32.2

EXHIBIT NO. 32.2

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. ss. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of First Trinity Financial Corporation, an Oklahoma corporation (the "Company"), hereby certifies that:

To my knowledge, the Annual Report on Form 10-K of the Company for the year ended December 31, 2017 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 8, 2018	By: /s/ Jeffrey J. Wood
	Jeffrey J. Wood, Chief Financial Officer

XML

Document And Entity Information - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Mar. 05, 2018	Jun. 30, 2017
Document Information [Line Items]
Entity Registrant Name	First Trinity Financial Corp.
Entity Central Index Key	0001395585
Trading Symbol	ftfc
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		7,802,593
Entity Public Float			$ 0
Document Type	10-K
Document Period End Date	Dec. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY
Amendment Flag	false

XML

Consolidated Statements of Financial Position - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Investments
Available-for-sale fixed maturity securities at fair value (amortized cost: $143,621,947 and $128,310,265 as of December 31, 2017 and 2016, respectively)	$ 149,683,139	$ 129,311,155
Available-for-sale equity securities at fair value (cost: $602,864 and $599,400 as of December 31, 2017 and 2016, respectively)	672,147	638,407
Mortgage loans on real estate	102,496,451	74,371,286
Investment real estate	2,382,966	2,506,673
Policy loans	1,660,175	1,598,116
Short-term investments	547,969
Other long-term investments	55,814,583	46,788,873
Total investments	313,257,430	255,214,510
Cash and cash equivalents	31,496,159	34,223,945
Accrued investment income	2,544,963	2,176,770
Recoverable from reinsurers	1,340,700	1,258,938
Agents' balances and due premiums	1,485,305	1,419,250
Deferred policy acquisition costs	24,555,902	18,191,990
Value of insurance business acquired	5,526,645	5,908,835
Other assets	10,920,570	14,858,375
Total assets	391,127,674	333,252,613
Policy liabilities
Policyholders' account balances	292,909,762	245,346,489
Future policy benefits	49,663,099	44,266,227
Policy claims	1,148,513	997,814
Other policy liabilities	68,490	69,854
Total policy liabilities	343,789,864	290,680,384
Deferred federal income taxes	2,961,929	693,470
Other liabilities	3,123,702	5,598,484
Total liabilities	349,875,495	296,972,338
Shareholders' equity
Common stock, par value $.01 per share (20,000,000 shares authorized, 8,050,173 issued as of December 31, 2017 and 2016 and 7,802,593 outstanding as of December 31, 2017 and 2016)	80,502	80,502
Additional paid-in capital	28,684,598	28,684,598
Treasury stock, at cost (247,580 shares as of December 31, 2017 and 2016)	(893,947)	(893,947)
Accumulated other comprehensive income	4,760,951	818,676
Accumulated earnings	8,620,075	7,590,446
Total shareholders' equity	41,252,179	36,280,275
Total liabilities and shareholders' equity	$ 391,127,674	$ 333,252,613

XML

Consolidated Statements of Financial Position (Parentheticals) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Available-for-sale fixed maturity securities at cost	$ 143,621,947	$ 128,310,265
Available-for-sale equity securities at cost	$ 602,864	$ 599,400
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	20,000,000	20,000,000
Common stock, shares issued (in shares)	8,050,173	8,050,173
Common stock, shares outstanding (in shares)	7,802,593	7,802,593
Treasury stock, shares (in shares)	247,580	247,580

XML

Consolidated Statements of Operations - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Revenues
Premiums	$ 15,855,686	$ 12,870,483
Net investment income	16,710,408	13,190,643
Net realized investment gains	271,470	729,739
Loss on other-than-temporary impairments	(224,250)	(212,342)
Other income	116,523	139,967
Total revenues	32,729,837	26,718,490
Benefits and claims
Increase in future policy benefits	5,402,902	4,786,377
Death benefits	4,463,854	3,814,049
Surrenders	878,361	728,122
Interest credited to policyholders	8,840,019	6,977,306
Dividend, endowment and supplementary life contract benefits	283,654	296,985
Total benefits and claims	19,868,790	16,602,839
Policy acquisition costs deferred	(9,321,726)	(7,445,304)
Amortization of deferred policy acquisition costs	2,870,412	2,202,367
Amortization of value of insurance business acquired	382,190	379,365
Commissions	8,585,278	6,882,311
Other underwriting, insurance and acquisition expenses	8,002,010	5,677,130
Total expenses	10,518,164	7,695,869
Total benefits, claims and expenses	30,386,954	24,298,708
Income before total federal income tax expense (benefit)	2,342,883	2,419,782
Current federal income tax expense	105,696	37,404
Deferred federal income tax expense (benefit)	1,267,823	(208,361)
Total federal income tax expense (benefit)	1,373,519	(170,957)
Net income	$ 969,364	$ 2,590,739
Net income per common share basic and diluted (in dollars per share)	$ 0.12	$ 0.33

XML

Consolidated Statements of Comprehensive Income - USD ($)		12 Months Ended
		Dec. 31, 2017	Dec. 31, 2016
Net income		$ 969,364	$ 2,590,739
Other Comprehensive Income (loss)
Total net unrealized investment gains arising during the period		5,071,141	4,880,178
Less net realized investment gains (losses)	[1]	(19,437)	470,438
Net unrealized investment gains		5,090,578	4,409,740
Less adjustment to deferred acquisition costs		87,402	66,626
Other comprehensive income before federal income tax expense		5,003,176	4,343,114
Federal income tax expense		1,060,901	868,621
Total other comprehensive income		3,942,275	3,474,493
Total comprehensive income		$ 4,911,639	$ 6,065,232

[1] These items appear within net realized investment gains and loss on other-than-temporary impairments in the consolidated statements of operations.

XML

Consolidated Statements of Changes in Shareholders' Equity - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Total
Balance at Dec. 31, 2015	$ 80,502	$ 28,684,598	$ (893,947)	$ (2,655,817)	$ 4,999,707	$ 30,215,043
Comprehensive income:
Net income					2,590,739	2,590,739
Other comprehensive income				3,474,493		3,474,493
Balance at Dec. 31, 2016	80,502	28,684,598	(893,947)	818,676	7,590,446	36,280,275
Comprehensive income:
Net income					969,364	969,364
Other comprehensive income				3,942,275		3,942,275
Federal tax rate change to 21%					60,265	60,265
Balance at Dec. 31, 2017	$ 80,502	$ 28,684,598	$ (893,947)	$ 4,760,951	$ 8,620,075	$ 41,252,179

XML

Consolidated Statements of Changes in Shareholders' Equity (Parentheticals)	12 Months Ended
	Dec. 31, 2018
Retained Earnings [Member] | Scenario, Forecast [Member]
Federal tax rate	21.00%

XML

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Operating activities
Net income	$ 969,364	$ 2,590,739
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for depreciation	145,804	146,122
Accretion of discount on investments	(3,102,042)	(1,948,423)
Net realized investment gains	(271,470)	(729,739)
Loss on other-than-temporary impairments	224,250	212,342
Amortization of policy acquisition cost	2,870,412	2,202,367
Policy acquisition costs deferred	(9,321,726)	(7,445,304)
Mortgage loan origination fees deferred		(4,531)
Amortization of loan origination fees	64,555	112,303
Amortization of value of insurance business acquired	382,190	379,365
Allowance for mortgage loan losses	98,388	61,079
Provision for deferred federal income tax expense (benefit)	1,267,823	(208,361)
Interest credited to policyholders	8,840,019	6,977,306
Change in assets and liabilities:
Accrued investment income	(368,193)	28,699
Policy loans	(62,059)	(111,799)
Short-term investments	(547,969)	599,855
Recoverable from reinsurers	(81,762)	(15,320)
Agents' balances and due premiums	(66,055)	(349,200)
Other assets (excludes depreciation of $316 and $633 in 2017 and 2016, respectively, and change in receivable for securities sold of ($5,923,663) and $6,286,370 in 2017 and 2016, respectively)	(1,986,174)	(2,516,800)
Future policy benefits	5,396,872	4,802,103
Policy claims	150,699	282,886
Other policy liabilities	(1,364)	(6,700)
Other liabilities (excludes change in payable of securities purchased of $228,373 and $234,222 in 2017 and 2016, respectively)	(2,703,155)	4,426,895
Net cash provided by operating activities	1,898,407	9,485,884
Investing activities
Purchases of fixed maturity securities	(37,095,248)	(11,338,377)
Maturities of fixed maturity securities	7,841,000	5,599,000
Sales of fixed maturity securities	12,389,756	14,933,968
Purchases of equity securities	(3,465)	(34,340)
Sales of equity securities		324,556
Purchases of mortgage loans	(53,913,277)	(33,480,579)
Payments on mortgage loans	25,670,590	17,550,870
Purchases of other long-term investments	(14,036,082)	(17,973,300)
Collections on other long-term investments	8,663,148	5,436,989
Sale of other long-term investments	792,012
Sales of real estate	190,083	43,269
Net change in receivable and payable for securities sold and purchased	6,152,036	(6,052,148)
Net cash used in investing activities	(43,349,447)	(24,990,092)
Financing activities
Policyholders' account deposits	56,666,113	53,989,462
Policyholders' account withdrawals	(17,942,859)	(13,308,895)
Net cash provided by financing activities	38,723,254	40,680,567
Increase (decrease) in cash and cash equivalents	(2,727,786)	25,176,359
Cash and cash equivalents, beginning of period	34,223,945	9,047,586
Cash and cash equivalents, end of period	$ 31,496,159	$ 34,223,945

XML

Consolidated Statements of Cash Flows (Parentheticals) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Depreciation	$ 316	$ 633
Change in receivable for securities sold	(5,923,663)	6,286,370
Change in payable of securities purchased	$ 228,373	$ 234,222

XML

Supplemental Disclosure - Cash and Non-cash Impact on Operating, Investing and Financing Activities

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Cash Flow, Supplemental Disclosures [Text Block]

During

201

7,

the Company reclassified an available-for-sale fixed maturity security totaling

$729,737

to other long-term investments due to a recent

third

party information change indicating the security does

not

qualify for available-for-sale treatment.

In conjunction with th

is reclassification, the non-cash impact on investing activities is summarized as follows:

	Year Ended
	December 31, 201 7
Reduction in available-for-securities fixed maturity securitie s	$	729,737
Other long-term investment s		(729,737	)
Net cash provided (used) in investing activitie s	$	-

During

2017

and

2016,

the Company foreclosed on residential mortgage loans of real estate totaling

$207,482

and

$394,427,

respectively, and transferred those properties to investment real estate that are now held for sale.

In conjunction with these foreclosures, the non-cash impact on investing activities is summarized as follows:

	Year Ended			Year Ended
	December 31, 201 7			December 31, 201 6
Reductions in mortgage loans due to foreclosur e	$	207,482		$	394,427
Investment real estate held-for-sale acquired through foreclosur e		(207,482	)		(394,427	)
Net cash provided (used) in investing activitie s	$	-		$	-

See notes to consolidated financial statements

.

XML

Note 1 - Organization and Significant Accounting Policies

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Significant Accounting Policies [Text Block]

1.

Organization and Significant Accounting Policies

First Trinity Financial Corporation (the “

Company” or “FTFC”) is the parent holding company of Trinity Life Insurance Company (“TLIC”), Family Benefit Life Insurance Company (“FBLIC”) and First Trinity Capital Corporation (“FTCC”). The Company was incorporated in Oklahoma on

April 19, 2004,

for the primary purpose of organizing a life insurance subsidiary.

The Company owns

100%

of TLIC. TLIC owns

100%

of FBLIC. TLIC and FBLIC are primarily engaged in the business of marketing, underwriting and distributing a broad range of individual life insurance and annuity products to individuals. TLIC’s and FBLIC’s current product portfolio consists of a modified premium whole life insurance policy with a flexible premium deferred annuity rider, whole life, term, final expense, accidental death and dismemberment and annuity products. The term products are both renewable and convertible and issued for

10,

15,

20

and

30

years. They can be issued with premiums fully guaranteed for the entire term period or with a limited premium guarantee. The final expense is issued as either a simplified issue or as a graded benefit, determined by underwriting. The TLIC and FBLIC products are sold through independent agents. TLIC is licensed in the states of Illinois, Kansas, Kentucky, Nebraska, North Dakota, Ohio, Oklahoma and Texas. FBLIC is licensed in the states of Alabama, Arizona, Arkansas, Colorado, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Nebraska, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Virginia and West Virginia.

The Comp

any owns

100%

of FTCC that was incorporated in

2006,

and began operations in

January 2007.

FTCC provided financing for casualty insurance premiums for individuals and companies and was licensed to conduct premium financing business in the states of Alabama, Arkansas, Louisiana, Mississippi and Oklahoma. FTCC has made

no

premium financing loans since

June 30, 2012.

Company Capitalization

The Company raised

$1,450,000

from

two

private placement stock offerings during

2004

and

$25,669,480

from

two

public s

tock offerings and

one

private placement stock offering from

June 22, 2005

through

February 23, 2007;

June 29, 2010

through

April 30, 2012

and

August 15, 2012

through

March 8, 2013.

The Company issued

7,347,488

shares of its common stock and incurred

$3,624,518

of offering costs during these private placements and public stock offerings. The Company also issued

702,685

shares of its common stock in connection with

two

stock dividends paid to shareholders in

2011

and

2012

that resulted in accumulated earnings being charged

$5,270,138

with an offsetting credit of

$5,270,138

to common stock and additional paid-in capital.

The Company has also purchased

247,580

shares of treasury stock at a cost of

$893,947

from former members of the Board of Directors incl

uding the former Chairman of the Board of Directors, a former agent, the former spouse of the Company’s Chairman, Chief Executive Officer and President and a charitable organization where a former member of the Board of Directors had donated shares of the Company’s common stock.

Acquisition of Other Companies

On

December 23, 2008,

FTFC acquired

100%

of the outstanding common stock of First Life America Corporation (“

FLAC”) from an unaffiliated company. The acquisition of FLAC was accounted for as a purchase. The aggregate purchase price for FLAC was

$2,695,234

including direct costs associated with the acquisition of

$195,234.

The acquisition of FLAC was financed with the working capital of FTFC.

On

December 31, 2008,

FTFC made FLAC a

15

year loan i

n the form of a surplus note in the amount of

$250,000

with an interest rate of

6%

payable monthly, that was approved by the Oklahoma Insurance Department (“OID”). This surplus note is eliminated in consolidation.

On

August 31, 2009,

two

of the Company

’s subsidiaries, Trinity Life Insurance Company (“Old TLIC”) and FLAC, were merged, with FLAC being the surviving company. Immediately following the merger, FLAC changed its name to TLIC.

On

December 28, 2011,

TLIC acquired

100%

of the outstanding common stock of FBLIC from FBLIC

’s shareholders. The acquisition of FBLIC was accounted for as a purchase. The aggregate purchase price for the acquisition of FBLIC was

$13,855,129.

The acquisition of FBLIC was financed with the working capital of TLIC.

On

April 28, 2015,

the Company acquired a block of life insurance policies and annuity contracts according to the terms of an assumption reinsurance agreement. The Company acquired assets of

$3,644,839

(including cash), assumed liabilities

of

$3,055,916

and recorded a gain on reinsurance assumption of

$588,923.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

Principles of Consolidation

The consolidated financial statements include the accounts and operations of the Company and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management

’s knowledge of current events and actions it

may

undertake in the future, they

may

ultimately differ from actual results.

Investments

Fixed maturity securities are comprised of bonds that are classified as available-for-sale and are carried at fair value with unrealized gains and losses, net of applicable income taxes, reported in accumulated other comprehensive income. The amortized cost of fixed maturity securities available-for-sale is adjusted for amortization of premium and accretion of discount to maturity.

Interest income, as well as the related amortization of premium and accretion of discount, is included in net investment income under the effective yield method. The amortized cost of fixed maturity securities available-for-sale is written down to fair value when a decline in value is considered to be other-than-temporary.

Equity securities available-for-sale is comprised of mutual funds, common stocks and preferred stocks that are carried at fair value. The associated unrealized gains and losses, net of applicable income taxes, are included in accumulated other comprehensive income. The cost of equity securities available-for-sale is written down to fair value when a decline in value is considered to be other-than-temporary. Dividends from these investments are recognized in net investment income when declared.

The Company evaluates the difference between the cost or amortized cost and estimated fair value of its investments to determine whether any decline in value is other-than-temporary in nature.

  This determination involves a degree of uncertainty.  If a decline in the fair value of a security is determined to be temporary, the decline is recorded as an unrealized loss in stockholders' equity. If a decline in a security's fair value is considered to be other-than-temporary, the Company then determines the proper treatment for the other-than-temporary impairment.

For fixed maturity securities available-for-sale, the amount of any other-than-temporary impairment related to a credit loss is recognized in earnings and reflected as a reduction in the cost basis of the security; and the amount of any other-than-temporary impairment related to other factors is recognized in other comprehensive income (loss) with

no

change to the cost basis of the security.

  For equity securities available-for-sale, the amount of any other-than-temporary impairment is recognized in earnings and reflected as a reduction in the cost basis of the security.

The assessment of whether a decline in fair value is considered temporary or other-than-temporary includes management's judgment as to the financial position and future prospects of the entity issuing the security. It is

not

possible to accurately predict when it

may

be determined that a specific security will become impaired.

  Future adverse changes in market conditions, poor operating results of underlying investments and defaults on mortgage loan payments could result in losses or an inability to recover the current carrying value of the investments, thereby possibly requiring an impairment charge in the future.

Likewise, if a change occurs in the Company

’s intent to sell temporarily impaired securities prior to maturity or recovery in value, or if it becomes more likely than

not

that the Company will be required to sell such securities prior to recovery in value or maturity, a future impairment charge could result.

If an other-than-temporary impairment related to a credit loss occurs with respect to a bond, the Company amortizes the reduced book value back to the security's expected recovery value over the remaining term of the bond.

  The Company continues to review the security for further impairment that would prompt another write-down in the value.

Mortgage loans are carried at unpaid balances, net of unamortized premium or discounts. Interest income and the amortization of premiums or discounts are included in net investment income.

Mortgage loan fees, certain direct loan origination costs, and purchase premiums and discounts on loans are recognized as an adjustment of yield by the interest method based on the contractual terms of the loan. In certain circumstances, prepayments

may

be anticipated. The Company has established a valuation allowance for mortgage loans on real estate that are

not

supported by funds held in escrow.

Investment real estate in buildings held for the production of income is carried at cost less accumulated depreciation.

Depreciation on investment real estate in buildings held for the production of income is calculated over an estimated useful life of

19

years. Investment real estate in land held for both the production of income and for sale is carried at cost. Investment real estate obtained through foreclosure on mortgage loans on real estate is carried at the lower of acquisition cost or net realizable value.

Policy loans are carried at unpaid principal balances. Interest income on policy loans is recognized in net investment income at the contract interest rate when earned.

Other long term investments are comprised of lottery prize receivables and are carried at amortized cost, net of unamortized discount. Interest income and the accretion of discount are included in net investment income.

Cash and Cash Equivalents

Cash and cash equivalents include cash on

hand, amounts due from banks and money market instruments.

Short-term investments

Short-term investments include funds that have a maturity of more than

90

days but less than

one

year at the date of purchase.

Investment Income and Realized Gains and Losses on Sales of Investments

Interest and dividends earned on investments are included in net investment income. Realized gains and losses on sales of investments are recognized in operations on the specific identification basis.

Deferred Policy Acquisition Costs

Commissions and other acquisition costs which vary with and

are primarily related to the successful production of new business are deferred and amortized in a systematic manner based on the related contract revenues or gross profits as appropriate. Recoverability of deferred acquisition costs is evaluated periodically by comparing the current estimate of the present value of expected pretax future profits to the unamortized asset balance. If this current estimate is less than the existing balance, the difference is charged to expense.

Deferred acquisition costs for the successful production of traditional life insurance contracts are deferred to the extent deemed recoverable and amortized over the premium paying period of the related policies using assumptions consistent with those used in computing future policy benefit liabilities.

Deferred acquisition costs related to the successful production of insurance and annuity products that subject the Company to mortality or morbidity risk over a period that extends beyond the period or periods in which premiums are collected and that have terms that are fixed and guaranteed (i.e., limited-payment long-duration annuity contracts) are deferred to the extent deemed recoverable and amortized in relation to the present value of actual and expected gross profits on the policies.

To the extent that realized gains and losses on fixed income securities result in adjustments to deferred acquisition costs related to insurance and annuity products, such adjustments are reflected as a component of the amortization of deferred acqui

sition costs. Deferred acquisition costs related to limited-payment long-duration insurance and annuity contracts are also adjusted, net of tax, for the change in amortization that would have been recorded if the unrealized gains (losses) from available-for-sale securities had actually been realized. This adjustment is included in the change in net unrealized appreciation (depreciation) on available-for-sale securities, a component of “Accumulated Other Comprehensive Income (Loss)” in the shareholders’ equity section of the statement of financial position.

Allowance for Loan Losses from Mortgage Loans and Premium Financing

The allowance for possible loan losses from investments in mortgage loans on real estate and loans from premium financing is a reserve established through a provision for possible loan losses charged to expense which represents, in the Company

’s judgment, the known and inherent credit losses existing in the residential and commercial and industrial mortgage loan and premium financing loan portfolios. The allowance, in the judgment of the Company, is necessary to reserve for estimated loan losses inherent in the residential and commercial and industrial mortgage loan and premium finance loan portfolios and reduces the carrying value of investments in mortgage loans on real estate and premium finance loans to the estimated net realizable value on the consolidated statement of financial position.

While the Company utilizes its best judgment and information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond the Company

’s control, including the performance of the residential and commercial and industrial mortgage loan and premium finance loan portfolios, the economy and changes in interest rates. The Company’s allowance for possible mortgage loan and premium finance loan losses consists of specific valuation allowances established for probable losses on specific loans and a portfolio reserve for probable incurred but

not

specifically identified loans.

Mortgage loans and premium finance loans are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the mortgage loan or premium finance loan agreement. Factors considered by the Company in determining impairment include payment status, collateral value of the real estate subject to the mortgage loan, and the probability of collecting scheduled principal and interest payments when due. Mortgage loans and premium finance loans that experience insignificant payment delays and payment shortfalls generally are

not

classified as impaired.

The Company determines the significance of payment delays and shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the mortgage loan or premium finance loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis.

Property and Equipment

Property and equipment are carried at cost less accumulated depreciation or amortization. Office furniture, equipment and computer software is recorded at cost or fair value at acquisition less accumulated depreciation or amortization using the straight-line method over the estimated useful life of the respective assets of

three

to

ten

years. Leasehold improvements are recorded at cost and depreciated over the remaining non-cancellable lease term.

Reinsurance

The Company cedes reinsurance under various agreements allowing management to control exposure to potential l

osses arising from large risks and providing additional capacity for growth. Estimated reinsurance recoverable balances are reported as assets and are recognized in a manner consistent with the liabilities related to the underlying reinsured contracts.

Value of Insurance Business Acquired

As a result of the Company

’s purchases of FLAC and FBLIC, an asset was recorded in the application of purchase accounting to recognize the value of acquired insurance in force.  The Company’s value of acquired insurance in force is an intangible asset with a definite life and is amortized under Financial Accounting Standards Board (“FASB”) guidance.  The value of acquired insurance in force is amortized primarily over the emerging profit of the related policies using the same assumptions that were used in computing liabilities for future policy benefits.

For the amortization of the value of acquired insurance in force, the Company periodically reviews its estimates of gross profits. The most significant assumptions involved in the estimation of gross profits include interest rate spreads, future financial market performance, business surrender/lapse rates, mortality and morbidity, expenses and the impact of realized investment gains and losses. In the event actual experience differs significantly from assumptions or assumptions are significantly revised, the Company is required to record a charge or credit to amortization expense for the period in which an adjustment is made.

As of

December 31,

201

7

and

2016,

there was

$3,213,233

and

$2,831,043,

respectively, of accumulated amortization of the value of insurance business acquired due to the purchases of FLAC and FBLIC. The Company expects to amortize the value of insurance business acquired by the following amounts over the next

five

years: 

$306,567

in

2018,

$286,076

in

2019,

$264,029

in

2020,

$244,791

in

2021

and

$227,007

in

2022.

Other Assets and Other Liabilities

Other assets consist primarily of

advances to mortgage loan originator, receivable for securities sold, federal and state income taxes recoverable, accrual of mortgage loan and long-term investment payments due, guaranty funds, notes receivable, prepaid assets, deposits, other receivables, property and equipment and loans from premium financing.

Other liabilities consist primarily of accrued expenses

payable, accounts payable, remittance items

not

allocated, payable for securities purchased, guaranty fund assessments, unclaimed funds, deferred revenue, unearned investment income, withholdings, escrows and other payables.

Policyholders

’ Account Balances

The Company

’s liability for policyholders’ account balances represents the contract value that has accrued to the benefit of the policyholder as of the financial statement date. This liability is generally equal to the accumulated account deposits plus interest credited less policyholders’ withdrawals and other charges assessed against the account balance. Interest crediting rates for individual annuities range from

2.25%

to

4.50%.

Interest crediting rates for deposit-type liabilities range from

2.50%

to

4.00%.

Future Policy Benefits

The Company

’s liability for future policy benefits is primarily comprised of the present value of estimated future payments to or on behalf of policyholders, where the timing and amount of payment depends on policyholder mortality or morbidity, less the present value of future net premiums. For life insurance and annuity products, expected mortality and morbidity is generally based on the Company’s historical experience or standard industry tables including a provision for the risk of adverse deviation. Interest rate assumptions are based on factors such as market conditions and expected investment returns. Although mortality, morbidity and interest rate assumptions are “locked-in” upon the issuance of new insurance with fixed and guaranteed terms, significant changes in experience or assumptions

may

require the Company to provide for expected future losses on a product by establishing premium deficiency reserves.

Policy Claims

Policy claim liabilities represent the estimated liabilities for claims reported plus estimated incurred but

not

yet reported claims developed from trends of historical market data

applied to current exposure.

Federal Income Taxes

The Company uses

the asset and liability method of accounting for income taxes. Deferred income taxes are provided for cumulative temporary differences between balances of assets and liabilities determined under U.S. GAAP and balances determined using tax bases. A valuation allowance is established for the amount of the deferred tax asset that exceeds the amount of the estimated future taxable income needed to utilize the future tax benefits.

Common Stock

Common stock is fully paid, non-assessable and has a par value of

$.01

per share.

Treasury Stock

Treasury stock

, representing shares of the Company’s common stock that have been reacquired after having been issued and fully paid, is recorded at the reacquisition cost and the shares are

no

longer outstanding.

