10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2016
	or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to.
COMMISSION FILE NUMBER 000-10685

Midwest Holding Inc.
(Exact name of registrant as specified in its charter)

Nebraska	20-0362426
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
2900 S. 70th, Suite 400, Lincoln, Nebraska	68506
(Address of principal executive offices)	(Zip Code)

Registrant’s CUSIP number: 59833J 107

Registrant’s telephone number, including area code: (402) 489-8266

Former name, former address and former fiscal year, if changed since last report: Not applicable

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 ( § 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

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

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer  ☐	Smaller reporting company ☒
(Do not check if a
smaller reporting company)

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

As of August 1, 2016, there were 22,558,956 shares of Voting Common Stock, par value $0.001 per share, issued and outstanding.

MIDWEST HOLDING INC.

FORM 10-Q

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item No.	Item Caption	Page
Item 1.	Financial Statements	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Statements of Cash Flows	5
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
PART II – OTHER INFORMATION
Item No.	Item Caption	Page
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	33
	Signatures	34

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Midwest Holding Inc. and Subsidiaries
Consolidated Balance Sheets

	June 30, 2016			December 31, 2015
	(unaudited)
Assets
Investments, available-for-sale, at fair value
Fixed maturies (amortized cost: $24,400,678 and $24,279,231, respectively)	$	24,354,666		$	23,271,277
Equity securities, at cost		53,816			140,250
Real estate, held for investment		523,749			529,769
Policy loans		393,492			420,775
Total investments		25,325,723			24,362,071
Cash and cash equivalents		3,214,086			1,192,336
Amounts recoverable from reinsurers		11,859,279			12,212,656
Interest and dividends due and accrued		261,206			264,791
Due premiums		636,734			640,073
Deferred acquisition costs, net		2,649,927			2,765,063
Value of business acquired, net		1,897,986			2,039,110
Intangible assets		700,000			700,000
Goodwill		1,129,824			1,129,824
Property and equipment, net		191,053			217,565
Assets associated with business held for sale (see Note 3)		16,345,892			16,870,241
Other assets		1,141,958			532,674
Total assets	$	65,353,668		$	62,926,404
Liabilities and Stockholders' Equity
Liabilities:
Benefit reserves	$	24,459,542		$	24,155,140
Policy claims		461,792			839,859
Deposit-type contracts		15,165,556			13,897,421
Advance premiums		56,481			57,699
Total policy liabilities		40,143,371			38,950,119
Accounts payable and accrued expenses		1,088,578			1,013,313
Liabilities associated with business held for sale (see Note 3)		14,988,764			15,508,998
Surplus notes		550,000			550,000
Total liabilities		56,770,713			56,022,430
Commitments and Contingencies (See Note 9)
Stockholders' Equity:
Preferred stock, Series A, $0.001 par value. Liquidation preference $6.00 per share.
Authorized 2,000,000 shares; issued and outstanding 74,159 shares
as of June 30, 2016 and December 31, 2015.		74			74
Preferred stock, Series B, $0.001 par value. Liquidation preference $6.00 per share.
Authorized 1,000,000 shares; issued and outstanding 102,669 shares
as of June 30, 2016 and December 31, 2015.		103			103
Common stock, $0.001 par value. Authorized 120,000,000 shares;
issued and outstanding 22,558,956 as of June 30, 2016
and 18,006,301 shares as of December 31, 2015.		22,559			18,006
Additional paid-in capital		33,964,290			31,584,529
Accumulated deficit		(25,374,520	)		(23,685,525	)
Accumulated other comprehensive loss		(29,551	)		(1,013,213	)
Total stockholders' equity		8,582,955			6,903,974
Total liabilities and stockholders' equity	$	65,353,668		$	62,926,404

See Notes to Consolidated Financial Statements.

3

Midwest Holding Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Income:
Premiums	$	932,042		$	993,554		$	1,859,475		$	1,872,105
Investment income, net of expenses		201,778			100,121			414,906			295,745
Net realized (loss) gain on investments		(56,629	)		(74,543	)		(53,744	)		3,705
Miscellaneous income		13,250			44,392			63,557			99,244
		1,090,441			1,063,524			2,284,194			2,270,799
Expenses:
Death and other benefits		179,096			262,432			408,118			461,299
Interest credited		182,395			126,246			352,989			255,598
Increase in benefit reserves		224,644			247,927			391,669			498,551
Amortization of deferred acquisition costs		25,233			123,503			147,727			253,850
Salaries and benefits		593,093			479,284			1,113,323			991,835
Other operating expenses		806,055			647,217			1,559,363			1,412,871
		2,010,516			1,886,609			3,973,189			3,874,004
Loss before income taxes		(920,075	)		(823,085	)		(1,688,995	)		(1,603,205	)
Income tax expense		-			-			-			-
Net loss		(920,075	)		(823,085	)		(1,688,995	)		(1,603,205	)
Comprehensive income:
Unrealized gains (losses) on investments
arising during period		478,024			(646,053	)		929,918			(501,910	)
Less: reclassification adjustment for net
realized losses (gains) on investments		56,629			74,543			53,744			(3,705	)
Other comprehensive income		534,653			(571,510	)		983,662			(505,615	)
Comprehensive (loss)	$	(385,422	)	$	(1,394,595	)	$	(705,333	)	$	(2,108,820	)
Net loss per common share, basic and diluted	$	(0.04	)	$	(0.06	)	$	(0.08	)	$	(0.12	)

See Notes to Consolidated Financial Statements.

4

Midwest Holding Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)

	Six Months ended June 30,
	2016			2015
Cash Flows from Operating Activities:
Net loss	$	(1,688,995	)	$	(1,603,205	)
Adjustments to reconcile net loss to net cash and cash equivalents provided by
(used in) operating activities:
Net adjustment for premium and discount on investments		105,673			74,421
Depreciation and amortization		208,235			196,192
Deferred acquisition costs capitalized		(66,951	)		(453,647	)
Amortization of deferred acquisition costs		147,727			253,850
Net realized loss (gain) on investments		53,744			(4,768	)
Loss from equity method investments		-			16,650
Changes in operating assets and liabilities:
Amounts recoverable from reinsurers		353,377			388,325
Interest and dividends due and accrued		3,585			(1,085	)
Due premiums		3,339			522
Policy liabilities		275,049			677,602
Other assets and liabilities		(569,165	)		(202,324	)
Other assets and liabilities held for sale		1,877			(76,993	)
Net cash (used for) operating activities		(1,172,505	)		(734,460	)
Cash Flows from Investing Activities:
Securities available for sale:
Purchases		(7,878,585	)		(8,324,853	)
Proceeds from sale or maturity		7,671,898			7,129,385
Securities held for sale:
Purchases		-			(305,675	)
Proceeds from sale or maturity		52,703			287,236
Net change in equity securities carried at cost:
Proceeds from sale or maturity		26,434			6,000
Proceeds from payments on mortgage loans on real estate, held for investment		-			349,386
Acquisition of Northstar Financial Corporation		2,427,394			-
Net change in policy loans		27,283			(35,686	)
Purchases of property and equipment		(29,515	)		(4,566	)
Net cash provided by (used for) investing activities		2,297,612			(898,773	)
Cash Flows from Financing Activities:
Issuance of common stock		-			214,720
Preferred stock dividend		(21,560	)		(34,497	)
Receipts on deposit-type contracts		1,339,406			1,191,753
Withdrawals on deposit-type contracts		(421,203	)		(288,496	)
Net cash provided by financing activities		896,643			1,083,480
Net increase (decrease) in cash and cash equivalents		2,021,750			(549,753	)
Cash and cash equivalents:
Beginning		1,192,336			2,310,047
Ending	$	3,214,086		$	1,760,294

See Notes to Consolidated Financial Statements.

5

Midwest Holding Inc. and Subsidiaries
Supplemental Cash Flow Information
(Unaudited)

	June 30, 2016		June 30, 2015
Supplemental Disclosure of Non-Cash Information
Common stock issued on Northstar Acquisition	$	2,405,874	$	-
	$	2,405,874	$	1,811,612

See Notes to Consolidated Financial Statements.