Accumulated Other Comprehensive Income

(Loss)

FASB guidance requires the inclusion of unrealized gains or losses on available-for-sale securities, net of tax, as a component of other comprehensive income

(loss).  Unrealized gains and losses recognized in accumulated other comprehensive income (loss) that are later recognized in net income through a reclassification adjustment are identified on the specific identification method. In addition, deferred acquisition costs related to limited-payment long-duration insurance and annuity contracts are also adjusted, net of tax, for the change in amortization that would have been recorded if the unrealized gains (losses) from available-for-sale securities had actually been realized. This adjustment is included in the change in net unrealized appreciation (depreciation) on available-for-sale securities, a component of “Accumulated Other Comprehensive Income (loss)” in the shareholders’ equity section of the statement of financial position.

Revenues and Expenses

Revenues on traditional life insurance products consist of direct premiums reported as earned when due. Liabilities for future policy benefits are provided and acquisition costs are amorti

zed in a systematic manner based on the related contract revenues or gross profits as appropriate.

Acquisition costs for traditional life insurance contracts are deferred to the exten

t deemed recoverable and are amortized

over the premium paying period of the related policies using assumptions consistent with those used in computing future policy benefit liabilities. Traditional life insurance products are treated as long-duration contracts since they are ordinary whole life insurance products, which generally remain in force for the lifetime of the insured.

Deferred acquisition costs related to insurance and annuity products

that subject the Company to mortality or morbidity risk over a period that extends beyond the period or periods in which premiums are collected and that have terms that are fixed and guaranteed are deferred to the extent deemed recoverable and amortized in relation to the present value of actual and expected gross profits on the policies. These insurance and annuity contracts are treated as long-duration insurance contracts since the Company is subject to risk from policyholder mortality and morbidity over an extended period.

Net Income per Common Share

Net income per common share basic and diluted is calculated using the weighted average number of common shares outstanding and subscribed during the year

. The weighted average outstanding and subscribed common shares basic and diluted were

7,802,593

for both of the years ended

December 31, 2017

and

2016.

Subsequent Events

Management has evaluated all events subsequent to

December 31,

201

7

through the date that these financial statements have been issued.

Recent Accounting Pronouncements

Revenue from Contracts with Customers

In

May 2014,

the FASB issued updated guidance to clarify the principles for recognizing revenue. While insurance contracts are

not

within the scope of this updated guidance, the Company's fee income related to providing services will be subject to this updated guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services. The following steps are applied in the updated guidance: (

1

)

 identify the contract(s) with a customer; (

2

) identify the performance obligations in the contract; (

3

) determine the transaction price; (

4

) allocate the transaction price to the performance obligations in the contract and (

5

) recognize revenue when, or as, the entity satisfies a performance obligation.

In

July

 

2015,

the FASB deferred the effective date of the updated guidance on revenue recognitionby

one

year to the quarter ending

March 

31,

2018.

  The adoption of this guidance is

not

expected to have a material effect on the Company’s result of operations, financial position or liquidity.

Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern

In

August 2014,

the FASB issued guidance to address the diversity in practice in determining when there is substantial doubt about an entity's ability to continue as a going concern and when an entity must disclose certain relevant conditions and events. The new guidance requires an entity to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within

one

year after the date that the financial statements are issued (or available to be issued). The new guidance allows the entity to consider the mitigating effects of management's plans that will alleviate the substantial doubt and requires certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans.

If conditions or events raise substantial doubt that is

not

alleviated, an entity should disclose that there is substantial doubt about the entity's ability to continue as a going concern within

one

year after the date that the financial statements are issued (or available to be issued), along with the principal conditions or events that raise substantial doubt, management's evaluation of the significance of those conditions or events in relation to the entity's ability to meet its obligations and management's plans that are intended to mitigate those conditions.

The guidance is effective for annual periods ending after

December 

15,

2016,

and interim and annual periods thereafter. The adoption of this guidance did

not

have a material effect on the Company's results of operations, financial position or liquidity since there are

no

uncertainties about the Company’s ability to continue as a going concern.

Recognition and Measurement of Financial Assets and Financial Liabilities

In

January 2016,

the FASB issued updated guidance regarding financial instruments. This guidance intends to enhance reporting for financial instruments and addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The significant amendments in this update generally require equity investments to be measured at fair value with changes in fair value recognized in net income, require the use of an exit price notion when measuring the fair value of financial instruments for disclosure purposes and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities. This guidance also intends to enhance the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments.

This guidance is effective for fiscal years beginning after

December 15, 2017.

The recognition and measurement provisions of this guidance will be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption and early adoption is

not

permitted. The Company is evaluating this guidance but expects the primary impact will be the recognition of unrealized gains and losses on available-for-sale equity securities in net income. Currently, all unrealized gains and losses on available-for-sale equity securities are recognized in other comprehensive income (loss). The effect of the adoption of this guidance on the Company

’s results of operations, financial position and liquidity is primarily dependent on the fair value of the available-for-sale equity securities in future periods, the existence of a deferred tax asset related to available-for-sale securities in future periods and the economic conditions at the time of that future adoption.

Leases

In

February 2016,

the FASB issued updated guidance regarding leases that generally requires the lessee and lessor to recognize lease assets and lease liabilities on the statement of financial position. A lessee should recognize on the statement of financial position a liability to make lease payments and an asset representing its right-to-use the underlying assets for the lease term. Optional payments to extend the lease or purchase the underlying leased asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise the option(s).

If the lease has a term of

12

months or less, a lessee can make an election to recognize lease expenses for such leases on a straight-line basis over the lease term. There is a differentiation between finance leases and operating leases for the lessee in the statements of operations and cash flows. Finance leases recognize interest on the lease liability separately from the right-to-use the asset whereas an operating lease recognizes a single lease cost allocated over the lease term on a generally straight-line basis. All cash payments are within operating activities in the statement of cash flows except finance leases classify repayments of the principal portion of the lease liability within financing activities.

The accounting applied by the lessor is largely unchanged from that applied under previous U.S. GAAP. Key aspects of the lessor accounting model, however, were aligned with the revenue recognition guidance of Codification Topic

606.

The previous accounting model for leverage leases continues to apply only to those leveraged leases that commenced before the effective date of Codification Update

2016

-

02

Leases (Topic

842

).

Entities will generally continue to account for leases that commenced before the effective date of this update in accordance with previous U.S. GAAP unless the lease is modified. Lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimal rental payments that were tracked and disclosed under previous U.S. GAAP. The updated guidance is to be applied using a modified retrospective approach effective for annual and interim periods beginning after

December

 

15,

2018.

Early adoption is permitted.  The adoption of this guidance is

not

expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Investments

— Equity Method and Joint Ventures:  Simplifying the Transition to the Equity Method of Accounting

In

March

 

2016,

the FASB issued updated guidance that eliminates the requirement to retroactively apply the equity method of accounting when an investment that was previously accounted for using another method of accounting becomes qualified to apply the equity method due to an increase in the level of ownership interest or degree of influence.  If the investment was previously accounted for as an available-for-sale security, any related unrealized gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for the equity method is recognized through earnings.  The updated guidance is effective for reporting periods beginning after

December 

15,

2016,

and is to be applied prospectively. Early adoption was permitted.  The adoption of this guidance did

not

have an impact on the Company’s results of operations, financial position or liquidity.

Derivatives and Hedging:

  Contingent Put and Call Options in Debt Instruments

In

March

 

2016,

the FASB issued updated guidance clarifying that when a call (put) option in a debt instrument is contingently exercisable, the event that triggers the ability to exercise the option is considered to be clearly and closely related to the debt instrument (i.e., the economic characteristics and risks of the option are related to interest rates or credit risks) and the entity does

not

have to assess whether the option should be accounted for separately.

The updated guidance is effective for reporting periods beginning after

December

 

15,

2016.

Early adoption was permitted. The adoption of this guidance did

not

have a material effect on the Company’s results of operations, financial position or liquidity.

Financial Instruments

— Credit Losses:  Measurement of Credit Losses on Financial Instruments

In

June

 

2016,

the FASB issued updated guidance for the accounting for credit losses for financial instruments. The updated guidance applies a new credit loss model (current expected credit losses or CECL) for determining credit-related impairments for financial instruments measured at amortized cost (e.g. mortgage loans and reinsurance amounts recoverable) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses should consider historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. The expected credit losses, and subsequent adjustments to such losses, will be recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected.

The updated guidance also amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security

’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will

no

longer impact the determination of whether a credit loss exists.

The updated guidance is effective for reporting periods beginning after

December

 

15,

2019.

Early adoption is permitted for reporting periods beginning after

December 

15,

2018.

Based on the financial instruments currently held by the Company, the Company expects there would

not

be a material effect on the Company’s results of operations, financial position or liquidity if the new guidance were able to be adopted in the current accounting period. The impact on the Company’s results of operations, financial position or liquidity at the date of adoption of the updated guidance will be determined by the financial instruments held by the Company and the economic conditions at that time.

Statement of Cash Flows

– Classification of Certain Cash Receipts and Cash Payments

In

August 2016,

the FASB issued specific guidance to reduce the existing diversity in practice in how

eight

specific cash flow issues of certain cash receipts and cash payments are presented and classified in the statement of cash flows. The updated guidance is effective for annual and interim periods beginning after

December

 

15,

2017,

and is to be applied retrospectively. Early adoption is permitted.  The adoption of this guidance is

not

expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Consolidation

– Interests Held through Related Parties that Are Under Common Control

In

October 2016,

the FASB issued further guidance that makes targeted amendments to consolidation accounting. This update changes how a reporting entity that is the primary beneficiary of a variable interest entity treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The updated guidance is effective for annual and interim periods beginning after

December

 

15,

2016,

and is to be applied retrospectively. Early adoption was permitted.  The adoption of this guidance did

not

have an impact on the Company’s results of operations, financial position or liquidity.

Statement of Cash Flows

– Classification of Certain Cash Receipts and Cash Payments

In

November 2016,

the FASB issued specific guidance on the cash flow classification and presentation of changes in restricted cash or restricted cash equivalents when there are transfers between cash, cash equivalents and restricted cash or restricted cash equivalents and when there are direct cash receipts into restricted cash or restricted cash equivalents or direct cash payments made from restricted cash or restricted cash equivalents. The updated guidance is effective for annual and interim periods beginning after

December

 

15,

2017,

and is to be applied retrospectively. Early adoption is permitted.  The adoption of this guidance is

not

expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Business Combinations

– Clarifying the Definition of a Business

In

January 2017,

the FASB issued guidance to clarify the definition of a business to assist reporting entities in evaluating whether transactions should be accounted for as an acquisition or disposal of assets or businesses. This update provides a screen to determine when an integrated set of assets or activities is

not

a business and the requirements to be met to be considered a business.

The updated guidance is effective for annual and interim periods beginning after

December

 

15,

2017,

and is to be applied retrospectively. Early adoption is permitted in certain situations.  The adoption of this guidance is

not

expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Intangibles

– Goodwill and Other - Simplifying the Test for Goodwill Impairment

In

January 2017,

the FASB issued guidance to modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. Reporting entities will

no

longer determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. The updated guidance is effective for annual and interim periods beginning after

December

 

15,

2017,

and is to be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after

January 1, 2017. 

The adoption of this guidance is

not

expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Compensation

— Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

In

March

 

2017,

the FASB issued updated guidance to improve the presentation of net periodic pension cost and net periodic post retirement cost (net benefit costs). Net benefit costs comprise several components that reflect different aspects of an employer’s financial arrangements as well as the cost of benefits provided to employees.  The update requires that the

employer service cost component be reported in the same lines as other employee compensation cost and that the other components (non-service costs) be presented separately from the service cost and outside of a subtotal of income from operations if

one

is presented.  The update also allows only the service cost component to be eligible for capitalization in assets when applicable.

The updated guidance is effective for reporting periods beginning after

December

 

15,

2017.

The update is to be applied retrospectively with respect to the presentation of service cost and non-service cost and prospectively with respect to applying the service cost only eligible for capitalization in assets guidance. Early adoption is permitted as of the

first

interim period of an annual period if an entity issues interim financial statements. This pronouncement will

not

impact the Company since it does

not

have any pension or postretirement benefit plans and has

no

intention to adopt such plans.

Compensation

— Stock Compensation: Scope of Modification Accounting

In

May

 

2017,

the FASB issued updated guidance related to a change to the terms or conditions (modification) of a share-based payment award.  The updated guidance provides that an entity should account for the effects of a modification unless the fair value and vesting conditions of the modified award and the classification of the modified award (equity or liability instrument) are the same as the original award immediately before the modification.

The updated guidance is effective for the quarter ending

March

 

31,

2018.

  The update is to be applied prospectively to an award modified on or after the adoption date. Early adoption is permitted in any interim periods for which financial statements have

not

yet been made available for issuance. The adoption of this guidance is

not

expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Target Improvement to Accounting for Hedging Activities

In

August 2017,

the FASB issued updated authoritative guidance for the application of hedge accounting. The updated guidance updates certain recognition and measurement requirements for hedge accounting.

The objective of the guidance is to more closely align the economics of a company’s risk management activities in its financial results and reduce the complexity of applying hedge accounting. The updates include the expansion of hedging strategies that are eligible for hedge accounting, elimination of the separate measurement and reporting of hedge ineffectiveness, presentation of the changes in the fair value of the hedging instrument in the same consolidated statement of operations line as the earnings effect of the hedged item and simplification of hedge effectiveness assessments. This guidance also includes new disclosures and will be applied using a modified retrospective approach by recording a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption.

The updated guidance is effective for reporting periods b

eginning after

December 

15,

2018.

Early adoption is permitted for reporting periods beginning before

December 

15,

2018.

The Company does

not

currently and does

not

intend to participate in hedging activities and there is therefore

no

impact on the Company’s results of operations, financial position or liquidity. This pronouncement would be adopted if the Company begins to participate in hedging activities in the future.

XML

Note 2 - Investments

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

2.

Investments

Fixed Maturity and Equity Securities Available-For-Sale

Investments in fixed maturity and equity securities available-for-sale as of

Dec

ember

31,

2017

and

2016

are summarized as follows:

			Gros s		Gros s
	Amortized Cos t		Unrealize d		Unrealized		Fair
	or Cos t		Gain s		Losse s		Valu e
	December 31, 201 7
Fixed maturity securitie s
U.S. government and U.S. government agencie s	$	2,989,688	$	48,720	$	65,341	$	2,973,067
States and political subdivision s		9,368,393		337,442		20,148		9,685,687
Residential mortgage-backed securitie s		29,573		41,736		-		71,309
Corporate bond s		109,340,273		5,248,291		491,556		114,097,008
Foreign bond s		21,894,020		1,134,999		172,951		22,856,068
Total fixed maturity securitie s		143,621,947		6,811,188		749,996		149,683,139
Equity securitie s
Mutual fund s		347,942		1,124		-		349,066
Corporate preferred stoc k		99,945		775		-		100,720
Corporate common stoc k		154,977		67,384		-		222,361
Total equity securitie s		602,864		69,283		-		672,147
Total fixed maturity and equity securitie s	$	144,224,811	$	6,880,471	$	749,996	$	150,355,286

	December 31, 201 6
Fixed maturity securitie s
U.S. government and U.S. government agencie s	$	3,157,889	$	99,086	$	71,592	$	3,185,383
States and political subdivision s		9,172,533		144,947		66,584		9,250,896
Residential mortgage-backed securitie s		33,970		36,757		-		70,727
Corporate bond s		100,268,424		2,324,712		1,613,095		100,980,041
Foreign bond s		15,677,449		394,742		248,083		15,824,108
Total fixed maturity securitie s		128,310,265		3,000,244		1,999,354		129,311,155
Equity securitie s
Mutual fund s		344,783		-		2,869		341,914
Corporate preferred stoc k		99,945		-		3,585		96,360
Corporate common stoc k		154,672		45,461		-		200,133
Total equity securitie s		599,400		45,461		6,454		638,407
Total fixed maturity and equity securitie s	$	128,909,665	$	3,045,705	$	2,005,808	$	129,949,562

All securities in an unrealized loss position as of the financial statement dates, the estimated fair value, pre-tax gross unrealized loss and number of securities by length of time that those securities have been continuously in an unrealized loss position

as of

December 31, 2017

and

2016

are summarized as follows:

			Unrealized		Number of
	Fair Value		Loss		Securities
	December 31, 2017
Fixed maturity securitie s
Less than 12 month s
U.S. government and U.S. government agencies	$	326,163	$	3,897		2
States and political subdivisions		608,342		6,889		3
Corporate bonds		5,995,898		130,337		23
Foreign bonds		2,061,178		98,520		7
Total less than 12 month s		8,991,581		239,643		35
More than 12 month s
U.S. government and U.S. government agencies		1,338,617		61,444		5
States and political subdivisions		579,008		13,259		4
Corporate bonds		5,139,898		361,219		20
Foreign bonds		501,875		74,431		3
Total more than 12 month s		7,559,398		510,353		32
Total fixed maturity securities in an unrealized loss positio n	$	16,550,979	$	749,996		67

	December 31, 2016
Fixed maturity securitie s
Less than 12 month s
U.S. government and U.S. government agencies	$	1,878,308	$	71,592	6
States and political subdivisions		2,532,653		66,584	14
Corporate bonds		23,721,217		696,066	92
Foreign bonds		5,087,133		155,833	16
Total less than 12 month s		33,219,311		990,075	128
More than 12 month s
Corporate bonds		8,004,923		917,029	36
Foreign bonds		1,024,548		92,250	6
Total more than 12 month s		9,029,471		1,009,279	42
Total fixed maturity securities in an unrealized loss positio n		42,248,782		1,999,354	170
Equity securitie s
Less than 12 month s
Corporate preferred stock		96,360		3,585	2
Total less than 12 month s		96,360		3,585	2
More than 12 month s
Mutual funds		89,113		2,869	1
Total more than 12 month s		89,113		2,869	1
Total equity securities in an unrealized loss positio n		185,473		6,454	3
Total fixed maturity and equity securities in an unrealized loss positio n	$	42,434,255	$	2,005,808	173

As of

December 31,

201

7,

the Company held

67

available-for-sale fixed maturity securities with an unrealized loss of

$749,996,

fair value of

$16,550,979

and amortized cost of

$17,300,975.

These unrealized losses were primarily due to market interest rate movements in the bond market as of

December 31, 2017.

The ratio of the fair value to the amortized cost of these

67

securities is

96%.

As of

December 31, 2016

, the Company held

170

available-for-sale fixed maturity securities with an unrealized loss of

$1,999,354,

fair value of

$42,248,782

and amortized cost of

$44,248,136.

These unrealized losses were primarily due to market interest rate movements in the bond market as of

December 31, 2016.

The ratio of the fair value to the amortized cost of these

170

securities is

95%.

As of

December 31, 2016,

the Company ha

d

three

available-for-sale equity securities with an unrealized loss of

$6,454,

fair value of

$185,473

and cost of

$191,927.

The ratio of fair value to cost of these securities is

97%.

Fixed mat

urity securities were

93%

and

92%

investment grade as rated by Standard & Poor’s as of

December 31, 2017

and

December 31, 2016,

respectively.

The Company

’s decision to record an impairment loss is primarily based on whether the security’s fair value is likely to remain significantly below its book value based on all of the factors considered. Factors that are considered include the length of time the security’s fair value has been below its carrying amount, the severity of the decline in value, the credit worthiness of the issuer, and the coupon and/or dividend payment history of the issuer. The Company also assesses whether it intends to sell or whether it is more likely than

not

that it

may

be required to sell the security prior to its recovery in value.

For any fixed maturity securities that are other-than-temporarily impaired, the Company determines the portion of the other-than-temporary impairment that is credit-related and the portion that is related to other factors. The credit-related portion is the difference between the expected future cash flows and the amortized cost basis of the fixed maturity security, and that difference is charged to earnings. The non-credit-related portion representing the remaining difference to fair value is recognized in other comprehensive income (loss). Only in the case of a credit-related impairment where management has the intent to sell the security, or it is more likely than

not

that it will be required to sell the security before recovery of its cost basis, is a fixed maturity security adjusted to fair value and the resulting losses recognized in realized gains (losses) in the consolidated statements of operations. Any other-than-temporary impairments on equity securities are recorded in the consolidated statements of operations in the periods incurred as the difference between fair value and cost.

The Company has recorded other-than-temporary impairments on its fixed maturity available-for-sale investment in an energy corporation with a total par value of

$650,000

as a result of continuing unrealized losses. During

fourth

quarter

2016

this security was initially impaired by a

$20

7,450

charge to the statement of operations. During

second

quarter

2017

this security was further impaired by a

$224,250

charge to the statement of operations. These impairments were considered fully credit-related and represent the difference between the amortized cost basis of the security and its fair value.

The Company experienced

no

additional other-than-temporary impairments on fixed maturity available-for-sale securities for the years ended

December 31, 2017

and

2016.

Management believes that the Company will fully recover its cost basis in the securities held as of

December 31, 2017,

and management does

not

have the intent to sell nor is it more likely than

not

that the Company will be required to sell such securities until they recover or mature.  The remaining temporary impairments shown herein are primarily the result of the current interest rate environment rather than credit factors that would imply other-than-temporary impairment. 

Net unrealized gains included in other comprehensive income for investments classified as available-for-sale, net of the effect of deferred income taxes and deferred acquisition costs assuming that the appreciation had been realized as

of

December 31, 2017

and

2016

are summarized as follows:

	December 31, 201 7			December 31, 201 6
Unrealized appreciation on available-for-sale securitie s	$	6,130,475		$	1,039,897
Adjustment to deferred acquisition cost s		(103,955	)		(16,553	)
Deferred income taxe s		(1,265,569	)		(204,668	)
Net unrealized appreciatio n on available-for-sale securities	$	4,760,951		$	818,676

The amortized cost and fair value of fixed maturity available-for-sale securities as

of

December 31, 2017,

by contractual maturity, are summarized as follows:

	December 31, 201 7
	Amortized Cost		Fair Value
Due in one year or les s	$	5,567,133	$	5,598,493
Due in one year through five year s		32,033,219		32,937,704
Due after five years through ten year s		39,235,251		40,412,131
Due after ten year s		66,756,771		70,663,502
Due at multiple maturity date s		29,573		71,309
	$	143,621,947	$	149,683,139

Expected maturities will differ from contractual maturities because borrowers

may

have the right to call or prepay obligations with or without call or prepayment penalties.

Proceeds and gross realized gains (losses) from the sales, calls and maturities of fixed maturity and equity securities available-for-sale, mortgage loans on real estate

, investment real estate and other long-term investments for the years ended

December 31, 2017

and

2016

are summarized as follows:

	Years Ended December 31 ,
	Fixed Maturity Securitie s						Equity Securitie s					Mortgage Loans on Real Estat e					Investment Real Estat e
	201 7			201 6			201 7		201 6			201 7		201 6			201 7			201 6
Proceed s	$	20,230,756		$	20,532,968		$	-	$	324,556		$	25,670,590	$	17,550,870		$	190,083		$	43,269
Gross realized gain s		594,337			643,041			-		100,869			-		101,104			6,050			-
Gross realized losse s		(389,524	)		(64,554	)		-		(1,468	)		-		(28,591	)		(1,668	)		(20,662	)
Loss on other-than - temporary impairmen t		(224,250	)		(207,450	)		-		-			-		-			-			(4,892	)

	Years Ended December 31 ,
	Other Long-Term Investment s
	201 7		201 6
Proceed s	$	792,012	$	-
Gross realized gain s		62,275		-
Gross realized losse s		-		-
Loss on other-than - temporary impairmen t		-		-

The accumulated change in net unrealized investment gains

(losses) for fixed maturity and equity securities available-for-sale for the years ended

December 31, 2017

and

2016

and the amount of realized investment gains (losses) on fixed maturity and equity securities available-for-sale, mortgage loans on real estate, investment real estate and other long-term investments for the years ended

December 31, 2017

and

2016

are summarized as follows:

	Years Ended December 31 ,
	201 7		201 6
Change in unrealized investment gains (losses) :
Available-for-sale securities :
Fixed maturity securitie s	$	5,060,302	$	4,473,318
Equity securitie s		30,276		(63,578	)
Net realized investment gains (losses) :
Available-for-sale securities :
Fixed maturity securitie s		204,813		578,487
Equity securitie s		-		99,401
Mortgage loans on real estat e		-		72,513
Investment real estat e		4,382		(20,662	)
Other long-term investment s		62,275		-

Mortgage Loans on Real Estate

The Company

’s mortgage loans by property type as of

December 31, 2017

and

2016

are summarized as follows:

	December 31, 201 7		December 31, 201 6
Commercial and industrial mortgage loan s
Retail store s	$	1,227,894	$	1,075,324
Office building s		137,703		179,484
Industria l		430,613		-
Total commercial and industrial mortgage loan s		1,796,210		1,254,808
Residential mortgage loan s		100,700,241		73,116,478
Total mortgage loan s	$	102,496,451	$	74,371,286

The Company utilizes the ratio of the carrying value of individual residential and commercial

and industrial mortgage loans compared to the individual appraisal value to evaluate the credit quality of its mortgage loans on real estate (commonly referred to as the loan-to-value ratio). The Company’s residential and commercial and industrial mortgage loans on real estate by credit quality using this ratio as of

December 31, 2017

and

2016

are summarized as follows:

			As of December 31 ,
			Residential Mortgage Loan s				Commercial and Industrial Mortgage Loan s				Total Mortgage Loan s
Loan-To-Value Rati o			201 7		201 6		201 7		201 6		201 7		201 6
Over 70%	to	80 %	$	19,515,632	$	14,559,541	$	-	$	-	$	19,515,632	$	14,559,541
Over 60%	to	70 %		36,192,035		29,738,887		-		-		36,192,035		29,738,887
Over 50%	to	60 %		25,121,248		15,440,364		835,093		1,051,155		25,956,341		16,491,519
Over 40%	to	50 %		12,923,381		10,399,031		-		-		12,923,381		10,399,031
Over 30%	to	40 %		4,303,273		2,184,351		658,296		203,653		4,961,569		2,388,004
Over 20%	to	30 %		1,867,670		467,410		159,671		-		2,027,341		467,410
Over 10%	to	20 %		727,245		317,936		143,150		-		870,395		317,936
10%	or	les s		49,757		8,958		-		-		49,757		8,958
	Tota l		$	100,700,241	$	73,116,478	$	1,796,210	$	1,254,808	$	102,496,451	$	74,371,286

The outstanding principal balance of mortgage loans, by the most significant st

ates, as of

December 31, 2017

and

2016

are summarized as follows:

	December 31, 201 7					December 31, 201 6
	Amoun t		Percentag e			Amoun t		Percentag e
Alabam a	$	796,489		0.78	%	$	123,940		0.17	%
Arizon a		1,666,684		1.63	%		735,704		0.99	%
Californi a		3,973,810		3.88	%		3,516,796		4.73	%
Colorad o		206,490		0.20	%		846,964		1.14	%
Connecticu t		307,716		0.30	%		245,547		0.33	%
Florid a		18,773,474		18.32	%		14,157,109		19.04	%
Georgi a		8,019,796		7.82	%		6,761,450		9.09	%
Hawai i		236,758		0.23	%		-		0.00	%
Illinoi s		11,165,357		10.89	%		10,984,320		14.77	%
Indian a		966,491		0.94	%		548,783		0.74	%
Kansa s		421,362		0.41	%		114,098		0.15	%
Kentuck y		101,022		0.10	%		104,490		0.14	%
Louisian a		252,457		0.25	%		256,971		0.35	%
Marylan d		437,705		0.43	%		-		0.00	%
Massachusett s		293,933		0.29	%		-		0.00	%
Michiga n		199,661		0.19	%		491,692		0.66	%
Minnesot a		351,397		0.34	%		216,640		0.29	%
Missour i		2,628,265		2.56	%		2,466,872		3.32	%
Nevad a		492,840		0.48	%		554,223		0.75	%
New Jerse y		334,804		0.33	%		-		0.00	%
New Yor k		2,236,894		2.18	%		419,620		0.56	%
North Carolin a		1,009,279		0.98	%		1,048,442		1.41	%
Ohi o		2,425,787		2.37	%		1,737,406		2.34	%
Oklahom a		356,203		0.35	%		354,890		0.48	%
Orego n		1,416,750		1.38	%		-		0.00	%
Pennsylvani a		211,147		0.21	%		224,879		0.30	%
South Carolin a		718,897		0.70	%		345,682		0.46	%
Tennesse e		1,465,126		1.43	%		1,190,701		1.60	%
Texa s		40,414,632		39.43	%		26,141,950		35.14	%
Washingto n		239,998		0.23	%		247,125		0.33	%
Wisconsi n		282,869		0.28	%		286,319		0.38	%
All other state s		92,358		0.09	%		248,673		0.34	%
	$	102,496,451		100	%	$	74,371,286		100	%

There were

23

loans with a remaining principal balance of

$3,094,155

that were more than

90

days past due as of

December 31, 2017.