6

Midwest Holding Inc. and Subsidiaries
Notes to Consolidated Financial Statements

Note 1. Nature of Operations and Summary of Significant Accounting Policies

Nature of operations: Midwest Holding Inc. and its wholly owned subsidiaries (“Midwest” or the “Company,” which also may be referred to as “we,” “our” or “us”) operate multiple insurance businesses through one business segment. These insurance companies are: American Life & Security Corporation (“American Life”), Capital Reserve Life Insurance Company (“Capital Reserve”), First Wyoming Life Insurance Company (“First Wyoming Life”) and Great Plains Life Assurance Company (“Great Plains”). Through these insurance companies we sell traditional, non-traditional and multi-benefit life insurance policies.

Basis of presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with United States of America generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions from the Securities and Exchange Commission (“SEC”) Quarterly Report on Form 10-Q, including Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Therefore, the information contained in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2105 (“2015 Form 10-K”), should be read in connection with the reading of these interim unaudited consolidated financial statements.

In the opinion of management, these statements include all normal recurring adjustments necessary for a fair presentation of the Company’s results. Operating results for the six month period ended June 30, 2016, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016. All material inter-company accounts and transactions have been eliminated in consolidation.

Investments: All fixed maturities and a portion of the equity securities owned by the Company are considered available-for-sale and are included in the consolidated financial statements at their fair value as of the financial statement date. Bond premiums and discounts are amortized using the scientific-yield method (calculated by multiplying the adjusted basis by the yield at issuance and then subtracting the coupon interest) over the term of the bonds. Realized gains and losses on securities sold during the year are determined by the specific security sold. Unrealized holding gains and losses, net of applicable income taxes, are included in comprehensive loss.

Declines in the fair value of available for sale securities below their amortized cost are evaluated to assess whether any other-than-temporary impairment loss should be recorded. In determining if these losses are expected to be other-than-temporary, we consider severity of impairment, duration of impairment, forecasted recovery period, industry outlook, financial condition of the issuer, issuer credit ratings and the intent and ability of us to hold the investment until the recovery of the cost.

The recognition of other-than-temporary impairment losses on debt securities is dependent on the facts and circumstances related to the specific security. If the Company intends to sell a security or it is more likely than not that the Company would be required to sell a security prior to recovery of the amortized cost, the difference between amortized cost and fair value is recognized in the statement of comprehensive income as an other-than-temporary impairment. If the Company does not expect to recover the amortized basis, does not plan to sell the security and if it is not more likely than not that the Company would be required to sell a security before the recovery of its amortized cost, the recognition of the other-than-temporary impairment is bifurcated. The Company recognizes the credit loss portion in the income statement and the noncredit loss portion in accumulated other comprehensive loss. The credit component of the other-than-temporary impairment is determined by comparing the net present value of projected cash flows with the amortized cost basis of the debt security. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the fixed income security at the date of acquisition. Cash flow estimates are driven by assumptions regarding probability of default, including changes in credit ratings, and estimates regarding timing and amount of recoveries associated with a default. No other-than-temporary impairments were recognized during the six months ended June 30, 2016 or 2015.

Investment income consists of interest, dividends, gains and losses from equity method investments, and real estate income, which are recognized on an accrual basis and amortization of premiums and discounts.

7

Midwest Holding Inc. and Subsidiaries
Notes to Consolidated Financial Statements – Continued

Included within the Company’s equity securities are certain privately purchased common stocks. These investments are recorded using the cost basis method of accounting. These securities do not have a readily determinable fair value. The Company does not control these entities economically, and therefore does not consolidate these entities in its financial statements.

Policy loans: 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. No valuation allowance is established for these policy loans as the amount of the loan is fully secured by the death benefit of the policy and cash surrender value.

Real estate, held for investment: Real estate, held for investment is comprised of ten condominiums in Hawaii. Real estate is carried at depreciated cost. Depreciation on residential real estate is computed on a straight-line basis over 50 years.

Cash and cash equivalents: The Company considers all liquid investments with original maturities of three months or less when purchased to be cash equivalents. At June 30, 2016 and December 31, 2015, the Company had no cash equivalents. The Company has cash on deposit with financial institutions which at times may exceed the Federal Deposit Insurance Corporation insurance limits. The Company has not suffered any losses in the past and does not believe it is exposed to any significant credit risk in these balances.

Deferred acquisition costs: Deferred acquisition costs consist of incremental direct costs, net of amounts ceded to reinsurers, that result directly from and are essential to the contract acquisition transaction and would not have been incurred by the Company had the contract acquisition not occurred. These costs are capitalized, to the extent recoverable, and amortized over the life of the premiums produced. The Company evaluates the types of acquisition costs it capitalizes. The Company capitalizes agent compensation and benefits and other expenses that are directly related to the successful acquisition of contracts. The Company also capitalizes expenses directly related to activities performed by the Company, such as underwriting, policy issuance, and processing fees incurred in connection with successful contract acquisitions.

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. The Company performs a recoverability analysis annually in the fourth quarter of its fiscal year unless events occur which require an immediate review. The Company determined during its December 31, 2015 analysis that all deferred acquisition costs were recoverable.

The following table provides information about deferred acquisition costs for the periods ended June 30, 2016 and December 31, 2015, respectively.

	Six Months Ended			Year Ended
	June 30,			December 31,
	2016			2015
Balance at beginning of period	$	2,765,063		$	2,646,970
Capitalization of commissions, sales and issue expenses		66,951			552,466
Change in DAC due to unrealized investment (gains) losses		(34,360	)		35,301
Gross amortization		(147,727	)		(469,674	)
Balance at end of period	$	2,649,927		$	2,765,063

8

Midwest Holding Inc. and Subsidiaries
Notes to Consolidated Financial Statements – Continued

Value of business acquired: Value of business acquired represents the estimated value assigned to purchased companies or insurance in force of the assumed policy obligations at the date of acquisition of a block of policies. American Life purchased Capital Reserve during 2010, resulting in an initial capitalized asset for value of business acquired of $116,326. Additionally, the Company paid an upfront ceding commission of $375,000 to Security National Life (“SNL”) in respect of the purchase of Capital Reserve. An initial asset was established for the value of this business acquired totaling $348,010, representing primarily the ceding commission. The agreement has an automatic renewal provision unless the Company notifies SNL of its intention not to renew, no less than 180 days prior to the expiration of the then current agreement. Each automatic renewal period is for one year. This reinsurance remains in place. The remaining capitalized and SNL asset balances at June 30, 2016, of $43,622 and $130,504, respectively, will be included in the accounting for the anticipated sale of Capital Reserve in the second half of 2016. Midwest acquired Great Plains Financial in 2014 and established an asset for value of business acquired of $1,288,207. Midwest acquired First Wyoming Capital during 2015 and established an asset for value of business acquired of $506,600. These assets are being amortized on a straight-line basis, which approximates the earnings pattern of the related policies, over ten years. The accounting for the First Wyoming acquisition is still preliminary and is expected to be final in the third quarter of 2016. The Company recognized amortization expense of $56,478 and $43,814 for the three months ended June 30, 2016 and 2015, respectively relative to these transactions. The Company recognized amortization expense of $112,957 and $87,627 for the six months ended June 30, 2016 and 2015, respectively related to these transactions.

Additionally, American Life purchased Old Reliance in August 2011, resulting in an initial capitalized asset for value of business acquired of $824,485. This asset is being amortized over the life of the related policies (refer to “revenue recognition and related expenses” discussed later regarding amortization methods). Amortization recognized during the three months ended June 30, 2016 totaled $13,135 and the accretion recognized during the three months ended June 30, 2015 totaled $653. Amortization recognized during the six months ended June 30, 2016 and 2015 totaled $28,166 and $99, respectively.

Recoverability of value of business acquired 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. If this current estimate is less than the existing balance, the difference is charged to expense. Management has determined that no events occurred in the six months ended June 30, 2016 that suggest a review should be undertaken.