There were

11

loans with a remaining principal balance of

$1,208,379

that were more than

90

days past due as of

December 31, 2016.

There were

no

mortgage loans in default and in the foreclosure process as of

December 31, 2017

and

2016.

During

2017

the Company foreclosed on residential mortgage loans of real estate totaling $

207,482

and transferred those properties to investment real estate held for sale. During

2016

the Company foreclosed on residential mortgage loans of real estate totaling

$394,427

and transferred those properties to investment real estate held for sale.

The principal balances of the

986

residential mortgage loans owned by the Company as of

December 31, 2017

that aggregated to

$100,700,241

ranged from a low of

$84

to a high of

$852,011

and the interest rates ranged from

4.13%

to

16.07%.

The principal balances of the

six

commercial and

two

industrial mortgage loans owned by the Company as of

December 31, 2017

that aggregated to

$1,796,210

ranged from a low of

$90,431

to a high of

$432,798

and the interest rates ranged from

5.75%

to

9.99%.

The principal balances of the

755

residential mortgage loans owned by the Company as of

December 31, 2016

that aggregated to

$73,116,478

ranged from a low of

$2,148

to a high of

$864,562

and the interest rates ranged from

5.40%

to

20.78%.

The principal balances of the

four

commercial mortgage loans owned by the Company as of

December 31, 2016

that aggregated to

$1,254,808

ranged from a low of

$180,386

to a high of

$451,554

and the interest rates ranged from

5.75%

to

8.25%.

There are allowances for losses on mortgage loans of $

342,815

and

$244,427

as of

December 31, 2017

and

2016,

respectively. As of

December 31, 2017,

$564,479

of independent mortgage loan balances are held in escrow by a

third

party for the benefit of the Company related to its investment in mortgage loans on real estate with

one

loan originator.

As of

December 31, 2016,

$525,063

of independent mortgage loan balances were held in escrow by a

third

party for the benefit of the Company related to its investment in mortgage loans on real estate with

one

loan originator.

In

2017

and

2016

the Company did

not

experience any impairment on mortgage loan investments.

Investment real estate

D

uring

2017

the Company foreclosed on residential mortgage loans of real estate totaling

$207,482

and transferred those properties to investment real estate held for sale. During

2017,

the Company sold investment real estate property with an aggregate carrying value of

$185,701.

The Company recorded a gross realized investment gain on sale of

$4,382

based on an aggregate sales price of

$190,083.

D

uring

2016

the Company foreclosed on

seven

residential mortgage loans of real estate totaling

$394,427

and transferred those properties to investment real estate held for sale. During

2016

the Company sold investment real estate property with an aggregate carrying value of

$63,931.

The Company recorded a gross realized investment loss on sale of

$20,662

based on an aggregate sales price of

$43,269.

TLIC owns approximately

six

and

one

-half acres of land located in Topeka, Kansas that includes a

20,000

square foot office building on approximately

one

-

fourth

of this land. This building and land on

one

of the

four

lots is held for the production of income. The other

three

lots of land owned in Topeka, Kansas are held for

investment. In addition, FBLIC owns

one

-half acre of undeveloped land located in Jefferson City, Missouri. During

2016

management impaired the undeveloped land by

$4,892

from its carrying value to its net realizable value expected at the time of ultimate resale.

The Company

’s investment real estate as of

December 31, 2017

and

2016

is summarized as follows:

	December 31 ,
	201 7			201 6
Land - held for the production of incom e	$	213,160		$	213,160
Land - held for investmen t		745,155			745,155
Total lan d		958,315			958,315
Building - held for the production of incom e		2,267,557			2,267,557
Less - accumulated depreciation		(1,195,183	)		(1,049,695	)
Buildings net of accumulated depreciatio n		1,072,374			1,217,862
Residential real estate - held for sal e		352,277			330,496
Total residential real estat e		352,277			330,496
Investment real estate, net of accumulated depreciatio n	$	2,382,966		$	2,506,673

Other Long-Term Investments

The Company

’s investment in lottery prize cash flows was

$55,814,583

and

$46,788,873

as of

December 31, 2017

and

2016,

respectively. The lottery prize cash flows are assignments of the future rights from lottery winners purchased at a discounted price. Payments on these investments are made by state run lotteries.

The amortized cost and estimated fair value of lottery prize cash flows, by contractual maturity, as of D

ecember 

31,

2017

are summarized as follows:

	December 31, 201 7
	Amortized Cost		Fair Value
Due in one year or les s	$	8,020,313	$	8,162,983
Due in one year through five year s		22,512,241		24,685,185
Due after five years through ten year s		15,839,830		19,684,133
Due after ten year s		9,442,199		15,766,284
	$	55,814,583	$	68,298,585

The outstanding balance of lottery prize cash flows, by state

lottery, as of

December 31, 2017

and

2016

are summarized as follows:

	December 31, 201 7					December 31, 201 6
	Amoun t		Percentag e			Amoun t		Percentag e
Arizon a	$	314,056		0.56	%	$	67,009		0.14	%
Californi a		4,892,381		8.77	%		3,725,329		7.96	%
Connecticu t		1,734,926		3.11	%		1,554,844		3.32	%
Florid a		47,641		0.09	%		92,721		0.20	%
Georgi a		3,209,769		5.75	%		1,179,442		2.52	%
Illinoi s		512,415		0.92	%		565,667		1.21	%
Indian a		1,282,229		2.30	%		1,303,314		2.79	%
Kentuck y		-		0.00	%		28,411		0.06	%
Main e		204,839		0.37	%		239,011		0.51	%
Massachusett s		13,613,341		24.39	%		10,262,521		21.93	%
Michiga n		294,385		0.53	%		307,892		0.66	%
Missour i		115,906		0.21	%		122,945		0.26	%
New Jerse y		12,842		0.02	%		61,823		0.13	%
New Yor k		21,742,899		38.93	%		19,633,916		41.97	%
Ohi o		3,125,819		5.60	%		3,476,857		7.43	%
Orego n		107,035		0.19	%		-		0.00	%
Pennsylvani a		1,700,591		3.05	%		1,027,361		2.20	%
Texa s		2,320,411		4.16	%		2,540,038		5.43	%
Vermon t		282,896		0.51	%		293,573		0.63	%
Washingto n		300,202		0.54	%		306,199		0.65	%
	$	55,814,583		100.00	%	$	46,788,873		100.00	%

Major categories of net investment income for t

he years ended

December 31, 2017

and

2016

are summarized as follows:

	Years Ended December 31 ,
	201 7			201 6
Fixed maturity securitie s	$	6,504,233		$	5,970,940
Equity securitie s		20,167			27,364
Other long-term investment s		3,645,043			2,685,639
Mortgage loan s		8,364,448			5,774,229
Policy loan s		114,246			107,541
Real estat e		375,369			340,032
Short-term and other investment s		141,259			44,013
Gross investment incom e		19,164,765			14,949,758
Investment expense s		(2,454,357	)		(1,759,115	)
Net investment incom e	$	16,710,408		$	13,190,643

XML

Note 3 - Fair Value Measurements

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Fair Value Disclosures [Text Block]

3.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) on the measurement date.

  The Company also considers the impact on fair value of a significant decrease in volume and level of activity for an asset or liability when compared with normal activity.

The Company holds fixed maturity and equity securities that are measured and reported at fair market value on the

consolidated statements of financial position. The Company determines the fair market values of its financial instruments based on the fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes

three

levels of inputs that

may

be used to measure fair value, as follows:

Level

1

- Quoted prices in active markets for identical assets or liabilities. The Company’s Level

1

assets include equity securities that are traded in an active exchange market.

Level

2

- Observable inputs other than Level

1

prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are

not

active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. The Company’s Level

2

assets and liabilities include fixed maturity securities with quoted prices that are traded less frequently than exchange-traded instruments or assets and liabilities whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes U.S. Government and agency mortgage-backed debt securities, state and political subdivision securities, corporate debt securities and foreign debt securities.

Level

3

- Unobservable inputs that are supported by little or

no

market activity and that are significant to the fair value of the assets or liabilities. The Company’s Level

3

assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This category generally includes certain private equity investments where independent pricing information was

not

able to be obtained for a significant portion of the underlying assets.

The Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into the

three

-level fair value hierarchy. If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the valuation inputs, or their ability to be observed,

may

result in a reclassification for certain financial assets or liabilities. Reclassifications impacting Level

3

of the fair value hierarchy are reported as transfers in and out of the Level

3

category as of the beginning of the period in which the reclassifications occur.

The Company

’s fair value hierarchy for those financial instruments measured at fair value on a recurring basis as of

December 31, 2017

and

2016

is summarized as follows:

	Level 1		Level 2		Level 3		Tota l
	December 31, 201 7
Fixed maturity securities, available-for-sal e
U.S. government and U.S. government agencie s	$	-	$	2,973,067	$	-	$	2,973,067
States and political subdivision s		-		9,685,687		-		9,685,687
Residential mortgage-backed securitie s		-		71,309		-		71,309
Corporate bond s		-		114,097,008		-		114,097,008
Foreign bond s		-		22,856,068		-		22,856,068
Total fixed maturity securitie s	$	-	$	149,683,139	$	-	$	149,683,139
Equity securities, available-for-sal e
Mutual fund s	$	-	$	349,066	$	-	$	349,066
Corporate preferred stoc k		100,720		-		-		100,720
Corporate common stoc k		160,861		-		61,500		222,361
Total equity securitie s	$	261,581	$	349,066	$	61,500	$	672,147

	December 31, 201 6
Fixed maturity securities, available-for-sal e
U.S. government and U.S. government agencie s	$	-	$	3,185,383	$	-	$	3,185,383
States and political subdivision s		-		9,250,896		-		9,250,896
Residential mortgage-backed securitie s		-		70,727		-		70,727
Corporate bond s		-		100,980,041		-		100,980,041
Foreign bond s		-		15,824,108		-		15,824,108
Total fixed maturity securitie s	$	-	$	129,311,155	$	-	$	129,311,155
Equity securities, available-for-sal e
Mutual fund s	$	-	$	341,914	$	-	$	341,914
Corporate preferred stoc k		96,360		-		-		96,360
Corporate common stoc k		138,633		-		61,500		200,133
Total equity securitie s	$	234,993	$	341,914	$	61,500	$	638,407

As of

December 3

1,

2017

and

2016,

Level

3

financial instruments consisted of

two

private placement common stocks that have

no

active trading. During

2016,

additional investments in

one

of the private placement common stocks were purchased.

These private placement stocks represent investments in small insurance holding companies. The fair value for these securities was determined through the use of unobservable assumptions about market participants. The Company has assumed a willing market participant would purchase the securities for the same price as the Company paid

.

Fair values for Level

1

and Level

2

assets

for the Company’s fixed maturity and equity securities available-for-sale are primarily based on prices supplied by a

third

party investment service. The

third

party investment service provides quoted prices in the market which use observable inputs in developing such rates.

The Company analyzes market valuations received to verify reasonableness and to understand the key assumptions used and the sources. Since the fixed maturity securities owned by the Company do

not

trade on a daily basis, the

third

party investment service prepares estimates of fair value measurements using relevant market data, benchmark curves, sector groupings and matrix pricing. As the fair value estimates of the Company

’s fixed maturity securities are based on observable market information rather than market quotes, the estimates of fair value on these fixed maturity securities are included in Level

2

of the hierarchy. The Company’s Level

2

investments include obligations of U.S. government, U.S. government agencies, state and political subdivisions, mortgage-backed securities, corporate bonds and foreign bonds.

The Company

’s equity securities are included in Level

1

and Level

2

and the private placement common stocks are included in Level

3.

Level

1

for those equity securities classified as such is appropriate since they trade on a daily basis, are based on quoted market prices in active markets and are based upon unadjusted prices. Level

2

for those equity securities classified as such is appropriate since they are

not

actively traded.

The Company

’s fixed maturity and equity securities available-for-sale portfolio is highly liquid and allows for a high percentage of the portfolio to be priced through pricing services.

The change in the fair value of the Company

’s Level

3

equity securities available-for-sale for the years ended

December 31, 2017

and

2016

is summarized as follows:

	Year Ended December 31 ,
	201 7		201 6
Beginning balanc e	$	61,500	$	46,500
Purchase s		-		15,000
Sale s		-		-
Impairmen t		-		-
Ending balanc e	$	61,500	$	61,500

Fair Value of Financial Instruments

The carrying amount and fair value of the Company

’s financial assets and financial liabilities disclosed, but

not

carried, at fair value as of

December 31, 2017

and

2016,

and the level within the fair value hierarchy at which such assets and liabilities are measured on a recurring basis are summarized as follows:

	Carryin g		Fai r
	Amoun t		Valu e		Level 1		Level 2		Level 3
	December 31, 201 7
Financial asset s
Mortgage loans on real estat e
Commercial and Industria l	$	1,796,210	$	1,783,385	$	-	$	-	$	1,783,385
Residentia l		100,700,241		102,192,001		-		-		102,192,001
Policy loan s		1,660,175		1,660,175		-		-		1,660,175
Short-term investmen ts		547,969		547,969		547,969		-		-
Other long-term investment s		55,814,583		68,298,585		-		-		68,298,585
Cash and cash equivalent s		31,496,159		31,496,159		31,496,159		-		-
Accrued investment incom e		2,544,963		2,544,963		-		-		2,544,963
Total financial asset s	$	194,560,300	$	208,523,237	$	32,044,128	$	-	$	176,479,109
Financial liabilitie s
Policyholders' account balance s	$	292,909,762	$	243,234,637	$	-	$	-	$	243,234,637
Policy claim s		1,148,513		1,148,513		-		-		1,148,513
Total financial liabilitie s	$	294,058,275	$	244,383,150	$	-	$	-	$	244,383,150

	December 31, 201 6
Financial asset s
Mortgage loans on real estat e
Commercia l	$	1,254,808	$	1,268,140	$	-	$	-	$	1,268,140
Residentia l		73,116,478		70,383,661		-		-		70,383,661
Policy loan s		1,598,116		1,598,116		-		-		1,598,116
Other long-term investment s		46,788,873		55,890,429		-		-		55,890,429
Cash and cash equivalent s		34,223,945		34,223,945		34,223,945		-		-
Accrued investment incom e		2,176,770		2,176,770		-		-		2,176,770
Total financial asset s	$	159,158,990	$	165,541,061	$	34,223,945	$	-	$	131,317,116
Financial liabilitie s
Policyholders' account balance s	$	245,346,489	$	206,541,702	$	-	$	-	$	206,541,702
Policy claim s		997,814		997,814		-		-		997,814
Total financial liabilitie s	$	246,344,303	$	207,539,516	$	-	$	-	$	207,539,516

The estimated fair value amounts have been determined using available market information and appropriate valuation methodologies. However, considerable judgment was required to interpret market data 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 following methods and assumptions were used in estimating the fair value disclosures for financial instruments in the accompanying financial statements and notes thereto:

Fixed Maturity Securities and Equity Securities

The fair value of fixed maturity securities and equity securities are based on the principles previously discussed as Level

1,

Level

2

and Level

3.

Mortgage Loans on Real Estate

The fair values for mortgage loans are estimated using discounted cash flow analyses. For residential mortgage loans, the discount rate used was indexed to the LIBOR yield curve adjusted for an appropriate credit spread. For commercial

and industrial mortgage loans, the discount rate used was assumed to be the interest rate on the last commercial mortgage acquired by the Company.

Cash and Cash Equivalents,

Short-Term Investments,

Accrued Investment Income

and

Policy Loans

The carrying value of these financial instruments approximates their fair values. Cash and cash equivalents

and short-term investments are included in Level

1

of the fair value hierarchy due to their highly liquid nature.

Other Long-Term Investments

Other long-term investments are comprised of lottery prize receivables and fair value is derived by using a discounted cash flow approach. Projected cash flows are discounted using the average Citigroup Pension Liability Index in effect at the end of each period.

Investment Contracts

– Policyholders’ Account Balances

The fair value for liabilities under investment-type insurance contracts (accumulation annuities) is calculated using a discounted cash flow approach.

  Cash flows are projected using actuarial assumptions and discounted to the valuation date using risk-free rates adjusted for credit risk and the nonperformance risk of the liabilities.

The fair values for insurance contracts other than investment-type contracts are

not

required to be disclosed.

Policy Claims

The carrying amounts reported for these liabilitie

s approximate their fair value.

XML

Note 4 - Special Deposits

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Restricted Assets Disclosure [Text Block]

4.

Special Deposits

TLIC and FBLIC are required to hold assets on deposit for the benefit of policyholders and other special deposits in accordance with statutory rules and regul

ations. As of

December 31, 2017

and

2016,

these required deposits had amortized costs that totaled

$4,308,853

and

$4,099,405,

respectively.

As of

December 31, 2017

and

2016,

these required deposits had fair values that totaled

$4,307,439

and

$4,125,116,

respectively.

XML

Note 5 - Allowance for Loan Losses From Mortgage Loans On Real Estate and Loans From Premium Financing

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Premiums Receivable Note [Text Block]

5.

Allowance for Loan Losses from Mortgage Loans on Real Estate and Premium Financing Loans

As of

December 31, 2017, $

564,479

of independent residential mortgage loans on real estate are held in escrow by a

third

party for the benefit of the Company.   As of

December 31, 2017,

$394,978

of that escrow amount is available to the Company as additional collateral on

$4,925,259

of advances to the loan originator. The remaining

December 31, 2017

escrow amount of

$169,501

is available to the Company as additional collateral on its investment of

$33,900,260

in residential mortgage loans on real estate.

In addition, the Company has an additional

$342,815

allowance for possible loan losses in the remaining

$68,596,191

of investments in mortgage loans on real estate as of

December 31, 2017.

As of

December 31, 2016,

$525,063

of independent mortgage loan balances were held in escrow by a

third

party for the benefit of the Company related to its investment in

$25,523,757

of mortgage loans on real estate with

one

loan originator. In

addition, the Company had an additional

$244,427

allowance for possible loan losses in the remaining

$48,847,529

of investments in mortgage loans on real estate as of

December 31, 2016.

Through

June 30, 2012,

FTCC financed amounts up to

80%

of the premium on property and casualty insurance policies after a

20%

or greater down payment was made by the policy owner. The premiums financed were collateralized b

y the amount of the unearned premium of the insurance policy. Policies that became delinquent were submitted for cancellation and recovery of the unearned premium, up to the amount of the loan balance,

25

days after a payment became delinquent.

As of

December 31, 2016

the Company established a full allowance for uncollectible receivables against the premium financing asset. In late

December

of

2016,

the Company wrote off the asset by netting the allowance for uncollectible receivables against the premium financing asset. The Company has made

no

premium financing loans since

June 30, 2012.

The balances of and changes in the Company

’s credit losses related to mortgage loans on real estate and loans from premium financing as of and for the years ended

December 31, 2017

and

2016

are summarized as follows (excluding

$33,900,260

and

$25,523,757

of mortgage loans on real estate as of

December 31, 2017

and

2016,

respectively, with

one

loan originator where independent mortgage loan balances are held in escrow by a

third

party for the benefit of the Company):

	Years Ended December 31 ,
	Residential Mortgage Loan s				Commercial and Industrial Mortgage Loan s					Premium Finance Loan s					Tota l
	201 7		201 6		201 7		201 6			201 7		201 6			201 7		201 6
Allowance, beginnin g	$	238,121	$	175,988	$	6,306	$	7,360		$	-	$	197,172		$	244,427	$	380,520
Charge off s		-		-		-		-			-		(347,885	)		-		(347,885	)
Recoverie s		-		-		-		-			-		-			-		-
Provisio n		95,668		62,133		2,720		(1,054	)		-		150,713			98,388		211,792
Allowance, endin g	$	333,789	$	238,121	$	9,026	$	6,306		$	-	$	-		$	342,815	$	244,427
Allowance, ending :
Individually evaluate d for impairmen t	$	-	$	-	$	-	$	-		$	-	$	-		$	-	$	-
Collectively evaluate d for impairmen t	$	333,789	$	238,121	$	9,026	$	6,306		$	-	$	-		$	342,815	$	244,427
Carrying Values :
Individually evaluate d for impairmen t	$	-	$	-	$	-	$	-		$	-	$	-		$	-	$	-
Collectively evaluate d for impairmen t	$	66,799,981	$	47,592,721	$	1,796,210	$	1,254,808		$	-	$	-		$	68,596,191	$	48,847,529

XML

Note 6 - Deferred Policy Acquisition Costs

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Deferred Policy Acquisition Costs [Text Block]

6.

Deferred Policy Acquisition Costs

The balances of and changes in deferred acquisition costs as of and for the years ended

December 31,

2017

and

2016

are summarized as follows:

	201 7			201 6
Balance, beginning of yea r	$	18,191,990		$	13,015,679
Capitalization of commissions, sales and issue expense s		9,321,726			7,445,304
Amortizatio n		(2,870,412	)		(2,202,367	)
Deferred acquisition costs allocated to investment s		(87,402	)		(66,626	)
Balance, end of yea r	$	24,555,902		$	18,191,990

XML

Note 7 - Federal Income Taxes

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

7.

Federal Income Taxes

FTFC files a consolidated federal income tax return with FTCC but does

not

file a consolidated tax return with TLIC or FBLIC. TLIC and FBLIC are taxed as life insurance companies under the provisions of the Internal Revenue Code. Life insurance companies must file separate tax returns until they have been a member of the consolidated filing group for

five

years. However, in

201

7

and

2016,

TLIC and FBLIC filed combined life insurance company

2016

and

2015

federal tax returns and intend to also file a combined life insurance company

2017

federal tax return for TLIC and FBLIC in

2018.

Certain items included in income reported for financial statement purposes are

not

included in taxable income for the current period, resulting in deferred income taxes.

A reconciliation

of federal income tax expense (benefit) computed by applying the federal income tax rate of

34

%

to income before federal income tax expense for the years ended

December 31, 2017

and

2016

is summarized as follows:

	Years Ended December 31 ,
	201 7			201 6
Expected tax expens e	$	796,580		$	822,726
Net operating losse s		649,460			(690,905	)
Loss contingency accrued for lawsuit settlemen t		385,331			-
Capital gain taxe s		185,461			72,249
Future policy benefit s		151,017			282,062
Value of life insurance business acquire d		108,773			53,111
Deferred policy acquisition cost s		(611,407	)		(651,873	)
Small life insurance company deductio n		(153,956	)		(62,303	)
Accrual of discoun t		(68,679	)		(183,393	)
Adjustment of prior years' taxe s		(23,068	)		(15,075	)
Difference in book versus tax basis of available-for-sale fixed maturity securitie s		(7,273	)		159,763
Othe r		(38,720	)		42,681
Total income tax expense (benefit )	$	1,373,519		$	(170,957	)

Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company

’s deferred tax liabilities and assets as of

December 31, 2017

and

2016

are summarized as follows:

	December 31 ,
	201 7			201 6
Deferred tax liabilities :
Net unrealized investment gain s	$	1,265,569		$	204,668
Available-for-sale fixed maturity securitie s		89,439			232,889
Deferred policy acquisition cost s		4,317,272			2,944,563
Reinsurance recoverabl e		249,822			251,788
Investment real estat e		38,700			35,940
Value of insurance business acquire d		1,160,595			1,181,767
Due premium s		26,036			25,914
Other asset s		6,962			5,819
Othe r		2,363			3,798
Total deferred tax liabilitie s		7,156,758			4,887,146
Deferred tax assets :
Policyholders' account balances and future policy benefit s		2,308,001			1,965,397
Policy claim s		13,993			25,983
Unearned investment incom e		12,941			9,491
Available-for-sale equity securitie s		51,554			48,945
Mortgage loan s		42,175			7,578
Alternative minimum tax carryforwar d		305,538			276,571
Net operating loss carryforwar d		1,057,511			1,843,238
Net capital loss carryforwar d		8,925			14,450
Dividend liabilit y		10,823			10,652
Loss contingency accrued for lawsuit settlemen t		385,331			-
Othe r		6,962			5,821
Total deferred tax asset s		4,203,754			4,208,126
Valuation allowanc e		(8,925	)		(14,450	)
Net deferred tax asset s		4,194,829			4,193,676
Net deferred tax liabilitie s	$	2,961,929		$	693,470

FTFC has net operating loss carryforwards of

$5,035,767

expiring in

2024

through

2033.

FTFC has capital loss carryforwards of

$42,500

expiring in

2018

that are subject to a full valuation allowance as of

December 31, 2017

and

2016

since it is

not

probable that the capital loss carryforwards will be utilized. During

2017,

FTFC utilized

$284,560

of the net operating loss carryforward existing as of

January 1, 2017

to offset

2017

federal taxable income. During

2016,

FTFC utilized

$299,347

of the net operating loss carryforward existing as of

January 1, 2016

to offset

2016

federal taxable income.

Due to FTFC

’s taxable income generated in

2017,

2016,

2015

and

2014

and FTFC’s projected taxable income in future years, the valuation allowance on FTFC’s net operating loss carryforward was reduced by

$1,699,953

during

2016

since it is probable the entire net operating loss carryforwards will be utilized.

During

201

7,

TLIC utilized the remaining

$116,225

net operating loss carryforwards originated from the acquisition of FLAC and existing as of

January 1, 2017

to offset a portion of

2017

federal taxable income. During

2016,

TLIC utilized

$135,000

of the net operating loss carryforward existing as of

January 1, 2016

to offset a portion of

2016

federal taxable income.

During

2017,

FBLIC utilized the remaining

$55,409

net operating loss carry forwards generated in

2016

and existing as of

January 1, 2017

to offset a portion of

2017

federal taxable income.

The Company has

no

known uncertain tax benefits within its provision for income taxes

beyond the

$1,834,910

loss contingency accrued for a lawsuit settlement. In addition, the Company does

not

believe it would be subject to any penalties or interest relative to any open tax years and, therefore, have

not

accrued any such amounts. The Company files U.S. federal income tax returns and income tax returns in various state jurisdictions.  The

2015

through

2017

U.S. federal tax years are subject to income tax examination by tax authorities. The Company classifies any interest and penalties (if applicable) as income tax expense in the financial statements.

XML

Note 8 - Reinsurance

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Reinsurance [Text Block]

8

.

Reinsurance

TLIC participates in reinsurance in order to provide risk diversification, additional capacity for future growth and limit the maximum net loss potential arising from large risks. TLIC reinsures all amounts of risk on any

one

life in excess of

$75,000

for individual life insurance with Investors Heritage Life Insurance Company, Optimum Re Insurance Company (“Optimum Re”) and Wilton Reassurance Company (“Wilton Re”).

TLIC is a party to an Automatic Retrocession Pool Agreement (the “Reinsurance Pool”) with Optimum Re, Catholic Order of Foresters, American Home Life Insurance Company and Woodmen of the World. The agreement provides for automatic retrocession of coverage in excess of Optimum Re

’s retention on business ceded to Optimum Re by the other parties to the Reinsurance Pool. TLIC’s maximum exposure on any

one

insured under the Reinsurance Pool is

$75,000.

As of

January 1, 2008,

the Reinsurance Pool stopped accepting new cessions.

Effective

September 29, 2005,

FLAC and Wilton Re executed a binding letter of intent whereby both parties agreed that FLAC would cede the simplified issue version of its Golden Eagle Whole Life (Final Expense) product to Wilton Re on a

50/50

quota share original term coinsurance basis. The letter of intent was executed on a retroactive basis to cover all applicable business issued by FLAC subsequent to

January 1, 2005.

Wilton Re agreed to provide various commission and expense allowances to FLAC in exchange for FLAC ceding

50%

of the applicable premiums to Wilton Re as they were collected. As of

June 24, 2006,

Wilton Re terminated the reinsurance agreement for new business issued after the termination date.

FBLIC also participates in reinsurance in order to provide risk diversification, additional capacity for future growth and limit the maximum net loss potential arising from large risks. FBLIC reinsures initial amounts of risk on any

one

life in excess of

$75,000

for individual life insurance with Optimum Re. TLIC and

FBLIC also reinsure the accidental death benefit portion of their life policies under a bulk agreement with Optimum Re.

To the extent that the reinsurance companies are unable to meet their obligations under the reinsurance agreements, TLIC and FBLIC remain primarily liable for the entire amount at

risk.

Reinsurance assumed and ceded amounts for TLIC and FBLIC

for

2017

and

2016

are summarized as follows:

	201 7		201 6
Premiums assume d	$	48,347	$	42,342
Commissions and expense allowances assume d		105		57
Benefits assume d		20,027		21,864
Reserve credits assume d		59,464		59,226
In force amount assume d		16,478,162		17,621,570
Premiums cede d		350,591		375,796
Commissions and expense allowances cede d		3,133		4,716
Benefits cede d		447,988		197,467
Reserve credits cede d		1,057,596		1,057,934
In force amount cede d		48,734,604		53,453,666

XML

Note 9 - Leases

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Leases of Lessee Disclosure [Text Block]

9

.

Leases

The Company leases

6,769

square feet of office space pursuant to an original

five

-year lease that began

October 1, 2010

and was amended on

October 1, 2015

for another

five

-year term. Under the terms of the original home office lease, the monthly rent was

$7,897

from

October 1, 2010

through

September 30, 2015.

Under the terms of the amended home office lease, the monthly rent is

$8,461

from

October 1, 2015

through

September 30, 2016

,

$8,630

from

October 1, 2016

through

September 30, 2017

and

$8,805

from

October 1, 2017

through

September 30, 2018

with increases of

two

percent each

twelve

month period from

October 1, 2018

through

September 30, 2020.

The Company incurred rent expense (including charges for the lessor’s building operating expenses above those specified in the lease agreement less monthly amortization of the leasehold improvement allowance received from the lessor) of

$92,041

and

$93,415

for the years ended

December 31, 2017

and

2016,

respectively, under this lease.

On

January 1, 2011,

the Company received a

$120,000

leasehold improvement allowance from the lessor related to the original lease that was fully amortized by

September 30, 2015

. In accordance with the amended lease on

October 1, 2015,

the Company was provided an allowance of

$54,152

for leasehold improvements. The leasehold improvement allowance is amortized over the remaining amended non-cancellable lease term and reduced rent expense by

$14,491,

$8,627

and

$1,250

for the years ended

December 31, 2017,

2016

and

2015,

respectively. The future minimum lease payments to be paid under the amended non-cancellable lease agreement are

$106,189,

$108,304

and

$82,446

for the years

2018

through

2020,

respectively.

TLIC owns approximately

six

and

one

-half acres of land located in Topeka, Kansas. A

20,000

square foot office building has been constructed on approximately

one

-

fourth

of this land.

TLIC executed a

two

year lease agreement effective

January 1, 2015,

for

7,500

square feet of its building in Topeka, Kansas. Effective

January 1, 2017,

this lease was renewed for

two

years. The terms of the lease leave TLIC responsible for paying real estate taxes, building insurance and building and ground maintenance. The monthly lease payments are

$8,696

for

2015,

2016,

2017

and

2018.

TLIC renewed a

five

year lease agreement effective

June 1, 2011,

for

10,000

square feet in the Topeka, Kansas office building. Beginning

June 1, 2014,

the lessee can terminate the lease with a

180

day written notice. The terms of the lease leave TLIC responsible for paying real estate taxes, building insurance and building and ground maintenance with partial reimbursement from the lessee. The lease agreement calls for minimum monthly base lease payments of

$17,750.

This

10,000

square feet lease was renewed for

five

years to be effective from

June 1, 2016

through

May 31, 2021,

with an option for an additional

five

years from

June 1, 2021

through

May 31, 2026.

Beginning

June 1, 2021,

the lessee can terminate the lease with a

120

day written notice. The terms of the lease leave TLIC responsible for paying real estate taxes, building insurance and building and ground maintenance with partial reimbursement from the lessee. The lease agreement calls for a monthly lease payment of

$16,598

from

June 1, 2016

through

June 30, 2016

. Starting

July 1, 2016,

the lease agreement includes an

$88,833

tenant improvement allowance that is amortized over

59

months with interest at

5.00%.

The monthly lease payments are

$18,299

from

July 1, 2016

through

June 30, 2017

and

$18,376

from

July 1, 2017

through

May 31, 2021.

A

five

year lease agreement effective

September 1, 2010

automatically renewed on

2,500

square feet of the Topeka, Kansas office building with a

90

day notice by the lessee to terminate the lease. This lease was renewed on

September 1, 2015

to run through

August 31, 2017

with an option for an additional

three

years through

August 31, 2020.

Beginning

September 1, 2017,

the lessee can terminate the lease with a

120

day written notice. The terms of the lease leave TLIC responsible for paying real estate taxes, building insurance and building and ground maintenance with partial reimbursement from the lessee. The lease payments are

$4,236

per month from

September 1, 2015

through

August 31, 2016,

$4,242

from

September 1, 2016

through

September 30, 2017

and

$4,263

from

October 1

,

2017

through

December 31, 2017.

The future minimum lease payments to be received under the non-cancellable lease agreements are

$324,858,

$220,512,

$220,512

and

$91,880

for the years

2018

through

2021,

respectively.

XML

Note 10 - Shareholders' Equity and Statury Accounting Practices

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

1

0

.

Shareholders’ Equity and Statutory Accounting Practices

TLIC is domiciled in Oklahoma and prepares its statutory financial statements in accordance with statut

ory accounting practices prescribed or permitted by the OID. FBLIC is domiciled in Missouri and prepares its statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the Missouri Department of Insurance. Prescribed statutory accounting practices include publications of the National Association of Insurance Commissioners, state laws, regulations, and general administrative rules. Permitted statutory accounting practices encompass all accounting practices

not

so prescribed. Statutory accounting practices primarily differ from U.S. GAAP by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions and valuing investments, deferred taxes, and certain assets on a different basis.

The statutory net income for TLIC

amounted to

$243,754

and

$1,927,154

for the years ended

December 31, 2017

and

2016,

respectively. The statutory capital and surplus of TLIC was

$11,248,234

and

$11,129,493

as of

December 

31,

2017

and

2016,

respectively. The statutory net income for FBLIC amounted to (

$1,528,459

) and

$6,645

for the years ended

December 31, 2017

and

2016,

respectively. The statutory capital and surplus of FBLIC was

$7,603,475

and

$9,141,799

as of

December 31, 2017

and

2016,

respectively.

TLIC is subject to Oklahoma laws and FBLIC is subject to Missouri laws that limit the amount of dividends insurance companies can pay to stockholders without approval of the respective Departments of I

nsurance. The maximum dividend, which

may

be paid in any

twelve

-month period without notification or approval, is limited to the greater of

10%

of statutory surplus as of

December 

31

of the preceding year or the net gain from operations of the preceding calendar year. Cash dividends

may

only be paid out of surplus derived from realized net profits. Based on these limitations, there is capacity for TLIC to pay a dividend up to

$1,124,823

in

2018

without prior approval. In addition, based on those limitations, there is the capacity for FBLIC to pay a dividend up to

$760,348

in

2018

without prior approval. FBLIC paid dividends of

$1,000,000

to TLIC in

2016.

These dividends are eliminated in consolidation. TLIC has paid

no

dividends to FTFC.

XML

Note 11 - Segment Data

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

1

1

.

Segment Data

T

he Company has a life insurance segment, consisting of the life insurance operations of TLIC and FBLIC, an annuity segment, consisting of the annuity operations of TLIC and FBLIC and a corporate segment. Results for the parent company and the operations of FTCC, after elimination of intercompany amounts, are allocated to the corporate segment

.

These segments as of and

for the years ended

December 31, 2017

and

2016

are summarized as follows:

	Year Ended December 31 ,
	201 7			201 6
Revenues :
Life insurance operation s	$	18,308,660		$	14,996,543
Annuity operation s		14,061,953			11,135,950
Corporate operation s		359,224			585,997
Tota l	$	32,729,837		$	26,718,490
Income (loss) before income taxes :
Life insurance operation s	$	(207,655	)	$	866,648
Annuity operation s		2,280,615			1,271,600
Corporate operation s		269,923			281,534
Tota l	$	2,342,883		$	2,419,782
Depreciation and amortization expense :
Life insurance operation s	$	2,528,920		$	2,081,066
Annuity operation s		934,041			759,091
Tota l	$	3,462,961		$	2,840,157

	December 31 ,
	201 7		201 6
Assets :
Life insurance operation s	$	56,780,793	$	50,577,282
Annuity operation s		328,727,443		275,745,766
Corporate operation s		5,619,438		6,929,565
Tota l	$	391,127,674	$	333,252,613

XML

Note 12 - Concentrations of Credit Risk

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

1

2

.          Concentrations of Credit Risk

Credit risk is limited by diversifying the Company

’s investments. The Company maintains cash and cash equivalents at multiple institutions. The Federal Deposit Insurance Corporation insures accounts up to

$250,000.

Uninsured balances aggregate

$21,835,216

as of

December 31, 2017.

Other funds are invested in mutual funds that invest in U.S. government securities. The Company monitors the solvency of all financial institutions in which it has funds to minimize the exposure for loss. The Company has

not

experienced any losses in such accounts. The Company’s lottery prize receivables due from various states and the geographical distribution of the Company’s mortgage loans by state are summarized in Note

2.

XML

Note 13 - Contingent Liabilities

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Contingencies Disclosure [Text Block]

1

3

.      Contingent Liabilities

A lawsuit filed by the Company and Chairman, President and Chief Executive Officer, Gregg E. Zahn, against former Company Board of Directors member Wayne Pettigrew and Mr. Pettigrew's company, Group & Pension Planners, Inc. (the "Defendants"), concluded o

n

February 17, 2017.

The lawsuit was filed in the District Court of Tulsa County, Oklahoma (Case

No.

CJ-

2013

-

03385

). In the lawsuit, the Company alleged that Mr. Pettigrew had defamed the Company by making untrue statements to certain shareholders of the Company, to the press and to regulators of the state of Oklahoma and had breached his fiduciary duties.

The jury concluded that Mr. Pettigrew, while still a member of the Company

’s Board of Directors, did, in fact, make untrue statements regarding the Company and Mr. Zahn and committed breaches of his fiduciary duties to the Company and the jury awarded the Company

$800,000

of damages against Mr. Pettigrew. In addition, the jury found that Mr. Pettigrew had defamed Mr. Zahn and intentionally inflicted emotional distress on Mr. Zahn and awarded Mr. Zahn

$3,500,000

of damages against Mr. Pettigrew. In addition to the damages awarded by the jury, the Company and Mr. Zahn have initiated steps to aggressively communicate the correction of the untrue statements to outside parties.

Mr. Pettigrew has appealed this decision but has failed to post an appeal bond. As a consequence, the Company and Mr. Zahn are in the process of executing on the judgments against Mr. Pettigrew

’s assets. The Company and Mr. Zahn have so far collected some property and money in the execution process and will continue to execute on the judgments. Any money or property collected to date during the execution of the judgments are held in escrow by a third party, have not been reflected in the December 31, 2017 consolidated financial statements, would have to be returned to Mr. Pettigrew in the event the judgments are reversed by the appellate courts.

Prior to

being acquired by TLIC, FBLIC developed, marketed, and sold life insurance products known as “Decreasing Term to

95”

policies. On

January 17, 2013,

FBLIC’s Board of Directors voted that, effective

March 1, 2013,

it was

not

approving, and therefore was

not

providing, a dividend for the Decreasing Term to

95

policies. On

November 

22,

2013,

a lawsuit was filed in the Circuit Court of Greene County, Missouri asserting claims against FBLIC relating to this decision. A trial was held

November 27, 2017

through

December 1, 2017

on the individual claims of

two

policyholders asserting fraud and negligent misrepresentation and on claims of a class of Missouri residents asking the Court to (

1

) find that the dividend provisions in the Decreasing Term to

95

policies violate Missouri law, specifically, § 

376.360

RSMo.; (

2

) order that the policies are

void

ab initio; and (

3

) order that FBLIC return all premiums collected under these policies, plus interest and attorneys’ fees.

Following the conclusion of the trial, subject to the approval of the Court, the parties reached a settlement resolving of both the individual and class claims. If approved by the Court, FBLIC will pay

$1.85

million as accrued in the consolidated financial statements to resolve all class and individual claims and all active Decreasing Term to

95

policies for individuals in the class will be cancelled. A hearing date for approval of the settlement has

not

yet been scheduled.

Guaranty fund

assessments, brought about by the insolvency of life and health insurers, are levied at the discretion of the various state guaranty fund associations to cover association obligations. In most states, guaranty fund assessments

may

be taken as a credit against premium taxes, typically over a

five

-year period.

XML

Note 14 - Related Party Transactions

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

1

4

. Related Party Transactions

On

April 15,

201

7,

the Company renewed its previous

one

-year loan of

$400,000

to its former Chairman. The renewed loan has a term of

one

year and a contractual interest rate of

5.00%.

The loan is collateralized by

100,000

shares of the Company’s Class A Common stock owned by the former Chairman.

This loan is included in other assets in the consolidated statements of financial position.

XML

Note 15 - Other Comprehensive Income and Accumulated Other Comprehensive Income (Loss)

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

1

5

. Other Comprehensive Income and Accumulated Other Comprehensive Income (Loss)

The changes in the components of the Company

’s accumulated other comprehensive income (loss) for the years ended

December 31, 2017

and

2016

are summarized as follows:

	Years Ended December 31, 2017 and 201 6
	Unrealize d
	Appreciatio n						Accumulate d
	(Depreciation) o n			Adjustment t o			Othe r
	Available-For-Sal e			Deferred Acquisitio n			Comprehensiv e
	Securitie s			Cost s			Income (Loss )
Balance as of January 1, 201 7	$	831,917		$	(13,241	)	$	818,676
Other comprehensive income before reclassifications, net of ta x		3,995,829			(68,869	)		3,926,960
Less amounts reclassified from accumulated other comprehensive income, net of ta x		(15,315	)		-			(15,315	)
Other comprehensive incom e		4,011,144			(68,869	)		3,942,275
Balance as of December 31, 201 7	$	4,843,061		$	(82,110	)	$	4,760,951
Balance as of January 1, 201 6	$	(2,695,876	)	$	40,059		$	(2,655,817	)
Other comprehensive income before reclassifications, net of ta x		3,904,143			(53,300	)		3,850,843
Less amounts reclassified from accumulated other comprehensive income, net of ta x		376,350			-			376,350
Other comprehensive incom e		3,527,793			(53,300	)		3,474,493
Balance as of December 31, 201 6	$	831,917		$	(13,241	)	$	818,676

The pretax components of

the Company’s other comprehensive income and the related income tax expense (benefit) for each component for the years ended

December 31, 2017

and

2016

are summarized as follows:

	Year Ended December 31, 201 7
				Income Ta x
				Expens e
	Preta x			(Benefit )			Net of Ta x
Other comprehensive income :
Change in net unrealized gains on available-for-sale securities :
Unrealized holding gains arising during the perio d	$	5,071,141		$	1,075,312		$	3,995,829
Less reclassification adjustment for net losses included in incom e		(19,437	)		(4,122	)		(15,315	)
Net unrealized gains on investment s		5,090,578			1,079,434			4,011,144
Adjustment to deferred acquisition cost s		(87,402	)		(18,533	)		(68,869	)
Total other comprehensive incom e	$	5,003,176		$	1,060,901		$	3,942,275

Other comprehensive income :		Year Ended December 31, 2016
Change in net unrealized gains on available-for-sale securities :
Unrealized holding gains arising during the perio d	$	4,880,178		$	976,035		$	3,904,143
Less reclassification adjustment for net gains included in incom e		470,438			94,088			376,350
Net unrealized gains on investment s		4,409,740			881,947			3,527,793
Adjustment to deferred acquisition cost s		(66,626	)		(13,326	)		(53,300	)
Total other comprehensive incom e	$	4,343,114		$	868,621		$	3,474,493

Realized gains and losses on the

sales of investments are determined based upon the specific identification method and include provisions for other-than-temporary impairments where appropriate.

The pretax and the related income tax components of the amounts reclassified from the Company

’s accumulated other comprehensive income (loss) to the Company’s consolidated statements of operations for the years ended

December 31, 2017

and

2016

are summarized as follows:

	Years Ended December 31 ,
Reclassification Adjustment s	2017			2016
Unrealized gains (losses) on available-for-sale securities :
Realized gains (losses) on sales of securities (a )	$	(19,437	)	$	470,438
Income tax expense (benefit) (b )		(4,122	)		94,088
Total reclassification adjustment s	$	(15,315	)	$	376,350

(a) These items appear within net realized investment gains and loss on other-than-temporary impairments in the consolidated statements of operations .

(b) These items appear within federal income taxes in the consolidated statements of operations .

XML

Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Stockholders' Equity, Policy [Policy Text Block]

Company Capitalization

The Company raised

$1,450,000

from

two

private placement stock offerings during

2004

and

$25,669,480

from

two

public s

tock offerings and

one

private placement stock offering from

June 22, 2005

through

February 23, 2007;

June 29, 2010

through

April 30, 2012

and

August 15, 2012

through

March 8, 2013.

The Company issued

7,347,488

shares of its common stock and incurred

$3,624,518

of offering costs during these private placements and public stock offerings. The Company also issued

702,685

shares of its common stock in connection with

two

stock dividends paid to shareholders in

2011

and

2012

that resulted in accumulated earnings being charged

$5,270,138

with an offsetting credit of

$5,270,138

to common stock and additional paid-in capital.

The Company has also purchased

247,580

shares of treasury stock at a cost of

$893,947

from former members of the Board of Directors incl

uding the former Chairman of the Board of Directors, a former agent, the former spouse of the Company’s Chairman, Chief Executive Officer and President and a charitable organization where a former member of the Board of Directors had donated shares of the Company’s common stock.

Business Combinations Policy [Policy Text Block]

Acquisition of Other Companies

On

December 23, 2008,

FTFC acquired

100%

of the outstanding common stock of First Life America Corporation (“

FLAC”) from an unaffiliated company. The acquisition of FLAC was accounted for as a purchase. The aggregate purchase price for FLAC was

$2,695,234

including direct costs associated with the acquisition of

$195,234.

The acquisition of FLAC was financed with the working capital of FTFC.

On

December 31, 2008,

FTFC made FLAC a

15

year loan i

n the form of a surplus note in the amount of

$250,000

with an interest rate of

6%

payable monthly, that was approved by the Oklahoma Insurance Department (“OID”). This surplus note is eliminated in consolidation.

On

August 31, 2009,

two

of the Company

’s subsidiaries, Trinity Life Insurance Company (“Old TLIC”) and FLAC, were merged, with FLAC being the surviving company. Immediately following the merger, FLAC changed its name to TLIC.

On

December 28, 2011,

TLIC acquired

100%

of the outstanding common stock of FBLIC from FBLIC

’s shareholders. The acquisition of FBLIC was accounted for as a purchase. The aggregate purchase price for the acquisition of FBLIC was

$13,855,129.

The acquisition of FBLIC was financed with the working capital of TLIC.

On

April 28, 2015,

the Company acquired a block of life insurance policies and annuity contracts according to the terms of an assumption reinsurance agreement. The Company acquired assets of

$3,644,839

(including cash), assumed liabilities

of

$3,055,916

and recorded a gain on reinsurance assumption of

$588,923.

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The consolidated financial statements include the accounts and operations of the Company and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management

’s knowledge of current events and actions it

may

undertake in the future, they

may

ultimately differ from actual results.

Investment, Policy [Policy Text Block]

Investments

Fixed maturity securities are comprised of bonds that are classified as available-for-sale and are carried at fair value with unrealized gains and losses, net of applicable income taxes, reported in accumulated other comprehensive income. The amortized cost of fixed maturity securities available-for-sale is adjusted for amortization of premium and accretion of discount to maturity.

Interest income, as well as the related amortization of premium and accretion of discount, is included in net investment income under the effective yield method. The amortized cost of fixed maturity securities available-for-sale is written down to fair value when a decline in value is considered to be other-than-temporary.

Equity securities available-for-sale is comprised of mutual funds, common stocks and preferred stocks that are carried at fair value. The associated unrealized gains and losses, net of applicable income taxes, are included in accumulated other comprehensive income. The cost of equity securities available-for-sale is written down to fair value when a decline in value is considered to be other-than-temporary. Dividends from these investments are recognized in net investment income when declared.

The Company evaluates the difference between the cost or amortized cost and estimated fair value of its investments to determine whether any decline in value is other-than-temporary in nature.

  This determination involves a degree of uncertainty.  If a decline in the fair value of a security is determined to be temporary, the decline is recorded as an unrealized loss in stockholders' equity. If a decline in a security's fair value is considered to be other-than-temporary, the Company then determines the proper treatment for the other-than-temporary impairment.

For fixed maturity securities available-for-sale, the amount of any other-than-temporary impairment related to a credit loss is recognized in earnings and reflected as a reduction in the cost basis of the security; and the amount of any other-than-temporary impairment related to other factors is recognized in other comprehensive income (loss) with

no

change to the cost basis of the security.

  For equity securities available-for-sale, the amount of any other-than-temporary impairment is recognized in earnings and reflected as a reduction in the cost basis of the security.

The assessment of whether a decline in fair value is considered temporary or other-than-temporary includes management's judgment as to the financial position and future prospects of the entity issuing the security. It is

not

possible to accurately predict when it

may

be determined that a specific security will become impaired.

  Future adverse changes in market conditions, poor operating results of underlying investments and defaults on mortgage loan payments could result in losses or an inability to recover the current carrying value of the investments, thereby possibly requiring an impairment charge in the future.

Likewise, if a change occurs in the Company

’s intent to sell temporarily impaired securities prior to maturity or recovery in value, or if it becomes more likely than

not

that the Company will be required to sell such securities prior to recovery in value or maturity, a future impairment charge could result.

If an other-than-temporary impairment related to a credit loss occurs with respect to a bond, the Company amortizes the reduced book value back to the security's expected recovery value over the remaining term of the bond.

  The Company continues to review the security for further impairment that would prompt another write-down in the value.

Mortgage loans are carried at unpaid balances, net of unamortized premium or discounts. Interest income and the amortization of premiums or discounts are included in net investment income.

Mortgage loan fees, certain direct loan origination costs, and purchase premiums and discounts on loans are recognized as an adjustment of yield by the interest method based on the contractual terms of the loan. In certain circumstances, prepayments

may

be anticipated. The Company has established a valuation allowance for mortgage loans on real estate that are

not

supported by funds held in escrow.

Investment real estate in buildings held for the production of income is carried at cost less accumulated depreciation.

Depreciation on investment real estate in buildings held for the production of income is calculated over an estimated useful life of

19

years. Investment real estate in land held for both the production of income and for sale is carried at cost. Investment real estate obtained through foreclosure on mortgage loans on real estate is carried at the lower of acquisition cost or net realizable value.