Goodwill and Other Intangible Assets: Goodwill represents the excess of the amounts paid to acquire subsidiaries and other businesses over the fair value of their net assets at the date of acquisition. Goodwill is tested for impairment at least annually in the fourth quarter or more frequently if events or circumstances change that would indicate that a triggering event has occurred. Management has determined that no events occurred in the six months ended June 30, 2016 that suggest a review should be undertaken.

The Company assesses the recoverability of indefinite-lived intangible assets at least annually or whenever events or circumstances suggest that the carrying value of an identifiable indefinite-lived intangible asset may exceed the sum of the future discounted cash flows expected to result from its use and eventual disposition. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. Management has determined that no events occurred in the six months ended June 30, 2016 that suggest a review should be undertaken.

Property and equipment: Property and equipment are stated at cost net of accumulated depreciation. Annual depreciation is primarily computed using straight-line methods for financial reporting and straight-line and accelerated methods for tax purposes. Furniture and equipment is depreciated over 3 to 7 years and computer software and equipment is generally depreciated over 3 years. Depreciation expense totaled $25,601 and $40,342 for the three months ended June 30, 2016 and 2015, respectively. Depreciation expense totaled $61,091 and 82,834 for the six months ended June 30, 2016 and 2015, respectively. Accumulated depreciation totaled $925,617 and $864,526 as of June 30, 2016 and December 31, 2015, respectively.

Maintenance and repairs are expensed as incurred. Replacements and improvements which extend the useful life of the asset are capitalized. The net book value of assets sold or retired are removed from the accounts, and any resulting gain or loss is reflected in earnings.

9

Midwest Holding Inc. and Subsidiaries
Notes to Consolidated Financial Statements – Continued

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized if the carrying amount of an asset may not be recoverable and exceeds estimated future undiscounted cash flows of the asset. A recognized impairment loss reduces the carrying amount of the asset to its fair value. Management has determined that no such events occurred in the six months ended June 30, 2016 that would indicate the carrying amounts may not be recoverable.

Reinsurance: In the normal course of business, the Company seeks to limit any single exposure to losses on large risks by purchasing reinsurance. The amounts reported in the consolidated balance sheets as reinsurance recoverable include amounts billed to reinsurers on losses paid as well as estimates of amounts expected to be recovered from reinsurers on insurance liabilities that have not yet been paid. Reinsurance recoverable on unpaid losses are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Insurance liabilities are reported gross of reinsurance recoverable. Management believes the recoverables are appropriately established. The Company generally strives to diversify its credit risks related to reinsurance ceded. Reinsurance premiums are generally reflected in income in a manner consistent with the recognition of premiums on the reinsured contracts. Reinsurance does not extinguish the Company’s primary liability under the policies written. Therefore, the Company regularly evaluates the financial condition of its reinsurers including their activities with respect to claim settlement practices and commutations, and establishes allowances for uncollectible reinsurance recoverable as appropriate. There were no allowances as of June 30, 2016 or December 31, 2015.

Benefit reserves: The Company establishes liabilities for amounts payable under insurance policies, including traditional life insurance and annuities. Generally, amounts are payable over an extended period of time. Liabilities for future policy benefits of traditional life insurance have been computed by a net level premium method based upon estimates at the time of issue for investment yields, mortality and withdrawals. These estimates include provisions for experience less favorable than initially expected. Mortality assumptions are based on industry experience expressed as a percentage of standard mortality tables.

Policy claims: Policy claims are based on reported claims plus estimated incurred but not reported claims developed from trends of historical data applied to current exposure.

Deposit-type contracts: Deposit-type contracts consist of amounts on deposit associated with deferred annuity riders, premium deposit funds and supplemental contracts without life contingencies.

Income taxes: The Company is subject to income taxes in the U.S. federal and various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state or local tax examinations by tax authorities for the years before 2010. The provision for income taxes is based on income as reported in the financial statements. The income tax provision is calculated under the asset and liability method. Deferred tax assets are recorded based on the differences between the financial statement and tax basis of assets and liabilities at the enacted tax rates. The principal assets and liabilities giving rise to such differences are investments, insurance reserves, and deferred acquisition costs. A deferred tax asset valuation allowance is established when there is uncertainty that such assets would be realized. The Company has no uncertain tax positions that it believes are more-likely-than not that the benefit will not to be realized. When applicable, the Company recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense. The Company had no accruals for payments of interest and penalties at June 30, 2016 and December 31, 2015.