Policy loans are carried at unpaid principal balances. Interest income on policy loans is recognized in net investment income at the contract interest rate when earned.

Other long term investments are comprised of lottery prize receivables and are carried at amortized cost, net of unamortized discount. Interest income and the accretion of discount are included in net investment income.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

Cash and cash equivalents include cash on

hand, amounts due from banks and money market instruments.

Short Term Investments [Policy Text Block]

Short-term investments

Short-term investments include funds that have a maturity of more than

90

days but less than

one

year at the date of purchase.

Revenue Recognition, Policy [Policy Text Block]

Investment Income and Realized Gains and Losses on Sales of Investments

Interest and dividends earned on investments are included in net investment income. Realized gains and losses on sales of investments are recognized in operations on the specific identification basis.

Deferred Policy Acquisition Costs, Policy [Policy Text Block]

Deferred Policy Acquisition Costs

Commissions and other acquisition costs which vary with and

are primarily related to the successful production of new business are deferred and amortized in a systematic manner based on the related contract revenues or gross profits as appropriate. Recoverability of deferred acquisition costs is evaluated periodically by comparing the current estimate of the present value of expected pretax future profits to the unamortized asset balance. If this current estimate is less than the existing balance, the difference is charged to expense.

Deferred acquisition costs for the successful production of traditional life insurance contracts are deferred to the extent deemed recoverable and amortized over the premium paying period of the related policies using assumptions consistent with those used in computing future policy benefit liabilities.

Deferred acquisition costs related to the successful production of insurance and annuity products that subject the Company to mortality or morbidity risk over a period that extends beyond the period or periods in which premiums are collected and that have terms that are fixed and guaranteed (i.e., limited-payment long-duration annuity contracts) are deferred to the extent deemed recoverable and amortized in relation to the present value of actual and expected gross profits on the policies.

To the extent that realized gains and losses on fixed income securities result in adjustments to deferred acquisition costs related to insurance and annuity products, such adjustments are reflected as a component of the amortization of deferred acqui

sition costs. Deferred acquisition costs related to limited-payment long-duration insurance and annuity contracts are also adjusted, net of tax, for the change in amortization that would have been recorded if the unrealized gains (losses) from available-for-sale securities had actually been realized. This adjustment is included in the change in net unrealized appreciation (depreciation) on available-for-sale securities, a component of “Accumulated Other Comprehensive Income (Loss)” in the shareholders’ equity section of the statement of financial position.

Premiums Receivable, Allowance for Doubtful Accounts, Estimation Methodology, Policy [Policy Text Block]

Allowance for Loan Losses from Mortgage Loans and Premium Financing

The allowance for possible loan losses from investments in mortgage loans on real estate and loans from premium financing is a reserve established through a provision for possible loan losses charged to expense which represents, in the Company

’s judgment, the known and inherent credit losses existing in the residential and commercial and industrial mortgage loan and premium financing loan portfolios. The allowance, in the judgment of the Company, is necessary to reserve for estimated loan losses inherent in the residential and commercial and industrial mortgage loan and premium finance loan portfolios and reduces the carrying value of investments in mortgage loans on real estate and premium finance loans to the estimated net realizable value on the consolidated statement of financial position.

While the Company utilizes its best judgment and information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond the Company

’s control, including the performance of the residential and commercial and industrial mortgage loan and premium finance loan portfolios, the economy and changes in interest rates. The Company’s allowance for possible mortgage loan and premium finance loan losses consists of specific valuation allowances established for probable losses on specific loans and a portfolio reserve for probable incurred but

not

specifically identified loans.

Mortgage loans and premium finance loans are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the mortgage loan or premium finance loan agreement. Factors considered by the Company in determining impairment include payment status, collateral value of the real estate subject to the mortgage loan, and the probability of collecting scheduled principal and interest payments when due. Mortgage loans and premium finance loans that experience insignificant payment delays and payment shortfalls generally are

not

classified as impaired.

The Company determines the significance of payment delays and shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the mortgage loan or premium finance loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

Property and equipment are carried at cost less accumulated depreciation or amortization. Office furniture, equipment and computer software is recorded at cost or fair value at acquisition less accumulated depreciation or amortization using the straight-line method over the estimated useful life of the respective assets of

three

to

ten

years. Leasehold improvements are recorded at cost and depreciated over the remaining non-cancellable lease term.

Reinsurance Accounting Policy [Policy Text Block]

Reinsurance

The Company cedes reinsurance under various agreements allowing management to control exposure to potential l

osses arising from large risks and providing additional capacity for growth. Estimated reinsurance recoverable balances are reported as assets and are recognized in a manner consistent with the liabilities related to the underlying reinsured contracts.

Intangible Assets Arising from Insurance Contracts Acquired in Business Combination, Policy [Policy Text Block]

Value of Insurance Business Acquired

As a result of the Company

’s purchases of FLAC and FBLIC, an asset was recorded in the application of purchase accounting to recognize the value of acquired insurance in force.  The Company’s value of acquired insurance in force is an intangible asset with a definite life and is amortized under Financial Accounting Standards Board (“FASB”) guidance.  The value of acquired insurance in force is amortized primarily over the emerging profit of the related policies using the same assumptions that were used in computing liabilities for future policy benefits.

For the amortization of the value of acquired insurance in force, the Company periodically reviews its estimates of gross profits. The most significant assumptions involved in the estimation of gross profits include interest rate spreads, future financial market performance, business surrender/lapse rates, mortality and morbidity, expenses and the impact of realized investment gains and losses. In the event actual experience differs significantly from assumptions or assumptions are significantly revised, the Company is required to record a charge or credit to amortization expense for the period in which an adjustment is made.

As of

December 31,

201

7

and

2016,

there was

$3,213,233

and

$2,831,043,

respectively, of accumulated amortization of the value of insurance business acquired due to the purchases of FLAC and FBLIC. The Company expects to amortize the value of insurance business acquired by the following amounts over the next

five

years: 

$306,567

in

2018,

$286,076

in

2019,

$264,029

in

2020,

$244,791

in

2021

and

$227,007

in

2022.

Other Assets and Liabilities, Policy [Policy Text Block]

Other Assets and Other Liabilities

Other assets consist primarily of

advances to mortgage loan originator, receivable for securities sold, federal and state income taxes recoverable, accrual of mortgage loan and long-term investment payments due, guaranty funds, notes receivable, prepaid assets, deposits, other receivables, property and equipment and loans from premium financing.

Other liabilities consist primarily of accrued expenses

payable, accounts payable, remittance items

not

allocated, payable for securities purchased, guaranty fund assessments, unclaimed funds, deferred revenue, unearned investment income, withholdings, escrows and other payables.

Policyholder Accounts, Policy [Policy Text Block]

Policyholders

’ Account Balances

The Company

’s liability for policyholders’ account balances represents the contract value that has accrued to the benefit of the policyholder as of the financial statement date. This liability is generally equal to the accumulated account deposits plus interest credited less policyholders’ withdrawals and other charges assessed against the account balance. Interest crediting rates for individual annuities range from

2.25%

to

4.50%.

Interest crediting rates for deposit-type liabilities range from

2.50%

to

4.00%.

Future Policy Benefits Liability, Policy [Policy Text Block]

Future Policy Benefits

The Company

’s liability for future policy benefits is primarily comprised of the present value of estimated future payments to or on behalf of policyholders, where the timing and amount of payment depends on policyholder mortality or morbidity, less the present value of future net premiums. For life insurance and annuity products, expected mortality and morbidity is generally based on the Company’s historical experience or standard industry tables including a provision for the risk of adverse deviation. Interest rate assumptions are based on factors such as market conditions and expected investment returns. Although mortality, morbidity and interest rate assumptions are “locked-in” upon the issuance of new insurance with fixed and guaranteed terms, significant changes in experience or assumptions

may

require the Company to provide for expected future losses on a product by establishing premium deficiency reserves.

Unpaid Policy Claims and Claims Adjustment Expense, Policy [Policy Text Block]

Policy Claims

Policy claim liabilities represent the estimated liabilities for claims reported plus estimated incurred but

not

yet reported claims developed from trends of historical market data

applied to current exposure.

Income Tax, Policy [Policy Text Block]

Federal Income Taxes

The Company uses

the asset and liability method of accounting for income taxes. Deferred income taxes are provided for cumulative temporary differences between balances of assets and liabilities determined under U.S. GAAP and balances determined using tax bases. A valuation allowance is established for the amount of the deferred tax asset that exceeds the amount of the estimated future taxable income needed to utilize the future tax benefits.

Common Stock Policy [Policy Text Block]

Common Stock

Common stock is fully paid, non-assessable and has a par value of

$.01

per share.

Treasury Stock [Policy Text Block]

Treasury Stock

Treasury stock

, representing shares of the Company’s common stock that have been reacquired after having been issued and fully paid, is recorded at the reacquisition cost and the shares are

no

longer outstanding.

Comprehensive Income, Policy [Policy Text Block]

Accumulated Other Comprehensive Income

(Loss)

FASB guidance requires the inclusion of unrealized gains or losses on available-for-sale securities, net of tax, as a component of other comprehensive income

(loss).  Unrealized gains and losses recognized in accumulated other comprehensive income (loss) that are later recognized in net income through a reclassification adjustment are identified on the specific identification method. In addition, deferred acquisition costs related to limited-payment long-duration insurance and annuity contracts are also adjusted, net of tax, for the change in amortization that would have been recorded if the unrealized gains (losses) from available-for-sale securities had actually been realized. This adjustment is included in the change in net unrealized appreciation (depreciation) on available-for-sale securities, a component of “Accumulated Other Comprehensive Income (loss)” in the shareholders’ equity section of the statement of financial position.

Insurance Premiums Revenue Recognition, Policy [Policy Text Block]

Revenues and Expenses

Revenues on traditional life insurance products consist of direct premiums reported as earned when due. Liabilities for future policy benefits are provided and acquisition costs are amorti

zed in a systematic manner based on the related contract revenues or gross profits as appropriate.

Acquisition costs for traditional life insurance contracts are deferred to the exten

t deemed recoverable and are amortized

over the premium paying period of the related policies using assumptions consistent with those used in computing future policy benefit liabilities. Traditional life insurance products are treated as long-duration contracts since they are ordinary whole life insurance products, which generally remain in force for the lifetime of the insured.

Deferred acquisition costs related to insurance and annuity products

that subject the Company to mortality or morbidity risk over a period that extends beyond the period or periods in which premiums are collected and that have terms that are fixed and guaranteed are deferred to the extent deemed recoverable and amortized in relation to the present value of actual and expected gross profits on the policies. These insurance and annuity contracts are treated as long-duration insurance contracts since the Company is subject to risk from policyholder mortality and morbidity over an extended period.

Earnings Per Share, Policy [Policy Text Block]

Net Income per Common Share

Net income per common share basic and diluted is calculated using the weighted average number of common shares outstanding and subscribed during the year

. The weighted average outstanding and subscribed common shares basic and diluted were

7,802,593

for both of the years ended

December 31, 2017

and

2016.

Subsequent Events, Policy [Policy Text Block]

Subsequent Events

Management has evaluated all events subsequent to

December 31,

201

7

through the date that these financial statements have been issued.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

Revenue from Contracts with Customers

In

May 2014,

the FASB issued updated guidance to clarify the principles for recognizing revenue. While insurance contracts are

not

within the scope of this updated guidance, the Company's fee income related to providing services will be subject to this updated guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services. The following steps are applied in the updated guidance: (

1

)

 identify the contract(s) with a customer; (

2

) identify the performance obligations in the contract; (

3

) determine the transaction price; (

4

) allocate the transaction price to the performance obligations in the contract and (

5

) recognize revenue when, or as, the entity satisfies a performance obligation.

In

July

 

2015,

the FASB deferred the effective date of the updated guidance on revenue recognitionby

one

year to the quarter ending

March 

31,

2018.

  The adoption of this guidance is

not

expected to have a material effect on the Company’s result of operations, financial position or liquidity.

Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern

In

August 2014,

the FASB issued guidance to address the diversity in practice in determining when there is substantial doubt about an entity's ability to continue as a going concern and when an entity must disclose certain relevant conditions and events. The new guidance requires an entity to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within

one

year after the date that the financial statements are issued (or available to be issued). The new guidance allows the entity to consider the mitigating effects of management's plans that will alleviate the substantial doubt and requires certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans.

If conditions or events raise substantial doubt that is

not

alleviated, an entity should disclose that there is substantial doubt about the entity's ability to continue as a going concern within

one

year after the date that the financial statements are issued (or available to be issued), along with the principal conditions or events that raise substantial doubt, management's evaluation of the significance of those conditions or events in relation to the entity's ability to meet its obligations and management's plans that are intended to mitigate those conditions.

The guidance is effective for annual periods ending after

December 

15,

2016,

and interim and annual periods thereafter. The adoption of this guidance did

not

have a material effect on the Company's results of operations, financial position or liquidity since there are

no

uncertainties about the Company’s ability to continue as a going concern.

Recognition and Measurement of Financial Assets and Financial Liabilities

In

January 2016,

the FASB issued updated guidance regarding financial instruments. This guidance intends to enhance reporting for financial instruments and addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The significant amendments in this update generally require equity investments to be measured at fair value with changes in fair value recognized in net income, require the use of an exit price notion when measuring the fair value of financial instruments for disclosure purposes and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities. This guidance also intends to enhance the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments.

This guidance is effective for fiscal years beginning after

December 15, 2017.

The recognition and measurement provisions of this guidance will be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption and early adoption is

not

permitted. The Company is evaluating this guidance but expects the primary impact will be the recognition of unrealized gains and losses on available-for-sale equity securities in net income. Currently, all unrealized gains and losses on available-for-sale equity securities are recognized in other comprehensive income (loss). The effect of the adoption of this guidance on the Company

’s results of operations, financial position and liquidity is primarily dependent on the fair value of the available-for-sale equity securities in future periods, the existence of a deferred tax asset related to available-for-sale securities in future periods and the economic conditions at the time of that future adoption.

Leases

In

February 2016,

the FASB issued updated guidance regarding leases that generally requires the lessee and lessor to recognize lease assets and lease liabilities on the statement of financial position. A lessee should recognize on the statement of financial position a liability to make lease payments and an asset representing its right-to-use the underlying assets for the lease term. Optional payments to extend the lease or purchase the underlying leased asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise the option(s).

If the lease has a term of

12

months or less, a lessee can make an election to recognize lease expenses for such leases on a straight-line basis over the lease term. There is a differentiation between finance leases and operating leases for the lessee in the statements of operations and cash flows. Finance leases recognize interest on the lease liability separately from the right-to-use the asset whereas an operating lease recognizes a single lease cost allocated over the lease term on a generally straight-line basis. All cash payments are within operating activities in the statement of cash flows except finance leases classify repayments of the principal portion of the lease liability within financing activities.

The accounting applied by the lessor is largely unchanged from that applied under previous U.S. GAAP. Key aspects of the lessor accounting model, however, were aligned with the revenue recognition guidance of Codification Topic

606.

The previous accounting model for leverage leases continues to apply only to those leveraged leases that commenced before the effective date of Codification Update

2016

-

02

Leases (Topic

842

).

Entities will generally continue to account for leases that commenced before the effective date of this update in accordance with previous U.S. GAAP unless the lease is modified. Lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimal rental payments that were tracked and disclosed under previous U.S. GAAP. The updated guidance is to be applied using a modified retrospective approach effective for annual and interim periods beginning after

December

 

15,

2018.

Early adoption is permitted.  The adoption of this guidance is

not

expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Investments

— Equity Method and Joint Ventures:  Simplifying the Transition to the Equity Method of Accounting

In

March

 

2016,

the FASB issued updated guidance that eliminates the requirement to retroactively apply the equity method of accounting when an investment that was previously accounted for using another method of accounting becomes qualified to apply the equity method due to an increase in the level of ownership interest or degree of influence.  If the investment was previously accounted for as an available-for-sale security, any related unrealized gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for the equity method is recognized through earnings.  The updated guidance is effective for reporting periods beginning after

December 

15,

2016,

and is to be applied prospectively. Early adoption was permitted.  The adoption of this guidance did

not

have an impact on the Company’s results of operations, financial position or liquidity.

Derivatives and Hedging:

  Contingent Put and Call Options in Debt Instruments

In

March

 

2016,

the FASB issued updated guidance clarifying that when a call (put) option in a debt instrument is contingently exercisable, the event that triggers the ability to exercise the option is considered to be clearly and closely related to the debt instrument (i.e., the economic characteristics and risks of the option are related to interest rates or credit risks) and the entity does

not

have to assess whether the option should be accounted for separately.

The updated guidance is effective for reporting periods beginning after

December

 

15,

2016.

Early adoption was permitted. The adoption of this guidance did

not

have a material effect on the Company’s results of operations, financial position or liquidity.

Financial Instruments

— Credit Losses:  Measurement of Credit Losses on Financial Instruments

In

June

 

2016,

the FASB issued updated guidance for the accounting for credit losses for financial instruments. The updated guidance applies a new credit loss model (current expected credit losses or CECL) for determining credit-related impairments for financial instruments measured at amortized cost (e.g. mortgage loans and reinsurance amounts recoverable) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses should consider historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. The expected credit losses, and subsequent adjustments to such losses, will be recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected.

The updated guidance also amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security

’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will

no

longer impact the determination of whether a credit loss exists.

The updated guidance is effective for reporting periods beginning after

December

 

15,

2019.

Early adoption is permitted for reporting periods beginning after

December 

15,

2018.

Based on the financial instruments currently held by the Company, the Company expects there would

not

be a material effect on the Company’s results of operations, financial position or liquidity if the new guidance were able to be adopted in the current accounting period. The impact on the Company’s results of operations, financial position or liquidity at the date of adoption of the updated guidance will be determined by the financial instruments held by the Company and the economic conditions at that time.

Statement of Cash Flows

– Classification of Certain Cash Receipts and Cash Payments

In

August 2016,

the FASB issued specific guidance to reduce the existing diversity in practice in how

eight

specific cash flow issues of certain cash receipts and cash payments are presented and classified in the statement of cash flows. The updated guidance is effective for annual and interim periods beginning after

December

 

15,

2017,

and is to be applied retrospectively. Early adoption is permitted.  The adoption of this guidance is

not

expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Consolidation

– Interests Held through Related Parties that Are Under Common Control

In

October 2016,

the FASB issued further guidance that makes targeted amendments to consolidation accounting. This update changes how a reporting entity that is the primary beneficiary of a variable interest entity treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The updated guidance is effective for annual and interim periods beginning after

December

 

15,

2016,

and is to be applied retrospectively. Early adoption was permitted.  The adoption of this guidance did

not

have an impact on the Company’s results of operations, financial position or liquidity.

Statement of Cash Flows

– Classification of Certain Cash Receipts and Cash Payments

In

November 2016,

the FASB issued specific guidance on the cash flow classification and presentation of changes in restricted cash or restricted cash equivalents when there are transfers between cash, cash equivalents and restricted cash or restricted cash equivalents and when there are direct cash receipts into restricted cash or restricted cash equivalents or direct cash payments made from restricted cash or restricted cash equivalents. The updated guidance is effective for annual and interim periods beginning after

December

 

15,

2017,

and is to be applied retrospectively. Early adoption is permitted.  The adoption of this guidance is

not

expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Business Combinations

– Clarifying the Definition of a Business

In

January 2017,

the FASB issued guidance to clarify the definition of a business to assist reporting entities in evaluating whether transactions should be accounted for as an acquisition or disposal of assets or businesses. This update provides a screen to determine when an integrated set of assets or activities is

not

a business and the requirements to be met to be considered a business.

The updated guidance is effective for annual and interim periods beginning after

December

 

15,

2017,

and is to be applied retrospectively. Early adoption is permitted in certain situations.  The adoption of this guidance is

not

expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Intangibles

– Goodwill and Other - Simplifying the Test for Goodwill Impairment

In

January 2017,

the FASB issued guidance to modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. Reporting entities will

no

longer determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. The updated guidance is effective for annual and interim periods beginning after

December

 

15,

2017,

and is to be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after

January 1, 2017. 

The adoption of this guidance is

not

expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Compensation

— Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

In

March

 

2017,

the FASB issued updated guidance to improve the presentation of net periodic pension cost and net periodic post retirement cost (net benefit costs). Net benefit costs comprise several components that reflect different aspects of an employer’s financial arrangements as well as the cost of benefits provided to employees.  The update requires that the

employer service cost component be reported in the same lines as other employee compensation cost and that the other components (non-service costs) be presented separately from the service cost and outside of a subtotal of income from operations if

one

is presented.  The update also allows only the service cost component to be eligible for capitalization in assets when applicable.

The updated guidance is effective for reporting periods beginning after

December

 

15,

2017.

The update is to be applied retrospectively with respect to the presentation of service cost and non-service cost and prospectively with respect to applying the service cost only eligible for capitalization in assets guidance. Early adoption is permitted as of the

first

interim period of an annual period if an entity issues interim financial statements. This pronouncement will

not

impact the Company since it does

not

have any pension or postretirement benefit plans and has

no

intention to adopt such plans.

Compensation

— Stock Compensation: Scope of Modification Accounting

In

May

 

2017,

the FASB issued updated guidance related to a change to the terms or conditions (modification) of a share-based payment award.  The updated guidance provides that an entity should account for the effects of a modification unless the fair value and vesting conditions of the modified award and the classification of the modified award (equity or liability instrument) are the same as the original award immediately before the modification.

The updated guidance is effective for the quarter ending

March

 

31,

2018.

  The update is to be applied prospectively to an award modified on or after the adoption date. Early adoption is permitted in any interim periods for which financial statements have

not

yet been made available for issuance. The adoption of this guidance is

not

expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Target Improvement to Accounting for Hedging Activities

In

August 2017,

the FASB issued updated authoritative guidance for the application of hedge accounting. The updated guidance updates certain recognition and measurement requirements for hedge accounting.

The objective of the guidance is to more closely align the economics of a company’s risk management activities in its financial results and reduce the complexity of applying hedge accounting. The updates include the expansion of hedging strategies that are eligible for hedge accounting, elimination of the separate measurement and reporting of hedge ineffectiveness, presentation of the changes in the fair value of the hedging instrument in the same consolidated statement of operations line as the earnings effect of the hedged item and simplification of hedge effectiveness assessments. This guidance also includes new disclosures and will be applied using a modified retrospective approach by recording a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption.

The updated guidance is effective for reporting periods b

eginning after

December 

15,

2018.

Early adoption is permitted for reporting periods beginning before

December 

15,

2018.

The Company does

not

currently and does

not

intend to participate in hedging activities and there is therefore

no

impact on the Company’s results of operations, financial position or liquidity. This pronouncement would be adopted if the Company begins to participate in hedging activities in the future.