Revenue recognition and related expenses: Revenues on traditional life insurance products consist of direct and assumed premiums reported as earned when due.

Amounts received as payment for annuities and/or non-traditional contracts such as interest sensitive whole life contracts, single payment endowment contracts, single payment juvenile contracts and other contracts without life contingencies are recognized as deposits to policyholder account balances and included in future insurance policy benefits. Revenues from these contracts are comprised of fees earned for administrative and contract-holder services and cost of insurance, which are recognized over the period of the contracts, and included in revenue. Deposits are shown as a financing activity in the Consolidated Statements of Cash Flows.

10

Midwest Holding Inc. and Subsidiaries
Notes to Consolidated Financial Statements – Continued

Amounts received under our multi-benefit policy form are allocated to the life insurance portion of the multi-benefit life insurance arrangement and the annuity portion based upon the signed policy.

Liabilities for future policy benefits are provided and acquisition costs are amortized by associating benefits and expenses with earned premiums to recognize related profits over the life of the contracts. Acquisition costs are amortized over the premium paying period using the net level premium method. Traditional life insurance products are treated as long duration contracts, which generally remain in force for the lifetime of the insured.

Comprehensive loss: Comprehensive loss is comprised of net loss and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses from marketable securities classified as available-for-sale, net of applicable taxes.

Common and preferred stock and earnings (loss) per share: The par value per common share is $0.001 with 100,000,000 shares authorized and 20,000,000 preferred shares authorized. At June 30, 2016 and December 31, 2015, the Company had 22,558,956 and 18,006,301 common shares issued and outstanding, respectively.

At June 30, 2016 and December 31, 2015, the Company had 1,179 warrants outstanding. The warrants are exercisable through December 31, 2016 for 10 shares of voting common stock at an exercise price of $6.50 per share.

The Class A preferred shares are non-cumulative, non-voting and convertible by the holder to voting common shares after May 2015, at a rate of 1.3 common shares for each preferred share (subject to customary anti-dilution adjustments). There is no stated dividend rate on the Class A shares, but the holders of Class A shares will receive a dividend on each outstanding share of Class A preferred stock in an amount equal to the amount of the dividend payable on each share of common stock. The par value per preferred Class A share is $0.001 with 2,000,000 shares authorized. At June 30, 2016 and December 31, 2015, the Company had 74,159 Class A preferred shares issued and outstanding.

The Class B preferred shares are non-cumulative, non-voting and convertible by the holder to voting common shares after May 1, 2017 at a rate of 2.0 common shares for each preferred share. The Company may only affect a conversion through a deemed liquidation or initial public offering. The par value per preferred Class B share is $0.001 with 1,000,000 shares authorized. The stated dividend rate on the Class B preferred shares is 7%. Dividends of $21,560 and $56,057 were paid as of June 30, 2016 and December 31, 2015 respectively. At June 30, 2016, and December 31, 2015, the Company had 102,669 Class B preferred shares issued and outstanding.

Earnings (loss) per share attributable to the Company’s common stockholders were computed based on the weighted average number of shares outstanding during each period. The weighted average number of shares outstanding during the three months ended June 30, 2016 and 2015 were 22,558,956 and 13,212,653 shares, respectively. The weighted average number of shares outstanding during the six months ended June 30, 2016 and 2015 were 20,682,546 and 13,195,416 shares, respectively.

Risk and uncertainties: Certain risks and uncertainties are inherent in our day-to-day operations and in the process of preparing our consolidated financial statements. The more significant of those risks and uncertainties, as well as the Company’s method for mitigating the risks, can be referenced in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2105 (“2015 Form 10-K”), and should be read in connection with the reading of these interim unaudited consolidated financial statements.