XML

Supplemental Disclosure - Cash and Non-cash Impact on Operating, Investing and Financing Activities (Tables)

12 Months Ended

Dec. 31, 2017

Notes Tables

Schedule of Cash Flow, Supplemental Disclosures [Table Text Block]

	Year Ended
	December 31, 201 7
Reduction in available-for-securities fixed maturity securitie s	$	729,737
Other long-term investment s		(729,737	)
Net cash provided (used) in investing activitie s	$	-

	Year Ended			Year Ended
	December 31, 201 7			December 31, 201 6
Reductions in mortgage loans due to foreclosur e	$	207,482		$	394,427
Investment real estate held-for-sale acquired through foreclosur e		(207,482	)		(394,427	)
Net cash provided (used) in investing activitie s	$	-		$	-

XML

Note 2 - Investments (Tables)

12 Months Ended

Dec. 31, 2017

Notes Tables

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

			Gros s		Gros s
	Amortized Cos t		Unrealize d		Unrealized		Fair
	or Cos t		Gain s		Losse s		Valu e
	December 31, 201 7
Fixed maturity securitie s
U.S. government and U.S. government agencie s	$	2,989,688	$	48,720	$	65,341	$	2,973,067
States and political subdivision s		9,368,393		337,442		20,148		9,685,687
Residential mortgage-backed securitie s		29,573		41,736		-		71,309
Corporate bond s		109,340,273		5,248,291		491,556		114,097,008
Foreign bond s		21,894,020		1,134,999		172,951		22,856,068
Total fixed maturity securitie s		143,621,947		6,811,188		749,996		149,683,139
Equity securitie s
Mutual fund s		347,942		1,124		-		349,066
Corporate preferred stoc k		99,945		775		-		100,720
Corporate common stoc k		154,977		67,384		-		222,361
Total equity securitie s		602,864		69,283		-		672,147
Total fixed maturity and equity securitie s	$	144,224,811	$	6,880,471	$	749,996	$	150,355,286

	December 31, 201 6
Fixed maturity securitie s
U.S. government and U.S. government agencie s	$	3,157,889	$	99,086	$	71,592	$	3,185,383
States and political subdivision s		9,172,533		144,947		66,584		9,250,896
Residential mortgage-backed securitie s		33,970		36,757		-		70,727
Corporate bond s		100,268,424		2,324,712		1,613,095		100,980,041
Foreign bond s		15,677,449		394,742		248,083		15,824,108
Total fixed maturity securitie s		128,310,265		3,000,244		1,999,354		129,311,155
Equity securitie s
Mutual fund s		344,783		-		2,869		341,914
Corporate preferred stoc k		99,945		-		3,585		96,360
Corporate common stoc k		154,672		45,461		-		200,133
Total equity securitie s		599,400		45,461		6,454		638,407
Total fixed maturity and equity securitie s	$	128,909,665	$	3,045,705	$	2,005,808	$	129,949,562

Schedule of Unrealized Loss on Investments [Table Text Block]

			Unrealized		Number of
	Fair Value		Loss		Securities
	December 31, 2017
Fixed maturity securitie s
Less than 12 month s
U.S. government and U.S. government agencies	$	326,163	$	3,897		2
States and political subdivisions		608,342		6,889		3
Corporate bonds		5,995,898		130,337		23
Foreign bonds		2,061,178		98,520		7
Total less than 12 month s		8,991,581		239,643		35
More than 12 month s
U.S. government and U.S. government agencies		1,338,617		61,444		5
States and political subdivisions		579,008		13,259		4
Corporate bonds		5,139,898		361,219		20
Foreign bonds		501,875		74,431		3
Total more than 12 month s		7,559,398		510,353		32
Total fixed maturity securities in an unrealized loss positio n	$	16,550,979	$	749,996		67

	December 31, 2016
Fixed maturity securitie s
Less than 12 month s
U.S. government and U.S. government agencies	$	1,878,308	$	71,592	6
States and political subdivisions		2,532,653		66,584	14
Corporate bonds		23,721,217		696,066	92
Foreign bonds		5,087,133		155,833	16
Total less than 12 month s		33,219,311		990,075	128
More than 12 month s
Corporate bonds		8,004,923		917,029	36
Foreign bonds		1,024,548		92,250	6
Total more than 12 month s		9,029,471		1,009,279	42
Total fixed maturity securities in an unrealized loss positio n		42,248,782		1,999,354	170
Equity securitie s
Less than 12 month s
Corporate preferred stock		96,360		3,585	2
Total less than 12 month s		96,360		3,585	2
More than 12 month s
Mutual funds		89,113		2,869	1
Total more than 12 month s		89,113		2,869	1
Total equity securities in an unrealized loss positio n		185,473		6,454	3
Total fixed maturity and equity securities in an unrealized loss positio n	$	42,434,255	$	2,005,808	173

Unrealized Gain (Loss) on Investments [Table Text Block]

	December 31, 201 7			December 31, 201 6
Unrealized appreciation on available-for-sale securitie s	$	6,130,475		$	1,039,897
Adjustment to deferred acquisition cost s		(103,955	)		(16,553	)
Deferred income taxe s		(1,265,569	)		(204,668	)
Net unrealized appreciatio n on available-for-sale securities	$	4,760,951		$	818,676

Investments Classified by Contractual Maturity Date [Table Text Block]

	December 31, 201 7
	Amortized Cost		Fair Value
Due in one year or les s	$	8,020,313	$	8,162,983
Due in one year through five year s		22,512,241		24,685,185
Due after five years through ten year s		15,839,830		19,684,133
Due after ten year s		9,442,199		15,766,284
	$	55,814,583	$	68,298,585

Realized Gain (Loss) on Investments [Table Text Block]

	Years Ended December 31 ,
	Fixed Maturity Securitie s						Equity Securitie s					Mortgage Loans on Real Estat e					Investment Real Estat e
	201 7			201 6			201 7		201 6			201 7		201 6			201 7			201 6
Proceed s	$	20,230,756		$	20,532,968		$	-	$	324,556		$	25,670,590	$	17,550,870		$	190,083		$	43,269
Gross realized gain s		594,337			643,041			-		100,869			-		101,104			6,050			-
Gross realized losse s		(389,524	)		(64,554	)		-		(1,468	)		-		(28,591	)		(1,668	)		(20,662	)
Loss on other-than - temporary impairmen t		(224,250	)		(207,450	)		-		-			-		-			-			(4,892	)

	Years Ended December 31 ,
	Other Long-Term Investment s
	201 7		201 6
Proceed s	$	792,012	$	-
Gross realized gain s		62,275		-
Gross realized losse s		-		-
Loss on other-than - temporary impairmen t		-		-

Available-for-sale Securities [Table Text Block]

	Years Ended December 31 ,
	201 7		201 6
Change in unrealized investment gains (losses) :
Available-for-sale securities :
Fixed maturity securitie s	$	5,060,302	$	4,473,318
Equity securitie s		30,276		(63,578	)
Net realized investment gains (losses) :
Available-for-sale securities :
Fixed maturity securitie s		204,813		578,487
Equity securitie s		-		99,401
Mortgage loans on real estat e		-		72,513
Investment real estat e		4,382		(20,662	)
Other long-term investment s		62,275		-

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	December 31, 201 7		December 31, 201 6
Commercial and industrial mortgage loan s
Retail store s	$	1,227,894	$	1,075,324
Office building s		137,703		179,484
Industria l		430,613		-
Total commercial and industrial mortgage loan s		1,796,210		1,254,808
Residential mortgage loan s		100,700,241		73,116,478
Total mortgage loan s	$	102,496,451	$	74,371,286

	December 31, 201 7					December 31, 201 6
	Amoun t		Percentag e			Amoun t		Percentag e
Alabam a	$	796,489		0.78	%	$	123,940		0.17	%
Arizon a		1,666,684		1.63	%		735,704		0.99	%
Californi a		3,973,810		3.88	%		3,516,796		4.73	%
Colorad o		206,490		0.20	%		846,964		1.14	%
Connecticu t		307,716		0.30	%		245,547		0.33	%
Florid a		18,773,474		18.32	%		14,157,109		19.04	%
Georgi a		8,019,796		7.82	%		6,761,450		9.09	%
Hawai i		236,758		0.23	%		-		0.00	%
Illinoi s		11,165,357		10.89	%		10,984,320		14.77	%
Indian a		966,491		0.94	%		548,783		0.74	%
Kansa s		421,362		0.41	%		114,098		0.15	%
Kentuck y		101,022		0.10	%		104,490		0.14	%
Louisian a		252,457		0.25	%		256,971		0.35	%
Marylan d		437,705		0.43	%		-		0.00	%
Massachusett s		293,933		0.29	%		-		0.00	%
Michiga n		199,661		0.19	%		491,692		0.66	%
Minnesot a		351,397		0.34	%		216,640		0.29	%
Missour i		2,628,265		2.56	%		2,466,872		3.32	%
Nevad a		492,840		0.48	%		554,223		0.75	%
New Jerse y		334,804		0.33	%		-		0.00	%
New Yor k		2,236,894		2.18	%		419,620		0.56	%
North Carolin a		1,009,279		0.98	%		1,048,442		1.41	%
Ohi o		2,425,787		2.37	%		1,737,406		2.34	%
Oklahom a		356,203		0.35	%		354,890		0.48	%
Orego n		1,416,750		1.38	%		-		0.00	%
Pennsylvani a		211,147		0.21	%		224,879		0.30	%
South Carolin a		718,897		0.70	%		345,682		0.46	%
Tennesse e		1,465,126		1.43	%		1,190,701		1.60	%
Texa s		40,414,632		39.43	%		26,141,950		35.14	%
Washingto n		239,998		0.23	%		247,125		0.33	%
Wisconsi n		282,869		0.28	%		286,319		0.38	%
All other state s		92,358		0.09	%		248,673		0.34	%
	$	102,496,451		100	%	$	74,371,286		100	%

Financing Receivable Credit Quality Indicators [Table Text Block]

			As of December 31 ,
			Residential Mortgage Loan s				Commercial and Industrial Mortgage Loan s				Total Mortgage Loan s
Loan-To-Value Rati o			201 7		201 6		201 7		201 6		201 7		201 6
Over 70%	to	80 %	$	19,515,632	$	14,559,541	$	-	$	-	$	19,515,632	$	14,559,541
Over 60%	to	70 %		36,192,035		29,738,887		-		-		36,192,035		29,738,887
Over 50%	to	60 %		25,121,248		15,440,364		835,093		1,051,155		25,956,341		16,491,519
Over 40%	to	50 %		12,923,381		10,399,031		-		-		12,923,381		10,399,031
Over 30%	to	40 %		4,303,273		2,184,351		658,296		203,653		4,961,569		2,388,004
Over 20%	to	30 %		1,867,670		467,410		159,671		-		2,027,341		467,410
Over 10%	to	20 %		727,245		317,936		143,150		-		870,395		317,936
10%	or	les s		49,757		8,958		-		-		49,757		8,958
	Tota l		$	100,700,241	$	73,116,478	$	1,796,210	$	1,254,808	$	102,496,451	$	74,371,286

Schedule of Real Estate Properties [Table Text Block]

	December 31 ,
	201 7			201 6
Land - held for the production of incom e	$	213,160		$	213,160
Land - held for investmen t		745,155			745,155
Total lan d		958,315			958,315
Building - held for the production of incom e		2,267,557			2,267,557
Less - accumulated depreciation		(1,195,183	)		(1,049,695	)
Buildings net of accumulated depreciatio n		1,072,374			1,217,862
Residential real estate - held for sal e		352,277			330,496
Total residential real estat e		352,277			330,496
Investment real estate, net of accumulated depreciatio n	$	2,382,966		$	2,506,673

Investment Holdings, Other than Securities [Table Text Block]

	December 31, 201 7					December 31, 201 6
	Amoun t		Percentag e			Amoun t		Percentag e
Arizon a	$	314,056		0.56	%	$	67,009		0.14	%
Californi a		4,892,381		8.77	%		3,725,329		7.96	%
Connecticu t		1,734,926		3.11	%		1,554,844		3.32	%
Florid a		47,641		0.09	%		92,721		0.20	%
Georgi a		3,209,769		5.75	%		1,179,442		2.52	%
Illinoi s		512,415		0.92	%		565,667		1.21	%
Indian a		1,282,229		2.30	%		1,303,314		2.79	%
Kentuck y		-		0.00	%		28,411		0.06	%
Main e		204,839		0.37	%		239,011		0.51	%
Massachusett s		13,613,341		24.39	%		10,262,521		21.93	%
Michiga n		294,385		0.53	%		307,892		0.66	%
Missour i		115,906		0.21	%		122,945		0.26	%
New Jerse y		12,842		0.02	%		61,823		0.13	%
New Yor k		21,742,899		38.93	%		19,633,916		41.97	%
Ohi o		3,125,819		5.60	%		3,476,857		7.43	%
Orego n		107,035		0.19	%		-		0.00	%
Pennsylvani a		1,700,591		3.05	%		1,027,361		2.20	%
Texa s		2,320,411		4.16	%		2,540,038		5.43	%
Vermon t		282,896		0.51	%		293,573		0.63	%
Washingto n		300,202		0.54	%		306,199		0.65	%
	$	55,814,583		100.00	%	$	46,788,873		100.00	%

Investment Income [Table Text Block]

	Years Ended December 31 ,
	201 7			201 6
Fixed maturity securitie s	$	6,504,233		$	5,970,940
Equity securitie s		20,167			27,364
Other long-term investment s		3,645,043			2,685,639
Mortgage loan s		8,364,448			5,774,229
Policy loan s		114,246			107,541
Real estat e		375,369			340,032
Short-term and other investment s		141,259			44,013
Gross investment incom e		19,164,765			14,949,758
Investment expense s		(2,454,357	)		(1,759,115	)
Net investment incom e	$	16,710,408		$	13,190,643

Available For Sale Fixed Maturity Securities [Member]

Notes Tables

Investments Classified by Contractual Maturity Date [Table Text Block]

	December 31, 201 7
	Amortized Cost		Fair Value
Due in one year or les s	$	5,567,133	$	5,598,493
Due in one year through five year s		32,033,219		32,937,704
Due after five years through ten year s		39,235,251		40,412,131
Due after ten year s		66,756,771		70,663,502
Due at multiple maturity date s		29,573		71,309
	$	143,621,947	$	149,683,139

XML

Note 3 - Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2017

Notes Tables

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

	Level 1		Level 2		Level 3		Tota l
	December 31, 201 7
Fixed maturity securities, available-for-sal e
U.S. government and U.S. government agencie s	$	-	$	2,973,067	$	-	$	2,973,067
States and political subdivision s		-		9,685,687		-		9,685,687
Residential mortgage-backed securitie s		-		71,309		-		71,309
Corporate bond s		-		114,097,008		-		114,097,008
Foreign bond s		-		22,856,068		-		22,856,068
Total fixed maturity securitie s	$	-	$	149,683,139	$	-	$	149,683,139
Equity securities, available-for-sal e
Mutual fund s	$	-	$	349,066	$	-	$	349,066
Corporate preferred stoc k		100,720		-		-		100,720
Corporate common stoc k		160,861		-		61,500		222,361
Total equity securitie s	$	261,581	$	349,066	$	61,500	$	672,147

	December 31, 201 6
Fixed maturity securities, available-for-sal e
U.S. government and U.S. government agencie s	$	-	$	3,185,383	$	-	$	3,185,383
States and political subdivision s		-		9,250,896		-		9,250,896
Residential mortgage-backed securitie s		-		70,727		-		70,727
Corporate bond s		-		100,980,041		-		100,980,041
Foreign bond s		-		15,824,108		-		15,824,108
Total fixed maturity securitie s	$	-	$	129,311,155	$	-	$	129,311,155
Equity securities, available-for-sal e
Mutual fund s	$	-	$	341,914	$	-	$	341,914
Corporate preferred stoc k		96,360		-		-		96,360
Corporate common stoc k		138,633		-		61,500		200,133
Total equity securitie s	$	234,993	$	341,914	$	61,500	$	638,407

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

	Year Ended December 31 ,
	201 7		201 6
Beginning balanc e	$	61,500	$	46,500
Purchase s		-		15,000
Sale s		-		-
Impairmen t		-		-
Ending balanc e	$	61,500	$	61,500

Fair Value, by Balance Sheet Grouping [Table Text Block]

	Carryin g		Fai r
	Amoun t		Valu e		Level 1		Level 2		Level 3
	December 31, 201 7
Financial asset s
Mortgage loans on real estat e
Commercial and Industria l	$	1,796,210	$	1,783,385	$	-	$	-	$	1,783,385
Residentia l		100,700,241		102,192,001		-		-		102,192,001
Policy loan s		1,660,175		1,660,175		-		-		1,660,175
Short-term investmen ts		547,969		547,969		547,969		-		-
Other long-term investment s		55,814,583		68,298,585		-		-		68,298,585
Cash and cash equivalent s		31,496,159		31,496,159		31,496,159		-		-
Accrued investment incom e		2,544,963		2,544,963		-		-		2,544,963
Total financial asset s	$	194,560,300	$	208,523,237	$	32,044,128	$	-	$	176,479,109
Financial liabilitie s
Policyholders' account balance s	$	292,909,762	$	243,234,637	$	-	$	-	$	243,234,637
Policy claim s		1,148,513		1,148,513		-		-		1,148,513
Total financial liabilitie s	$	294,058,275	$	244,383,150	$	-	$	-	$	244,383,150

	December 31, 201 6
Financial asset s
Mortgage loans on real estat e
Commercia l	$	1,254,808	$	1,268,140	$	-	$	-	$	1,268,140
Residentia l		73,116,478		70,383,661		-		-		70,383,661
Policy loan s		1,598,116		1,598,116		-		-		1,598,116
Other long-term investment s		46,788,873		55,890,429		-		-		55,890,429
Cash and cash equivalent s		34,223,945		34,223,945		34,223,945		-		-
Accrued investment incom e		2,176,770		2,176,770		-		-		2,176,770
Total financial asset s	$	159,158,990	$	165,541,061	$	34,223,945	$	-	$	131,317,116
Financial liabilitie s
Policyholders' account balance s	$	245,346,489	$	206,541,702	$	-	$	-	$	206,541,702
Policy claim s		997,814		997,814		-		-		997,814
Total financial liabilitie s	$	246,344,303	$	207,539,516	$	-	$	-	$	207,539,516

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Note 5 - Allowance for Loan Losses From Mortgage Loans On Real Estate and Loans From Premium Financing (Tables)

12 Months Ended

Dec. 31, 2017

Notes Tables

Allowance for Credit Losses on Financing Receivables [Table Text Block]

	Years Ended December 31 ,
	Residential Mortgage Loan s				Commercial and Industrial Mortgage Loan s					Premium Finance Loan s					Tota l
	201 7		201 6		201 7		201 6			201 7		201 6			201 7		201 6
Allowance, beginnin g	$	238,121	$	175,988	$	6,306	$	7,360		$	-	$	197,172		$	244,427	$	380,520
Charge off s		-		-		-		-			-		(347,885	)		-		(347,885	)
Recoverie s		-		-		-		-			-		-			-		-
Provisio n		95,668		62,133		2,720		(1,054	)		-		150,713			98,388		211,792
Allowance, endin g	$	333,789	$	238,121	$	9,026	$	6,306		$	-	$	-		$	342,815	$	244,427
Allowance, ending :
Individually evaluate d for impairmen t	$	-	$	-	$	-	$	-		$	-	$	-		$	-	$	-
Collectively evaluate d for impairmen t	$	333,789	$	238,121	$	9,026	$	6,306		$	-	$	-		$	342,815	$	244,427
Carrying Values :
Individually evaluate d for impairmen t	$	-	$	-	$	-	$	-		$	-	$	-		$	-	$	-
Collectively evaluate d for impairmen t	$	66,799,981	$	47,592,721	$	1,796,210	$	1,254,808		$	-	$	-		$	68,596,191	$	48,847,529

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Note 6 - Deferred Policy Acquisition Costs (Tables)

12 Months Ended

Dec. 31, 2017

Notes Tables

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Table Text Block]

	201 7			201 6
Balance, beginning of yea r	$	18,191,990		$	13,015,679
Capitalization of commissions, sales and issue expense s		9,321,726			7,445,304
Amortizatio n		(2,870,412	)		(2,202,367	)
Deferred acquisition costs allocated to investment s		(87,402	)		(66,626	)
Balance, end of yea r	$	24,555,902		$	18,191,990

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Note 7 - Federal Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Notes Tables

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	Years Ended December 31 ,
	201 7			201 6
Expected tax expens e	$	796,580		$	822,726
Net operating losse s		649,460			(690,905	)
Loss contingency accrued for lawsuit settlemen t		385,331			-
Capital gain taxe s		185,461			72,249
Future policy benefit s		151,017			282,062
Value of life insurance business acquire d		108,773			53,111
Deferred policy acquisition cost s		(611,407	)		(651,873	)
Small life insurance company deductio n		(153,956	)		(62,303	)
Accrual of discoun t		(68,679	)		(183,393	)
Adjustment of prior years' taxe s		(23,068	)		(15,075	)
Difference in book versus tax basis of available-for-sale fixed maturity securitie s		(7,273	)		159,763
Othe r		(38,720	)		42,681
Total income tax expense (benefit )	$	1,373,519		$	(170,957	)

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

	December 31 ,
	201 7			201 6
Deferred tax liabilities :
Net unrealized investment gain s	$	1,265,569		$	204,668
Available-for-sale fixed maturity securitie s		89,439			232,889
Deferred policy acquisition cost s		4,317,272			2,944,563
Reinsurance recoverabl e		249,822			251,788
Investment real estat e		38,700			35,940
Value of insurance business acquire d		1,160,595			1,181,767
Due premium s		26,036			25,914
Other asset s		6,962			5,819
Othe r		2,363			3,798
Total deferred tax liabilitie s		7,156,758			4,887,146
Deferred tax assets :
Policyholders' account balances and future policy benefit s		2,308,001			1,965,397
Policy claim s		13,993			25,983
Unearned investment incom e		12,941			9,491
Available-for-sale equity securitie s		51,554			48,945
Mortgage loan s		42,175			7,578
Alternative minimum tax carryforwar d		305,538			276,571
Net operating loss carryforwar d		1,057,511			1,843,238
Net capital loss carryforwar d		8,925			14,450
Dividend liabilit y		10,823			10,652
Loss contingency accrued for lawsuit settlemen t		385,331			-
Othe r		6,962			5,821
Total deferred tax asset s		4,203,754			4,208,126
Valuation allowanc e		(8,925	)		(14,450	)
Net deferred tax asset s		4,194,829			4,193,676
Net deferred tax liabilitie s	$	2,961,929		$	693,470

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Note 8 - Reinsurance (Tables)

12 Months Ended

Dec. 31, 2017

Notes Tables

Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block]

	201 7		201 6
Premiums assume d	$	48,347	$	42,342
Commissions and expense allowances assume d		105		57
Benefits assume d		20,027		21,864
Reserve credits assume d		59,464		59,226
In force amount assume d		16,478,162		17,621,570
Premiums cede d		350,591		375,796
Commissions and expense allowances cede d		3,133		4,716
Benefits cede d		447,988		197,467
Reserve credits cede d		1,057,596		1,057,934
In force amount cede d		48,734,604		53,453,666

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Note 11 - Segment Data (Tables)

12 Months Ended

Dec. 31, 2017

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Year Ended December 31 ,
	201 7			201 6
Revenues :
Life insurance operation s	$	18,308,660		$	14,996,543
Annuity operation s		14,061,953			11,135,950
Corporate operation s		359,224			585,997
Tota l	$	32,729,837		$	26,718,490
Income (loss) before income taxes :
Life insurance operation s	$	(207,655	)	$	866,648
Annuity operation s		2,280,615			1,271,600
Corporate operation s		269,923			281,534
Tota l	$	2,342,883		$	2,419,782
Depreciation and amortization expense :
Life insurance operation s	$	2,528,920		$	2,081,066
Annuity operation s		934,041			759,091
Tota l	$	3,462,961		$	2,840,157

Reconciliation of Assets from Segment to Consolidated [Table Text Block]

	December 31 ,
	201 7		201 6
Assets :
Life insurance operation s	$	56,780,793	$	50,577,282
Annuity operation s		328,727,443		275,745,766
Corporate operation s		5,619,438		6,929,565
Tota l	$	391,127,674	$	333,252,613

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Note 15 - Other Comprehensive Income and Accumulated Other Comprehensive Income (Loss) (Tables)

12 Months Ended

Dec. 31, 2017

Notes Tables

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	Years Ended December 31, 2017 and 201 6
	Unrealize d
	Appreciatio n						Accumulate d
	(Depreciation) o n			Adjustment t o			Othe r
	Available-For-Sal e			Deferred Acquisitio n			Comprehensiv e
	Securitie s			Cost s			Income (Loss )
Balance as of January 1, 201 7	$	831,917		$	(13,241	)	$	818,676
Other comprehensive income before reclassifications, net of ta x		3,995,829			(68,869	)		3,926,960
Less amounts reclassified from accumulated other comprehensive income, net of ta x		(15,315	)		-			(15,315	)
Other comprehensive incom e		4,011,144			(68,869	)		3,942,275
Balance as of December 31, 201 7	$	4,843,061		$	(82,110	)	$	4,760,951
Balance as of January 1, 201 6	$	(2,695,876	)	$	40,059		$	(2,655,817	)
Other comprehensive income before reclassifications, net of ta x		3,904,143			(53,300	)		3,850,843
Less amounts reclassified from accumulated other comprehensive income, net of ta x		376,350			-			376,350
Other comprehensive incom e		3,527,793			(53,300	)		3,474,493
Balance as of December 31, 201 6	$	831,917		$	(13,241	)	$	818,676

Comprehensive Income (Loss) [Table Text Block]

	Year Ended December 31, 201 7
				Income Ta x
				Expens e
	Preta x			(Benefit )			Net of Ta x
Other comprehensive income :
Change in net unrealized gains on available-for-sale securities :
Unrealized holding gains arising during the perio d	$	5,071,141		$	1,075,312		$	3,995,829
Less reclassification adjustment for net losses included in incom e		(19,437	)		(4,122	)		(15,315	)
Net unrealized gains on investment s		5,090,578			1,079,434			4,011,144
Adjustment to deferred acquisition cost s		(87,402	)		(18,533	)		(68,869	)
Total other comprehensive incom e	$	5,003,176		$	1,060,901		$	3,942,275

Other comprehensive income :		Year Ended December 31, 2016
Change in net unrealized gains on available-for-sale securities :
Unrealized holding gains arising during the perio d	$	4,880,178		$	976,035		$	3,904,143
Less reclassification adjustment for net gains included in incom e		470,438			94,088			376,350
Net unrealized gains on investment s		4,409,740			881,947			3,527,793
Adjustment to deferred acquisition cost s		(66,626	)		(13,326	)		(53,300	)
Total other comprehensive incom e	$	4,343,114		$	868,621		$	3,474,493

Schedule of Amounts Recognized in Other Comprehensive Income (Loss) [Table Text Block]

	Years Ended December 31 ,
Reclassification Adjustment s	2017			2016
Unrealized gains (losses) on available-for-sale securities :
Realized gains (losses) on sales of securities (a )	$	(19,437	)	$	470,438
Income tax expense (benefit) (b )		(4,122	)		94,088
Total reclassification adjustment s	$	(15,315	)	$	376,350

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Supplemental Disclosure - Cash and Non-cash Impact on Operating, Investing and Financing Activities (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Reduction in Available-for-sale Securities Fixed Maturity Securities	$ 729,737
Mortgage Loans on Real Estate, Foreclosures	207,482	$ 394,427
Residential Mortgage [Member]
Mortgage Loans on Real Estate, Foreclosures	$ 207,482	$ 394,427

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Supplemental Disclosure - Cash and Non-cash Impact on Operating, Investing and Financing Activities - Supplement Disclosures to Consolidated Statements of Cash Flows (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Reduction in available-for-securities fixed maturity securities	$ 729,737
Other long-term investments	(729,737)
Net cash provided (used) in investing activities	0	$ 0
Reductions in mortgage loans due to foreclosure	207,482	394,427
Investment real estate held-for-sale acquired through foreclosure	$ (207,482)	$ (394,427)

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Note 1 - Organization and Significant Accounting Policies (Details Textual)					12 Months Ended			24 Months Ended	93 Months Ended	110 Months Ended	168 Months Ended
	Apr. 28, 2015 USD ($)	Dec. 28, 2011 USD ($)	Dec. 31, 2008 USD ($)	Dec. 23, 2008 USD ($)	Dec. 31, 2017 USD ($) $ / shares shares	Dec. 31, 2016 USD ($) $ / shares shares	Dec. 31, 2004 USD ($)	Dec. 31, 2012 USD ($) shares	Mar. 08, 2013 USD ($)	Mar. 08, 2013 USD ($) shares	Dec. 31, 2017 USD ($) $ / shares shares	Aug. 31, 2009
Proceeds from Issuance of Private Placement							$ 1,450,000
Number Of Private Placements							2		1
Proceeds from Issuance Initial Public Offering									$ 25,669,480
Number of Public Offerings									2
Common Stock Dividends, Shares | shares								702,685
Number of Stock Dividends								2
Treasury Stock, Shares, Acquired | shares											247,580
Treasury Stock, Value, Acquired, Cost Method											$ 893,947
Number of Subsidiaries Merged												2
Asset Acquired Under Assumption Reinsurance Agreement	$ 3,644,839
Liabilities Assumed Under Reinsurance Assumption Agreement	3,055,916
Gain on Reinsurance Assumption	$ 588,923
Finite-Lived Intangible Assets, Accumulated Amortization					$ 3,213,233	$ 2,831,043					3,213,233
Present Value of Future Insurance Profits, Amortization Expense, Year One					306,567						306,567
Present Value of Future Insurance Profits, Amortization Expense, Year Two					286,076						286,076
Present Value of Future Insurance Profits, Amortization Expense, Year Three					264,029						264,029
Present Value of Future Insurance Profits, Amortization Expense, Year Four					244,791						244,791
Present Value of Future Insurance Profits, Amortization Expense, Year Five					$ 227,007						$ 227,007
Common Stock, Par or Stated Value Per Share | $ / shares					$ 0.01	$ 0.01					$ 0.01
Weighted Average Number of Shares Outstanding, Basic and Diluted | shares					7,802,593	7,802,593
Minimum [Member]
Liability for Policyholder Contract Deposits, Interest Rate					2.25%						2.25%
Policyholder Dividends, Rate on Policy Earnings					2.50%
Maximum [Member]
Liability for Policyholder Contract Deposits, Interest Rate					4.50%						4.50%
Policyholder Dividends, Rate on Policy Earnings					4.00%
Building [Member]
Property, Plant and Equipment, Useful Life					19 years
Office Furniture Equipment [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life					3 years
Office Furniture Equipment [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life					10 years
Retained Earnings [Member]
Dividends								$ 5,270,138
Common Stock Including Additional Paid in Capital [Member]
Stock Issued During Period, Value, Stock Dividend								$ 5,270,138
Term Products 10 Year [Member]
Term Products Number of Years					10 years
Term Products 15 Year [Member]
Term Products Number of Years					15 years
Term Products 20 Year [Member]
Term Products Number of Years					20 years
Term Products 30 Year [Member]
Term Products Number of Years					30 years
Trinity Life Insurance Company [Member] | Family Benefit Life Insurance Company [Member]
Business Acquisition, Percentage of Voting Interests Acquired		100.00%
Business Combination, Consideration Transferred		$ 13,855,129
First Trinity Financial Corporation [Member] | First Life America Corporation [Member
Business Acquisition, Percentage of Voting Interests Acquired				100.00%
Business Combination, Consideration Transferred				$ 2,695,234
Business Combination, Acquisition Related Costs				$ 195,234
Debt Instrument, Term			15 years
Debt Instrument, Face Amount			$ 250,000
Debt Instrument, Interest Rate, Stated Percentage			6.00%
Trinity Life Insurance Company [Member]
Wholly Owned Subsidiary Ownership Percentage					100.00%						100.00%
Family Benefit Life Insurance Company [Member] | Trinity Life Insurance Company [Member]
Wholly Owned Subsidiary Ownership Percentage					100.00%						100.00%
First Trinity Capital Corporation [Member]
Wholly Owned Subsidiary Ownership Percentage					100.00%						100.00%
First Trinity Capital Corporation [Member] | First Life America Corporation [Member
Stock Issued During Period, Shares, New Issues | shares										7,347,488
Payments of Stock Issuance Costs										$ 3,624,518