New accounting standards: In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326). Under the new guidance, this replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to perform credit loss estimates. This update changes the methodology from an incurred loss to an expected credit loss. An allowance for the expected credit loss will be set up and the net income will be impacted. The credit losses will be evaluated in the current period and an adjustment to the allowance can be made. The new standard becomes effective after December 15, 2019. We are currently evaluating the impact of our pending adoption of the new standard on our consolidated financial statements.

11

Midwest Holding Inc. and Subsidiaries
Notes to Consolidated Financial Statements – Continued

In March 2016, the FASB issued ASU 2016-07, Investments – Equity Method and Joint Ventures (Topic323). Under the new guidance, when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, requires that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The new standard becomes effective December 15, 2016. Early adoption of this update is permitted and we will adopt this Update should an investment change from the cost method to the equity method due to a change in ownership or degree of influence.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently evaluating the impact of our pending adoption of the new standard on our consolidated financial statements.

In January 2016, the FASB issued ASU 2016-1, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This guidance changes how entities account for equity investments that do not result in consolidation and are not accounted for under the equity method of accounting. Entities will be required to measure these investments at fair value at the end of each reporting period and recognize changes in fair value in net income. A practicability exception will be available for equity investments that do not have readily determinable fair values; however; the exception requires the Company to adjust the carrying amount for impairment and observable price changes in orderly transactions for the identical or a similar investment of the same issuer. This guidance also changes certain disclosure requirements and other aspects of current GAAP. This guidance is effective for fiscal years beginning after December 15, 2017, and is applicable to the Company in fiscal 2018. The Company is currently evaluating the impact of the adoption of ASU 2016-01 on its consolidated financial statements.

Note 2. Acquisitions

On March 15, 2016, Midwest acquired Northstar Financial Corporation (“Northstar”), an inactive Minnesota corporation, pursuant to an Agreement and Plan of Merger dated December 18, 2015, under which Midwest Acquisition Minnesota, Inc. (“Acquisition”) a wholly owned subsidiary of Midwest merged (the “Merger”) with and into Northstar, with Northstar being the survivor. Pursuant to the Merger, Midwest exchanged 1.27 shares of its voting common stock for each share of Northstar common stock, or approximately 4,553,000 shares.

We are treating the merger of Northstar into Midwest as an asset acquisition. The assets (primarily cash) and liabilities of Northstar were recorded in the Company’s consolidated financial statements at their estimated fair values as of the acquisition date.

12

Midwest Holding Inc. and Subsidiaries
Notes to Consolidated Financial Statements – Continued

On October 27, 2015, Midwest acquired 100% of the remaining outstanding shares of First Wyoming, a Wyoming corporation, that it did not previously own pursuant to an Agreement and Plan of Merger dated July 31, 2015. The accounting for this acquisition is still preliminary. The fair value of the Midwest common stock issued as consideration, the fair value of our previously held equity interest in First Wyoming, and the assets acquired and liabilities assumed from our acquisition of First Wyoming was based on a preliminary valuation and our estimates and assumptions are subject to change within the measurement period of approximately twelve months. The primary areas that are not yet finalized are related to the fair value of Midwest common stock issued, the fair value of our previously held equity interest in First Wyoming, and the fair value of Value of Business Acquired (“VOBA”). Measurement period adjustments will be applied to the period that the adjustment is identified in our consolidated financial statements.

The following table presents unaudited pro forma consolidated total income and net loss as if the acquisition had occurred as of January 1, 2015.

	Three months ended			Six months ended
	June 30, 2015			June 30, 2015
	(unaudited)			(unaudited)
Premiums	$	1,101,124		$	2,094,691
Investment income		99,727			361,485
Miscellaneous income		5,872			34,750
Total income	$	1,206,723		$	2,490,926
Net loss	$	(1,017,758	)	$	(2,018,728	)

The unaudited pro forma total income and net loss above was adjusted to eliminate the equity method investment loss of $55,711 for the three months ended June 30, 2015 and a loss of $16,650 for the six months ended June 30, 2015. The elimination of TPA fees paid by First Wyoming to Midwest of $38,620 for the three months ended June 30, 2015 and of $64,594 for the six months ended June 30, 2015. The unaudited pro forma net loss presented above also includes adjustments for the amortization of VOBA for the three months ended June 30, 2015 of $12,665 and for the six months ended June 30, 2015 of $25,330.