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Note 2 - Investments (Details Textual)	3 Months Ended	12 Months Ended
	Dec. 31, 2016 USD ($) ft²	Dec. 31, 2017 USD ($) ft² a	Dec. 31, 2016 USD ($) ft²	Jun. 30, 2017 USD ($)	Dec. 21, 2015 a	Sep. 01, 2010 ft²
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	173		173
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ 2,005,808		$ 2,005,808
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	42,434,255		42,434,255
Investment Impaired Par Value			650,000
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Credit Losses on Debt Securities Held	$ 207,450		$ 207,450	$ 224,250
Number Of Loans Past Due	11	23	11
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	$ 1,208,379	$ 3,094,155	$ 1,208,379
Past Due Loans, Term Past Due		90 days	90 days
Number of Mortgage Loans in Default	0	0	0
Mortgage Loans on Real Estate, Foreclosures		$ 207,482	$ 394,427
Allowance for Loan and Lease Losses, Real Estate	$ 244,427	342,815	244,427
Real Estate Investments, Net	$ 2,506,673	2,382,966	2,506,673
Proceeds from Sale of Real Estate Held-for-investment		190,083	$ 43,269
Area of Real Estate Property | ft²	6,769		6,769
Lottery Prize Cash Flows [Member]
Other Investments	$ 46,788,873	$ 55,814,583	$ 46,788,873
Topeka Kansas [Member] | Trinity Life Insurance Company [Member]
Area of Land | a		6.5
Topeka Kansas [Member] | Trinity Life Insurance Company [Member] | Office Building [Member]
Area of Real Estate Property					10,000	2,500
Topeka Kansas [Member] | Trinity Life Insurance Company [Member] | Held for the Production of Income [Member] | Office Building [Member]
Area of Land | a		6.5
Area of Real Estate Property | ft²		20,000
Jefferson City Missouri [Member] | FBLIC [Member] | Assets Held-for-sale not Part of a Disposal Group [Member]
Area of Land | a		0.5
Impairment of Real Estate	4,892
Residential Mortgage [Member]
Mortgage Loans on Real Estate, Foreclosures		$ 207,482	394,427
Real Estate Investments, Net	63,931	185,701	63,931
Gains (Losses) on Sales of Investment Real Estate		4,382	20,662
Proceeds from Sale of Real Estate Held-for-investment		190,083	$ 43,269
Number of Mortgage Loans Foreclosed			7
Independent Mortgage Loan Balances [Member]
Escrow Deposit	525,063	$ 564,479	$ 525,063
Residential Portfolio Segment [Member]
Mortgage Loans on Real Estate, Number of Loans		986	755
Mortgage Loans on Real Estate	73,116,478	$ 100,700,241	$ 73,116,478
Residential Portfolio Segment [Member] | Minimum [Member]
Mortgage Loans on Real Estate, Face Amount of Mortgages	2,148	$ 84	$ 2,148
Mortgage Loans on Real Estate, Interest Rate		4.13%	5.40%
Residential Portfolio Segment [Member] | Maximum [Member]
Mortgage Loans on Real Estate, Face Amount of Mortgages	864,562	$ 852,011	$ 864,562
Mortgage Loans on Real Estate, Interest Rate		16.07%	20.78%
Commercial Portfolio Segment [Member]
Mortgage Loans on Real Estate, Number of Loans		6	4
Mortgage Loans on Real Estate	1,254,808		$ 1,254,808
Commercial Portfolio Segment [Member] | Minimum [Member]
Mortgage Loans on Real Estate, Face Amount of Mortgages	180,386		$ 180,386
Mortgage Loans on Real Estate, Interest Rate			5.75%
Commercial Portfolio Segment [Member] | Maximum [Member]
Mortgage Loans on Real Estate, Face Amount of Mortgages	$ 451,554		$ 451,554
Mortgage Loans on Real Estate, Interest Rate			8.25%
Industrial Portfolio Segment [Member]
Mortgage Loans on Real Estate, Number of Loans		2
Commerical and Industrial Portfolio Segments [Member]
Mortgage Loans on Real Estate		$ 1,796,210
Commerical and Industrial Portfolio Segments [Member] | Minimum [Member]
Mortgage Loans on Real Estate, Face Amount of Mortgages		$ 90,431
Mortgage Loans on Real Estate, Interest Rate		5.75%
Commerical and Industrial Portfolio Segments [Member] | Maximum [Member]
Mortgage Loans on Real Estate, Face Amount of Mortgages		$ 432,798
Mortgage Loans on Real Estate, Interest Rate		9.99%
Debt Securities [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	170	67	170
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ 1,999,354	$ 749,996	$ 1,999,354
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	42,248,782	16,550,979	42,248,782
Available-for-sale Securities Continuous Unrealized Loss Position Amortized Cost	$ 44,248,136	$ 17,300,975	$ 44,248,136
Fair Value to Cost Ratio	95.00%	96.00%	95.00%
Fixed Maturity Securities, Investment Grade Percentage	92.00%	93.00%	92.00%
Equity Securities [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	3		3
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ 6,454		$ 6,454
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	185,473		185,473
Available-for-sale Securities Continuous Unrealized Loss Position Amortized Cost	$ 191,927		$ 191,927
Fair Value to Cost Ratio	97.00%		97.00%

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Note 2 - Investments - Available-for-sale Fixed Maturity and Equity Securities (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Securities, amortized cost	$ 144,224,811	$ 128,909,665
Securities, gross unrealized gains	6,880,471	3,045,705
Securities, gross unrealized losses	749,996	2,005,808
Available-for-sale securities	150,355,286	129,949,562
US Treasury and Government [Member]
Securities, amortized cost	2,989,688	3,157,889
Securities, gross unrealized gains	48,720	99,086
Securities, gross unrealized losses	65,341	71,592
Available-for-sale securities	2,973,067	3,185,383
US States and Political Subdivisions Debt Securities [Member]
Securities, amortized cost	9,368,393	9,172,533
Securities, gross unrealized gains	337,442	144,947
Securities, gross unrealized losses	20,148	66,584
Available-for-sale securities	9,685,687	9,250,896
Residential Mortgage Backed Securities [Member]
Securities, amortized cost	29,573	33,970
Securities, gross unrealized gains	41,736	36,757
Securities, gross unrealized losses
Available-for-sale securities	71,309	70,727
Corporate Debt Securities [Member]
Securities, amortized cost	109,340,273	100,268,424
Securities, gross unrealized gains	5,248,291	2,324,712
Securities, gross unrealized losses	491,556	1,613,095
Available-for-sale securities	114,097,008	100,980,041
Foreign Government Debt Securities [Member]
Securities, amortized cost	21,894,020	15,677,449
Securities, gross unrealized gains	1,134,999	394,742
Securities, gross unrealized losses	172,951	248,083
Available-for-sale securities	22,856,068	15,824,108
Debt Securities [Member]
Securities, amortized cost	143,621,947	128,310,265
Securities, gross unrealized gains	6,811,188	3,000,244
Securities, gross unrealized losses	749,996	1,999,354
Available-for-sale securities	149,683,139	129,311,155
Mutual Funds [Member]
Securities, amortized cost	347,942	344,783
Securities, gross unrealized gains	1,124
Securities, gross unrealized losses		2,869
Available-for-sale securities	349,066	341,914
Preferred Stock [Member]
Securities, amortized cost	99,945	99,945
Securities, gross unrealized gains	775
Securities, gross unrealized losses		3,585
Available-for-sale securities	100,720	96,360
Common Stock [Member]
Securities, amortized cost	154,977	154,672
Securities, gross unrealized gains	67,384	45,461
Securities, gross unrealized losses
Available-for-sale securities	222,361	200,133
Equity Securities [Member]
Securities, amortized cost	602,864	599,400
Securities, gross unrealized gains	69,283	45,461
Securities, gross unrealized losses		6,454
Available-for-sale securities	$ 672,147	$ 638,407

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Note 2 - Investments - Securities in an Unrealized Loss Position (Details)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value		$ 42,434,255
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss		$ 2,005,808
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions		173
US Government Agencies Debt Securities [Member]
Securities in an unrealized loss position, less than twelve months, fair value	$ 326,163	$ 1,878,308
Securities in an unrealized loss position, less than twelve months, unrealized loss	$ 3,897	$ 71,592
Securities in an unrealized loss position, less than twelve months, number	2	6
Securities in an unrealized loss position, more than twelve months, fair value	$ 1,338,617
Securities in an unrealized loss position, more than twelve months, unrealized loss	$ 61,444
Securities in an unrealized loss position, more than twelve months, number	5
US States and Political Subdivisions Debt Securities [Member]
Securities in an unrealized loss position, less than twelve months, fair value	$ 608,342	$ 2,532,653
Securities in an unrealized loss position, less than twelve months, unrealized loss	$ 6,889	$ 66,584
Securities in an unrealized loss position, less than twelve months, number	3	14
Securities in an unrealized loss position, more than twelve months, fair value	$ 579,008
Securities in an unrealized loss position, more than twelve months, unrealized loss	$ 13,259
Securities in an unrealized loss position, more than twelve months, number	4
Corporate Debt Securities [Member]
Securities in an unrealized loss position, less than twelve months, fair value	$ 5,995,898	$ 23,721,217
Securities in an unrealized loss position, less than twelve months, unrealized loss	$ 130,337	$ 696,066
Securities in an unrealized loss position, less than twelve months, number	23	92
Securities in an unrealized loss position, more than twelve months, fair value	$ 5,139,898	$ 8,004,923
Securities in an unrealized loss position, more than twelve months, unrealized loss	$ 361,219	$ 917,029
Securities in an unrealized loss position, more than twelve months, number	20	36
Foreign Government Debt Securities [Member]
Securities in an unrealized loss position, less than twelve months, fair value	$ 2,061,178	$ 5,087,133
Securities in an unrealized loss position, less than twelve months, unrealized loss	$ 98,520	$ 155,833
Securities in an unrealized loss position, less than twelve months, number	7	16
Securities in an unrealized loss position, more than twelve months, fair value	$ 501,875	$ 1,024,548
Securities in an unrealized loss position, more than twelve months, unrealized loss	$ 74,431	$ 92,250
Securities in an unrealized loss position, more than twelve months, number	3	6
Debt Securities [Member]
Securities in an unrealized loss position, less than twelve months, fair value	$ 8,991,581	$ 33,219,311
Securities in an unrealized loss position, less than twelve months, unrealized loss	$ 239,643	$ 990,075
Securities in an unrealized loss position, less than twelve months, number	35	128
Securities in an unrealized loss position, more than twelve months, fair value	$ 7,559,398	$ 9,029,471
Securities in an unrealized loss position, more than twelve months, unrealized loss	$ 510,353	$ 1,009,279
Securities in an unrealized loss position, more than twelve months, number	32	42
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	$ 16,550,979	$ 42,248,782
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ 749,996	$ 1,999,354
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	67	170
Preferred Stock [Member]
Securities in an unrealized loss position, less than twelve months, fair value		$ 96,360
Securities in an unrealized loss position, less than twelve months, unrealized loss		$ 3,585
Securities in an unrealized loss position, less than twelve months, number		2
Equity Securities [Member]
Securities in an unrealized loss position, less than twelve months, fair value		$ 96,360
Securities in an unrealized loss position, less than twelve months, unrealized loss		$ 3,585
Securities in an unrealized loss position, less than twelve months, number		2
Securities in an unrealized loss position, more than twelve months, fair value		$ 89,113
Securities in an unrealized loss position, more than twelve months, unrealized loss		$ 2,869
Securities in an unrealized loss position, more than twelve months, number		1
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value		$ 185,473
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss		$ 6,454
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions		3
Mutual Funds [Member]
Securities in an unrealized loss position, more than twelve months, fair value		$ 89,113
Securities in an unrealized loss position, more than twelve months, unrealized loss		$ 2,869
Securities in an unrealized loss position, more than twelve months, number		1

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Note 2 - Investments - Net Unrealized Gains Included in Accumulated Other Comprehensive Income (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Unrealized appreciation on available-for-sale securities	$ 6,130,475	$ 1,039,897
Adjustment to deferred acquisition costs	(103,955)	(16,553)
Deferred income taxes	(1,265,569)	(204,668)
Net unrealized appreciation on available-for-sale securities	$ 4,760,951	$ 818,676

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Note 2 - Investments - Fixed Maturity Available-for-sale Securities by Contractual Maturities (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Due after five years through ten years - amortized cost	$ 15,839,830
Due after five years through ten years - fair value	19,684,133
Fixed maturity available-for-sale securities - amortized cost	143,621,947	$ 128,310,265
Fixed maturity available-for-sale securities - fair value	149,683,139	$ 129,311,155
Fixed Maturities [Member]
Due in one year or less - amortized cost	5,567,133
Due in one year or less - fair value	5,598,493
Due in one year through five years - amortized cost	32,033,219
Due in one year through five years - fair value	32,937,704
Due after five years through ten years - amortized cost	39,235,251
Due after five years through ten years - fair value	40,412,131
Due after ten years - amortized cost	66,756,771
Due after ten years - fair value	70,663,502
Due at multiple maturity dates - amortized cost	29,573
Due at multiple maturity dates - fair value	71,309
Fixed maturity available-for-sale securities - amortized cost	143,621,947
Fixed maturity available-for-sale securities - fair value	$ 149,683,139

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Note 2 - Investments - Available-for-sale Securities - Proceeds and Gross Realized Gains (Losses) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Fixed Maturities [Member]
Proceeds from sale of available-for-sale securities	$ 20,230,756	$ 20,532,968
Gross realized gains, available-for-sale securities	594,337	643,041
Gross realized losses, available-for-sale securities	(389,524)	(64,554)
Loss on other-than-temporary impairment, available-for-sale securities	(224,250)	(207,450)
Equity Securities [Member]
Proceeds from sale of available-for-sale securities		324,556
Gross realized gains, available-for-sale securities		100,869
Gross realized losses, available-for-sale securities		(1,468)
Loss on other-than-temporary impairment, available-for-sale securities
Mortgages [Member]
Proceeds from sale, maturity, or collection of investments	25,670,590	17,550,870
Gross realized gains on sale of investments		101,104
Gross realized losses on sale of investments		(28,591)
Loss on other-than-temporary impairment, held to maturity securities
Real Estate Investment [Member]
Proceeds from sale, maturity, or collection of investments	190,083	43,269
Gross realized gains on sale of investments	6,050
Gross realized losses on sale of investments	(1,668)	(20,662)
Loss on other-than-temporary impairment, held to maturity securities		(4,892)
Other Long-term Investments [Member]
Proceeds from sale, maturity, or collection of investments	792,012
Gross realized gains on sale of investments	62,275
Gross realized losses on sale of investments
Loss on other-than-temporary impairment, held to maturity securities

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Note 2 - Investments - Available-for-sale Securities - Accumulated Change in Net Unrealized Investment Gains (Losses) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Fixed Maturities [Member]
Available-for-sale securities - change in unrealized gains	$ 5,060,302	$ 4,473,318
Available-for-sale securities - realized gains	204,813	578,487
Equity Securities [Member]
Available-for-sale securities - change in unrealized gains	30,276	(63,578)
Available-for-sale securities - realized gains		99,401
Mortgages [Member]
Held to maturity securities - realized gains		72,513
Real Estate Investment [Member]
Held to maturity securities - realized gains	4,382	(20,662)
Other Long-term Investments [Member]
Held to maturity securities - realized gains	$ 62,275

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Note 2 - Investments - Mortgage Loans on Real Estate (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 102,496,451	$ 74,371,286
Mortgage loans on real estate, percentage	100.00%	100.00%
Alabama [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 796,489	$ 123,940
Mortgage loans on real estate, percentage	0.78%	0.17%
Arizona [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 1,666,684	$ 735,704
Mortgage loans on real estate, percentage	1.63%	0.99%
California [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 3,973,810	$ 3,516,796
Mortgage loans on real estate, percentage	3.88%	4.73%
Colorado [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 206,490	$ 846,964
Mortgage loans on real estate, percentage	0.20%	1.14%
Connecticut [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 307,716	$ 245,547
Mortgage loans on real estate, percentage	0.30%	0.33%
Florida [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 18,773,474	$ 14,157,109
Mortgage loans on real estate, percentage	18.32%	19.04%
Georgia [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 8,019,796	$ 6,761,450
Mortgage loans on real estate, percentage	7.82%	9.09%
HAWAII
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 236,758
Mortgage loans on real estate, percentage	0.23%	0.00%
Illinois [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 11,165,357	$ 10,984,320
Mortgage loans on real estate, percentage	10.89%	14.77%
Indiana [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 966,491	$ 548,783
Mortgage loans on real estate, percentage	0.94%	0.74%
KANSAS
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 421,362	$ 114,098
Mortgage loans on real estate, percentage	0.41%	0.15%
Kentucky [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 101,022	$ 104,490
Mortgage loans on real estate, percentage	0.10%	0.14%
Louisiana [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 252,457	$ 256,971
Mortgage loans on real estate, percentage	0.25%	0.35%
Maryland [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 437,705
Mortgage loans on real estate, percentage	0.43%	0.00%
Massachusetts [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 293,933
Mortgage loans on real estate, percentage	0.29%	0.00%
Michigan [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 199,661	$ 491,692
Mortgage loans on real estate, percentage	0.19%	0.66%
Minnesota [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 351,397	$ 216,640
Mortgage loans on real estate, percentage	0.34%	0.29%
Missouri [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 2,628,265	$ 2,466,872
Mortgage loans on real estate, percentage	2.56%	3.32%
NEVADA
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 492,840	$ 554,223
Mortgage loans on real estate, percentage	0.48%	0.75%
New Jersey [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 334,804
Mortgage loans on real estate, percentage	0.33%	0.00%
New York [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 2,236,894	$ 419,620
Mortgage loans on real estate, percentage	2.18%	0.56%
North Carolina [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 1,009,279	$ 1,048,442
Mortgage loans on real estate, percentage	0.98%	1.41%
Ohio [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 2,425,787	$ 1,737,406
Mortgage loans on real estate, percentage	2.37%	2.34%
OKLAHOMA
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 356,203	$ 354,890
Mortgage loans on real estate, percentage	0.35%	0.48%
OREGON
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 1,416,750
Mortgage loans on real estate, percentage	1.38%	0.00%
Pennsylvania [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 211,147	$ 224,879
Mortgage loans on real estate, percentage	0.21%	0.30%
South Carolina [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 718,897	$ 345,682
Mortgage loans on real estate, percentage	0.70%	0.46%
Tennessee [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 1,465,126	$ 1,190,701
Mortgage loans on real estate, percentage	1.43%	1.60%
Texas [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 40,414,632	$ 26,141,950
Mortgage loans on real estate, percentage	39.43%	35.14%
Washington [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 239,998	$ 247,125
Mortgage loans on real estate, percentage	0.23%	0.33%
WISCONSIN
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 282,869	$ 286,319
Mortgage loans on real estate, percentage	0.28%	0.38%
All Other States [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 92,358	$ 248,673
Mortgage loans on real estate, percentage	0.09%	0.34%
Commercial Portfolio Segment [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 1,796,210	$ 1,254,808
Commercial Portfolio Segment [Member] | Retail Site [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	1,227,894	1,075,324
Commercial Portfolio Segment [Member] | Office Building [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	137,703	179,484
Commercial Portfolio Segment [Member] | Industrial Property [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	430,613
Residential Portfolio Segment [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net	$ 100,700,241	$ 73,116,478

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Note 2 - Investments - Mortgage Loan to Value Ratios (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Mortgage loans on real estate	$ 102,496,451	$ 74,371,286
Residential Portfolio Segment [Member]
Mortgage loans on real estate	100,700,241	73,116,478
Commercial Portfolio Segment [Member]
Mortgage loans on real estate	1,796,210	1,254,808
Loan to Value Range1 [Member]
Mortgage loans on real estate	19,515,632	14,559,541
Loan to Value Range1 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	19,515,632	14,559,541
Loan to Value Range1 [Member] | Commercial Portfolio Segment [Member]
Mortgage loans on real estate
Loan to Value Range1 [Member] | Minimum [Member]
Loan to value ratio	70.00%
Loan to Value Range1 [Member] | Maximum [Member]
Loan to value ratio	80.00%
Loan to Value Range 2 [Member]
Mortgage loans on real estate	$ 36,192,035	29,738,887
Loan to Value Range 2 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	36,192,035	29,738,887
Loan to Value Range 2 [Member] | Commercial Portfolio Segment [Member]
Mortgage loans on real estate
Loan to Value Range 2 [Member] | Minimum [Member]
Loan to value ratio	60.00%
Loan to Value Range 2 [Member] | Maximum [Member]
Loan to value ratio	70.00%
Loan to Value Range 3 [Member]
Mortgage loans on real estate	$ 25,956,341	16,491,519
Loan to Value Range 3 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	25,121,248	15,440,364
Loan to Value Range 3 [Member] | Commercial Portfolio Segment [Member]
Mortgage loans on real estate	$ 835,093	1,051,155
Loan to Value Range 3 [Member] | Minimum [Member]
Loan to value ratio	50.00%
Loan to Value Range 3 [Member] | Maximum [Member]
Loan to value ratio	60.00%
Loan to Value Range 4 [Member]
Mortgage loans on real estate	$ 12,923,381	10,399,031
Loan to Value Range 4 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	12,923,381	10,399,031
Loan to Value Range 4 [Member] | Commercial Portfolio Segment [Member]
Mortgage loans on real estate
Loan to Value Range 4 [Member] | Minimum [Member]
Loan to value ratio	40.00%
Loan to Value Range 4 [Member] | Maximum [Member]
Loan to value ratio	50.00%
Loan to Value Range 5 [Member]
Mortgage loans on real estate	$ 4,961,569	2,388,004
Loan to Value Range 5 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	4,303,273	2,184,351
Loan to Value Range 5 [Member] | Commercial Portfolio Segment [Member]
Mortgage loans on real estate	$ 658,296	203,653
Loan to Value Range 5 [Member] | Minimum [Member]
Loan to value ratio	30.00%
Loan to Value Range 5 [Member] | Maximum [Member]
Loan to value ratio	40.00%
Loan to Value Range 6 [Member]
Mortgage loans on real estate	$ 2,027,341	467,410
Loan to Value Range 6 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	1,867,670	467,410
Loan to Value Range 6 [Member] | Commercial Portfolio Segment [Member]
Mortgage loans on real estate	$ 159,671
Loan to Value Range 6 [Member] | Minimum [Member]
Loan to value ratio	20.00%
Loan to Value Range 6 [Member] | Maximum [Member]
Loan to value ratio	30.00%
Loan to Value Range 7 [Member]
Mortgage loans on real estate	$ 870,395	317,936
Loan to Value Range 7 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	727,245	317,936
Loan to Value Range 7 [Member] | Commercial Portfolio Segment [Member]
Mortgage loans on real estate	$ 143,150
Loan to Value Range 7 [Member] | Minimum [Member]
Loan to value ratio	10.00%
Loan to Value Range 7 [Member] | Maximum [Member]
Loan to value ratio	20.00%
Loan to Value Range 8 [Member]
Mortgage loans on real estate	$ 49,757	8,958
Loan to Value Range 8 [Member] | Residential Portfolio Segment [Member]
Mortgage loans on real estate	49,757	8,958
Loan to Value Range 8 [Member] | Commercial Portfolio Segment [Member]
Mortgage loans on real estate
Loan to Value Range 8 [Member] | Minimum [Member]
Loan to value ratio	0.00%
Loan to Value Range 8 [Member] | Maximum [Member]
Loan to value ratio	10.00%

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Note 2 - Investments - Investment Real Estate (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Investment real estate, net	$ 2,382,966	$ 2,506,673
Land Held for the Production of Income [Member]
Investment real estate	213,160	213,160
Land Held for Sale [Member]
Investment real estate	745,155	745,155
Land [Member]
Investment real estate	958,315	958,315
Building Held for the Production of Income [Member]
Investment real estate	2,267,557	2,267,557
Less - accumulated depreciation	(1,195,183)	(1,049,695)
Investment real estate, net	1,072,374	1,217,862
Residential Real Estate - Held for Sale [Member]
Investment real estate	$ 352,277	$ 330,496

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Note 2 - Investments - Lottery Prize Cash Flows, by Contractual Maturity (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Due after five years through ten years, amortized cost	$ 15,839,830
Due after five years through ten years, fair value	19,684,133
Due, amortized cost	143,621,947	$ 128,310,265
Due, fair value	149,683,139	$ 129,311,155
Lottery Prize Cash Flows [Member]
Due in one year or less, amortized cost	8,020,313
Due in one year or less, fair value	8,162,983
Due in one year through five years, amortized cost	22,512,241
Due in one year through five years, fair value	24,685,185
Due after ten years, amortized cost	9,442,199
Due after ten years, fair value	15,766,284
Due, amortized cost	55,814,583
Due, fair value	$ 68,298,585

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Note 2 - Investments - Lottery Prize Cash Flows, by State Lottery (Details) - Lottery Prize Cash Flows [Member] - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Other Investments	$ 55,814,583	$ 46,788,873
Other investments, percentage	100.00%	100.00%
Arizona [Member]
Other Investments	$ 314,056	$ 67,009
Other investments, percentage	0.56%	0.14%
California [Member]
Other Investments	$ 4,892,381	$ 3,725,329
Other investments, percentage	8.77%	7.96%
Connecticut [Member]
Other Investments	$ 1,734,926	$ 1,554,844
Other investments, percentage	3.11%	3.32%
Florida [Member]
Other Investments	$ 47,641	$ 92,721
Other investments, percentage	0.09%	0.20%
Georgia [Member]
Other Investments	$ 3,209,769	$ 1,179,442
Other investments, percentage	5.75%	2.52%
Illinois [Member]
Other Investments	$ 512,415	$ 565,667
Other investments, percentage	0.92%	1.21%
Indiana [Member]
Other Investments	$ 1,282,229	$ 1,303,314
Other investments, percentage	2.30%	2.79%
Kentucky [Member]
Other Investments		$ 28,411
Other investments, percentage	0.00%	0.06%
Maine [Member]
Other Investments	$ 204,839	$ 239,011
Other investments, percentage	0.37%	0.51%
Massachusetts [Member]
Other Investments	$ 13,613,341	$ 10,262,521
Other investments, percentage	24.39%	21.93%
Michigan [Member]
Other Investments	$ 294,385	$ 307,892
Other investments, percentage	0.53%	0.66%
Missouri [Member]
Other Investments	$ 115,906	$ 122,945
Other investments, percentage	0.21%	0.26%
New Jersey [Member]
Other Investments	$ 12,842	$ 61,823
Other investments, percentage	0.02%	0.13%
New York [Member]
Other Investments	$ 21,742,899	$ 19,633,916
Other investments, percentage	38.93%	41.97%
Ohio [Member]
Other Investments	$ 3,125,819	$ 3,476,857
Other investments, percentage	5.60%	7.43%
OREGON
Other Investments	$ 107,035
Other investments, percentage	0.19%	0.00%
Pennsylvania [Member]
Other Investments	$ 1,700,591	$ 1,027,361
Other investments, percentage	3.05%	2.20%
Texas [Member]
Other Investments	$ 2,320,411	$ 2,540,038
Other investments, percentage	4.16%	5.43%
VERMONT
Other Investments	$ 282,896	$ 293,573
Other investments, percentage	0.51%	0.63%
Washington [Member]
Other Investments	$ 300,202	$ 306,199
Other investments, percentage	0.54%	0.65%

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Note 2 - Investments - Major Categories of Net Investment Income (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Gross Investment income	$ 19,164,765	$ 14,949,758
Investment expenses	(2,454,357)	(1,759,115)
Net investment income	16,710,408	13,190,643
Fixed Maturities [Member]
Gross Investment income	6,504,233	5,970,940
Equity Securities [Member]
Gross Investment income	20,167	27,364
Other Long-term Investments [Member]
Gross Investment income	3,645,043	2,685,639
Mortgages [Member]
Gross Investment income	8,364,448	5,774,229
Policy Loans [Member]
Gross Investment income	114,246	107,541
Real Estate Investment [Member]
Gross Investment income	375,369	340,032
Short-term Investments [Member]
Gross Investment income	$ 141,259	$ 44,013

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Note 3 - Fair Value Measurements (Details Textual)	Dec. 31, 2017	Dec. 31, 2016
Number Of Private Placement Common Stocks	2	2

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Note 3 - Fair Value Measurements - Fair Value Measured on a Recurring Basis (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Available-for-sale securities	$ 150,355,286	$ 129,949,562
US Treasury and Government [Member]
Available-for-sale securities	2,973,067	3,185,383
US Treasury and Government [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	2,973,067	3,185,383
US Treasury and Government [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
US Treasury and Government [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	2,973,067	3,185,383
US Treasury and Government [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
US States and Political Subdivisions Debt Securities [Member]
Available-for-sale securities	9,685,687	9,250,896
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	9,685,687	9,250,896
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	9,685,687	9,250,896
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Residential Mortgage Backed Securities [Member]
Available-for-sale securities	71,309	70,727
Residential Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	71,309	70,727
Residential Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Residential Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	71,309	70,727
Residential Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Corporate Debt Securities [Member]
Available-for-sale securities	114,097,008	100,980,041
Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	114,097,008	100,980,041
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	114,097,008	100,980,041
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Foreign Government Debt Securities [Member]
Available-for-sale securities	22,856,068	15,824,108
Foreign Government Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	22,856,068	15,824,108
Foreign Government Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Foreign Government Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	22,856,068	15,824,108
Foreign Government Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Debt Securities [Member]
Available-for-sale securities	149,683,139	129,311,155
Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	149,683,139	129,311,155
Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	149,683,139	129,311,155
Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Mutual Funds [Member]
Available-for-sale securities	349,066	341,914
Mutual Funds [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	349,066	341,914
Mutual Funds [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Mutual Funds [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	349,066	341,914
Mutual Funds [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Preferred Stock [Member]
Available-for-sale securities	100,720	96,360
Preferred Stock [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	100,720	96,360
Preferred Stock [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	100,720	96,360
Preferred Stock [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Preferred Stock [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Common Stock [Member]
Available-for-sale securities	222,361	200,133
Common Stock [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	222,361	200,133
Common Stock [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	160,861	138,633
Common Stock [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities
Common Stock [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	61,500	61,500
Equity Securities [Member]
Available-for-sale securities	672,147	638,407
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	672,147	638,407
Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	261,581	234,993
Equity Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	349,066	341,914
Equity Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	$ 61,500	$ 61,500

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Note 3 - Fair Value Measurement - Change in Fair Value of Available-for-sale Equity Securities (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Beginning balance	$ 61,500	$ 46,500
Purchases	0	15,000
Sales	0	0
Impairment	0	0
Ending balance	$ 61,500	$ 61,500

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Note 3 - Fair Value Measurements - Estimated Fair Values of Financial Instruments (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Policy loans	$ 1,660,175	$ 1,598,116
Short-term investments	547,969
Accrued investment income	2,544,963	2,176,770
Policy claims	1,148,513	997,814
Reported Value Measurement [Member]
Policy loans	1,660,175	1,598,116
Short-term investments	547,969
Other long-term investments	55,814,583	46,788,873
Cash and cash equivalents	31,496,159	34,223,945
Accrued investment income	2,544,963	2,176,770
Total financial assets	194,560,300	159,158,990
Policyholders' account balances	292,909,762	245,346,489
Policy claims	1,148,513	997,814
Total financial liabilities	294,058,275	246,344,303
Reported Value Measurement [Member] | Commercial [Member]
Mortgage loans on real estate	1,796,210	1,254,808
Reported Value Measurement [Member] | Residential [Member]
Mortgage loans on real estate	100,700,241	73,116,478
Estimate of Fair Value Measurement [Member]
Policy loans	1,660,175	1,598,116
Short-term investments	547,969
Other long-term investments	68,298,585	55,890,429
Cash and cash equivalents	31,496,159	34,223,945
Accrued investment income	2,544,963	2,176,770
Total financial assets	208,523,237	165,541,061
Policyholders' account balances	243,234,637	206,541,702
Policy claims	1,148,513	997,814
Total financial liabilities	244,383,150	207,539,516
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Policy loans
Short-term investments	547,969
Other long-term investments
Cash and cash equivalents	31,496,159	34,223,945
Accrued investment income
Total financial assets	32,044,128	34,223,945
Policyholders' account balances
Policy claims
Total financial liabilities
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Policy loans
Short-term investments
Other long-term investments
Cash and cash equivalents
Accrued investment income
Total financial assets
Policyholders' account balances
Policy claims
Total financial liabilities
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Policy loans	1,660,175	1,598,116
Short-term investments
Other long-term investments	68,298,585	55,890,429
Cash and cash equivalents
Accrued investment income	2,544,963	2,176,770
Total financial assets	176,479,109	131,317,116
Policyholders' account balances	243,234,637	206,541,702
Policy claims	1,148,513	997,814
Total financial liabilities	244,383,150	207,539,516
Estimate of Fair Value Measurement [Member] | Commercial [Member]
Mortgage loans on real estate	1,783,385	1,268,140
Estimate of Fair Value Measurement [Member] | Commercial [Member] | Fair Value, Inputs, Level 1 [Member]
Mortgage loans on real estate
Estimate of Fair Value Measurement [Member] | Commercial [Member] | Fair Value, Inputs, Level 2 [Member]
Mortgage loans on real estate
Estimate of Fair Value Measurement [Member] | Commercial [Member] | Fair Value, Inputs, Level 3 [Member]
Mortgage loans on real estate	1,783,385	1,268,140
Estimate of Fair Value Measurement [Member] | Residential [Member]
Mortgage loans on real estate	102,192,001	70,383,661
Estimate of Fair Value Measurement [Member] | Residential [Member] | Fair Value, Inputs, Level 1 [Member]
Mortgage loans on real estate
Estimate of Fair Value Measurement [Member] | Residential [Member] | Fair Value, Inputs, Level 2 [Member]
Mortgage loans on real estate
Estimate of Fair Value Measurement [Member] | Residential [Member] | Fair Value, Inputs, Level 3 [Member]
Mortgage loans on real estate	$ 102,192,001	$ 70,383,661

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Note 4 - Special Deposits (Details Textual) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Deposit Assets	$ 4,308,853	$ 4,099,405
Other Assets, Fair Value Disclosure	$ 4,307,439	$ 4,125,116

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Note 5 - Allowance for Loan Losses From Mortgage Loans On Real Estate and Loans From Premium Financing (Details Textual) - USD ($)		12 Months Ended
	Jun. 30, 2012	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Mortgage Loans on Real Estate, Commercial and Consumer, Net		$ 102,496,451	$ 74,371,286
Financing Receivable, Allowance for Credit Losses		342,815	244,427	$ 380,520
Financing Receivable, Collectively Evaluated for Impairment		68,596,191	48,847,529
Premiums Receivable, Percent Of Premium	80.00%
Premiums Receivable Down Payment Percent Of Premium	20.00%
Premiums Receivable, Delinquent Premium Term	25 days
Independent Mortgage Loan Balances [Member]
Financing Receivable, Allowance for Credit Losses		342,815
One Loan Originator and Investments [Member] | Independent Mortgage Loan Balances [Member]
Escrow Deposit		564,479
One Loan Originator [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net		33,900,260	25,523,757
One Loan Originator [Member] | Independent Mortgage Loan Balances [Member]
Escrow Deposit			525,063
Escrow Amount Available		394,978
Advances To Loan Originator		4,925,259
Residential Real Estate - Held for Sale [Member] | Independent Mortgage Loan Balances [Member]
Escrow Amount Available		169,501
Mortgage Loans on Real Estate, Commercial and Consumer, Net		$ 33,900,260
All Other Entities [Member]
Mortgage Loans on Real Estate, Commercial and Consumer, Net			48,847,529
Financing Receivable, Allowance for Credit Losses			$ 244,427

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Note 5 - Allowance for Loan Losses From Mortgage Loans On Real Estate and Loans From Premium Financing - Allowance for Loss On Premium Financing (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Allowance, beginning	$ 244,427	$ 380,520
Charge offs		(347,885)
Provision	98,388	211,792
Allowance, ending	342,815	244,427
Individually evaluated for impairment
Collectively evaluated for impairment	342,815	244,427
Individually evaluated for impairment
Financing Receivable, Collectively Evaluated for Impairment	68,596,191	48,847,529
Residential Portfolio Segment [Member]
Allowance, beginning	238,121	175,988
Provision	95,668	62,133
Allowance, ending	333,789	238,121
Collectively evaluated for impairment	333,789	238,121
Financing Receivable, Collectively Evaluated for Impairment	66,799,981	47,592,721
Commercial Portfolio Segment [Member]
Allowance, beginning	6,306	7,360
Provision	2,720	(1,054)
Allowance, ending	9,026	6,306
Collectively evaluated for impairment	9,026	6,306
Financing Receivable, Collectively Evaluated for Impairment	1,796,210	1,254,808
Premium Finance Loans [Member]
Allowance, beginning		197,172
Charge offs		(347,885)
Provision		150,713
Allowance, ending

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Note 6 - Deferred Policy Acquisition Costs - Deferred Acquisition Costs (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Balance, beginning of year	$ 18,191,990	$ 13,015,679
Capitalization of commissions, sales and issue expenses	9,321,726	7,445,304
Amortization	(2,870,412)	(2,202,367)
Deferred acquisition costs allocated to investments	(87,402)	(66,626)
Balance, end of year	$ 24,555,902	$ 18,191,990

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Note 7 - Federal Income Taxes (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	34.00%	34.00%
Operating Loss Carryforwards	$ 5,035,767	$ 5,035,767
Capital Loss Carry Forwards	42,500	42,500
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount	(284,560)	(299,347)
Offsetting Operating Loss Carryforward on Taxable Income		1,699,953
Loss Contingency Accrual	$ 1,834,910
Domestic Tax Authority [Member] | Earliest Tax Year [Member]
Open Tax Year	2015
Domestic Tax Authority [Member] | Latest Tax Year [Member]
Open Tax Year	2017
Trinity Life Insurance Company [Member]
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount	$ (116,225)	$ (135,000)
Family Benefit Life Insurance Company [Member]
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount	$ (55,409)

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Note 7 - Federal Income Taxes - Reconciliation of Federal Income Tax Expense (Benefit) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Expected tax expense	$ 796,580	$ 822,726
Net operating losses	649,460	(690,905)
Loss contingency accrued for lawsuit settlement	385,331
Capital gain taxes	185,461	72,249
Future policy benefits	151,017	282,062
Value of life insurance business acquired	108,773	53,111
Deferred policy acquisition costs	(611,407)	(651,873)
Small life insurance company deduction	(153,956)	(62,303)
Accrual of discount	(68,679)	(183,393)
Adjustment of prior years' taxes	(23,068)	(15,075)
Difference in book versus tax basis of available-for-sale fixed maturity securities	(7,273)	159,763
Other	(38,720)	42,681
Total federal income tax expense (benefit)	$ 1,373,519	$ (170,957)

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Note 7 - Federal Income Taxes - Deferred Taxes (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Deferred tax liabilities:
Net unrealized investment gains	$ 1,265,569	$ 204,668
Available-for-sale fixed maturity securities	89,439	232,889
Deferred policy acquisition costs	4,317,272	2,944,563
Reinsurance recoverable	249,822	251,788
Investment real estate	38,700	35,940
Value of insurance business acquired	1,160,595	1,181,767
Due premiums	26,036	25,914
Other assets	6,962	5,819
Other	2,363	3,798
Total deferred tax liabilities	7,156,758	4,887,146
Deferred tax assets:
Policyholders' account balances and future policy benefits	2,308,001	1,965,397
Policy claims	13,993	25,983
Unearned investment income	12,941	9,491
Available-for-sale equity securities	51,554	48,945
Mortgage loans	42,175	7,578
Alternative minimum tax carryforward	305,538	276,571
Net operating loss carryforward	1,057,511	1,843,238
Net capital loss carryforward	8,925	14,450
Dividend liability	10,823	10,652
Loss contingency accrued for lawsuit settlement	385,331
Other	6,962	5,821
Total deferred tax assets	4,203,754	4,208,126
Valuation allowance	(8,925)	(14,450)
Net deferred tax assets	4,194,829	4,193,676
Net deferred tax liabilities	$ 2,961,929	$ 693,470

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Note 8 - Reinsurance (Details Textual)	Dec. 31, 2017 USD ($)
Reinsurance Life Insurance Maximum Exposure	$ 75,000
Percent Ceded	50.00%
First Life America Corporation [Member
Reinsurance Life Insurance Maximum Exposure	$ 75,000

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Note 8 - Reinsurance - Reinsurance Assumed and Ceded (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Premiums assumed	$ 48,347	$ 42,342
Commissions and expense allowances assumed	105	57
Benefits assumed	20,027	21,864
Reserve credits assumed	59,464	59,226
In force amount assumed	16,478,162	17,621,570
Premiums ceded	350,591	375,796
Commissions and expense allowances ceded	3,133	4,716
Benefits ceded	447,988	197,467
Reserve credits ceded	1,057,596	1,057,934
In force amount ceded	$ 48,734,604	$ 53,453,666

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Note 9 - Leases (Details Textual)												1 Months Ended	3 Months Ended	12 Months Ended
	Oct. 01, 2017 USD ($)	Sep. 01, 2017	Oct. 01, 2016 USD ($)	Sep. 01, 2016 USD ($)	Dec. 21, 2015 a	Oct. 01, 2015 USD ($)	Sep. 01, 2015 USD ($)	Sep. 28, 2014 ft²	Jun. 01, 2011 ft²	Oct. 01, 2010 USD ($)	Sep. 01, 2010 ft²	Jun. 30, 2014	Dec. 31, 2015 USD ($)	Dec. 31, 2017 USD ($) ft² a	Dec. 31, 2016 USD ($) ft²	Jun. 30, 2016 USD ($)	Jan. 01, 2011 USD ($)
Area of Real Estate Property | ft²															6,769
Lessee, Operating Lease, Term of Contract										5 years
Lessee, Operating Lease, Renewal Term										5 years
Operating Leases, Rental Payments	$ 8,805		$ 8,630			$ 8,461				$ 7,897
Operating Lease, Rental Payment, Terms, Percentage Increase	2.00%
Operating Leases, Rent Expense														$ 92,041	$ 93,415
Operating Leases, Leasehold Improvement, Allowance						$ 54,152											$ 120,000
Operating Leases, Leasehold Improvement, Allowance Amortization													$ 1,250	$ 14,491	8,627
Operating Leases, Future Minimum Payments Receivable, Current															106,189
Operating Leases, Future Minimum Payments Receivable, in Two Years															108,304
Operating Leases, Future Minimum Payments Receivable, in Three Years															82,446
Topeka Kansas [Member] | Trinity Life Insurance Company [Member]
Area of Land | a														6.5
Office Building [Member] | Topeka Kansas [Member] | Trinity Life Insurance Company [Member]
Area of Real Estate Property					10,000						2,500
Lessee, Operating Lease, Renewal Term					5 years		3 years				5 years
Operating Leases, Rental Payments	$ 4,263			$ 4,242			$ 4,236
Operating Leases, Leasehold Improvement, Allowance															88,833
Operating Leases, Future Minimum Payments Receivable, Current														$ 324,858
Operating Leases, Future Minimum Payments Receivable, in Two Years														220,512
Operating Leases, Future Minimum Payments Receivable, in Three Years														220,512
Operating Lease, Monthly Payment Receivables														18,376	$ 18,299	$ 16,598
Operating Leases, Notice to Terminate Term		120 days			120 days						90 days
Operating Lease, Allowance on Leasehold Improments, Interest Rate															5.00%
Operating Leases, Future Minimum Payments Receivable, in Four Years														91,880
Office Building [Member] | Topeka Kansas [Member] | Trinity Life Insurance Company [Member] | Lease Agreement for 7,500 Square Feet [Member]
Area of Real Estate Property | ft²								7,500
Lessee, Operating Lease, Term of Contract								2 years
Lessee, Operating Lease, Renewal Term								2 years
Operating Lease, Monthly Payment Receivables														$ 8,696
Office Building [Member] | Topeka Kansas [Member] | Trinity Life Insurance Company [Member] | Lease Agreement for 10,000 Square Feet [Member]
Area of Real Estate Property | ft²									10,000
Lessee, Operating Lease, Renewal Term									5 years
Operating Lease, Monthly Payment Receivables															$ 17,750
Operating Leases, Notice to Terminate Term												180 days
Held for the Production of Income [Member] | Office Building [Member] | Topeka Kansas [Member] | Trinity Life Insurance Company [Member]
Area of Real Estate Property | ft²														20,000
Area of Land | a														6.5

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Note 10 - Shareholders' Equity and Statury Accounting Practices (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Statutory Accounting Practices, Statutory Net Income Amount	$ (1,528,459)	$ 6,645
Statutory Accounting Practices, Statutory Capital and Surplus, Balance	$ 7,603,475	9,141,799
Maximum Dividend Percent	10.00%
Statutory Accounting Practices, Statutory Amount Available for Dividend Payments	$ 760,348
Trinity Life Insurance Company [Member]
Statutory Accounting Practices, Statutory Net Income Amount	243,754	1,927,154
Statutory Accounting Practices, Statutory Capital and Surplus, Balance	11,248,234	11,129,493
Statutory Accounting Practices, Statutory Amount Available for Dividend Payments	$ 1,124,823
Family Benefit Life Insurance Company [Member] | Trinity Life Insurance Company [Member]
Payments of Dividends		$ 1,000,000

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Note 11 - Segment Data - Segment Data - Operations (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Total revenue	$ 32,729,837	$ 26,718,490
Income before income taxes	2,342,883	2,419,782
Depreciation and amortization expense	3,462,961	2,840,157
Life Insurance Operations [Member]
Total revenue	18,308,660	14,996,543
Income before income taxes	(207,655)	866,648
Depreciation and amortization expense	2,528,920	2,081,066
Annuity Operations [Member]
Total revenue	14,061,953	11,135,950
Income before income taxes	2,280,615	1,271,600
Depreciation and amortization expense	934,041	759,091
Corporate Segment [Member]
Total revenue	359,224	585,997
Income before income taxes	$ 269,923	$ 281,534

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Note 11 - Segment Data - Segment Data - Assets (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Total assets	$ 391,127,674	$ 333,252,613
Life Insurance Operations [Member]
Total assets	56,780,793	50,577,282
Annuity Operations [Member]
Total assets	328,727,443	275,745,766
Corporate Segment [Member]
Total assets	$ 5,619,438	$ 6,929,565

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Note 12 - Concentrations of Credit Risk (Details Textual)	Dec. 31, 2017 USD ($)
Cash, FDIC Insured Amount	$ 250,000
Cash, Uninsured Amount	$ 21,835,216

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Note 13 - Contingent Liabilities (Details Textual) - USD ($)	Feb. 17, 2017	Dec. 31, 2017
Case No. CJ-2013-03385 [Member] | Mr. Pettigrew [Member] | First Trinity Financial Corporation [Member]
Loss Contingency, Damages Awarded, Value	$ 800,000
Case No. CJ-2013-03385 [Member] | Mr. Pettigrew [Member] | Mr. Zahn [Member]
Loss Contingency, Damages Awarded, Value	$ 3,500,000
Decreasing Term to 95 [Member] | Pending Litigation [Member]
Loss Contingency, Estimate of Possible Loss		$ 1,850,000

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Note 14 - Related Party Transactions (Details Textual) - Collateralized Loan to Related Party [Member] - Former Chairman of The Board of Directors [Member]	Apr. 15, 2017 USD ($) shares
Due from Related Parties | $	$ 400,000
Related Party Transaction Term	1 year
Related Party Transaction, Rate	5.00%
Related Party Transactions, Common Stock as Collateral | shares	100,000

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Note 15 - Other Comprehensive Income and Accumulated Other Comprehensive Income (Loss) - Accumulated Other Comprehensive Income (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Beginning Balance	$ 818,676	$ (2,655,817)
Other comprehensive income before reclassifications, net of tax	3,926,960	3,850,843
Less amounts reclassified from accumulated other comprehensive income, net of tax	(15,315)	376,350
Other comprehensive income	3,942,275	3,474,493
Ending Balance	4,760,951	818,676
Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]
Beginning Balance	831,917	(2,695,876)
Other comprehensive income before reclassifications, net of tax	3,995,829	3,904,143
Less amounts reclassified from accumulated other comprehensive income, net of tax	(15,315)	376,350
Other comprehensive income	4,011,144	3,527,793
Ending Balance	4,843,061	831,917
Adjustment to Deferred Acquisition Costs [Member]
Beginning Balance	(13,241)	40,059
Other comprehensive income before reclassifications, net of tax	(68,869)	(53,300)
Less amounts reclassified from accumulated other comprehensive income, net of tax
Other comprehensive income	(68,869)	(53,300)
Ending Balance	$ (82,110)	$ (13,241)

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Note 15 - Other Comprehensive Income and Accumulated Other Comprehensive Income (Loss) - Other Comprehensive Income (Details) - USD ($)		12 Months Ended
		Dec. 31, 2017	Dec. 31, 2016
Unrealized holding gains arising during the period, pretax		$ 5,071,141	$ 4,880,178
Unrealized holding gains arising during the period, income tax expense		1,075,312	976,035
Unrealized holding gains arising during the period, net of tax		3,995,829	3,904,143
Realized gains (losses) on sales of securities	[1]	(19,437)	470,438
Income tax expense (benefit)	[2]	(4,122)	94,088
Less amounts reclassified from accumulated other comprehensive income, net of tax		(15,315)	376,350
Net unrealized gains on investments, pretax		5,090,578	4,409,740
Net unrealized gains on investments, income tax expense		1,079,434	881,947
Net unrealized gains on investments, net of tax		4,011,144	3,527,793
Adjustment to deferred acquisition costs, pretax		(87,402)	(66,626)
Adjustment to deferred acquisition costs, income tax expense		(18,533)	(13,326)
Adjustment to deferred acquisition costs, net of tax		(68,869)	(53,300)
Total other comprehensive income, pretax		5,003,176	4,343,114
Total other comprehensive income, income tax expense		1,060,901	868,621
Total other comprehensive income, net of tax		$ 3,942,275	$ 3,474,493

[1] These items appear within net realized investment gains and loss on other-than-temporary impairments in the consolidated statements of operations.

[2] These items appear within federal income taxes in the consolidated statements of operations.

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Note 15 - Other Comprehensive Income and Accumulated Other Comprehensive Income (Loss) - Reclassified from Accumulated Other Comprehensive Income (Details) - USD ($)		12 Months Ended
		Dec. 31, 2017	Dec. 31, 2016
Realized gains (losses) on sales of securities	[1]	$ (19,437)	$ 470,438
Income tax expense (benefit)	[2]	(4,122)	94,088
Total reclassification adjustments		$ (15,315)	$ 376,350

[1] These items appear within net realized investment gains and loss on other-than-temporary impairments in the consolidated statements of operations.

[2] These items appear within federal income taxes in the consolidated statements of operations.