Note 3. Assets and Liabilities Held for Sale

In December, 2015, American Life entered into a purchase agreement with an outside third party to sell its interest in Capital Reserve Life Insurance Company (“Capital Reserve”), which is dormant. Under the terms of the purchase agreement, American Life will receive cash which approximates the statutory surplus of Capital Reserve. American Life does not anticipate any gain or loss from this transaction to be significant. The sale of Capital Reserve is subject to insurance regulatory approval.

As of June 30, 2016 and December 31, 2015, Midwest classified $16.3 million and $16.9 million, respectively, of assets related to Capital Reserve as a business held-for-sale within total assets and $15.0 million and $15.5 million, respectively, of liabilities related to Capital Reserve as a business held-for-sale within total liabilities on the Consolidated Balance Sheet. The held for sale assets are primarily comprised of amounts recoverable from reinsurers, and the held for sale liabilities are primarily comprised of benefit reserves and deposit-type contracts. Closing is expected in the fourth quarter 2016.

Note 4. Investments

See Note 1 in our 2015 Form 10-K for information regarding our accounting policy relating to available-for-sale (“AFS”) securities, which also includes additional disclosures regarding our fair value measurements.

13

Midwest Holding Inc. and Subsidiaries
Notes to Consolidated Financial Statements – Continued

The cost or amortized cost and estimated fair value of investments classified as available-for-sale as of June 30, 2016 and December 31, 2015 are as follows:

	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
June 30, 2016:
Fixed maturities:
U.S. government obligations	$	4,206,158	$	74,749	$	109	$	4,280,798
States and political subdivisions -- general obligations		721,784	$	12,883		-		734,667
States and political subdivisions -- special revenue		275,307	$	16,675		-		291,982
Corporate		19,197,429	$	144,454		294,664		19,047,219
Total fixed maturities	$	24,400,678	$	248,761	$	294,773	$	24,354,666
December 31, 2015:
Fixed maturities:
U.S. government obligations	$	3,256,704	$	6,610	$	69,815	$	3,193,499
States and political subdivisions -- general obligations		1,001,993		-		6,942		995,051
States and political subdivisions -- special revenue		275,333		-		1,997		273,336
Corporate		19,745,201		1,468		937,278		18,809,391
Total fixed maturities	$	24,279,231	$	8,078	$	1,016,032	$	23,271,277

The Company has six securities that individually exceed 10% of the total of the state and political subdivisions categories as of June 30, 2016. The amortized cost, fair value, credit ratings, and description of the security is as follows:

	Amortized		Estimated
	Cost		Fair Value		Credit Rating
June 30, 2016:
Fixed maturities:
States and political subdivisions -- general obligations
Bellingham Wash	$	111,501	$	116,242	AA+
Longview Washington Refunding		164,760		168,273	NR
Memphis Tenn		110,369		114,872	AA
Maricopa County Arizona School District No. 31		335,154		335,280	AA
States and political subdivisions -- special revenue
Philadelphia PA Auth For Indl Dev City Svc Agreem		149,385		155,741	AA
Riviera Beach FLA Pub Impt Rev		100,407		110,485	AA
Total	$	971,576	$	1,000,893

14

Midwest Holding Inc. and Subsidiaries
Notes to Consolidated Financial Statements – Continued

The following table summarizes, for all securities in an unrealized loss position at June 30, 2016 and December 31, 2015, 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.

	June 30, 2016					December 31, 2015
			Gross		Number			Gross		Number
	Estimated		Unrealized		of	Estimated		Unrealized		of
	Fair Value		Loss		Securities	Fair Value		Loss		Securities
Fixed Maturities:
Less than 12 months:
U.S. government obligations	$	8,299	$	109	1	$	2,484,188	$	62,343	14
States and political subdivisions --
general obligations		-		-	-		660,569		5,004	5
States and political subdivisions --
special revenue		-		-	-		248,146		1,618	2
Corporate		3,824,751		44,670	18		15,320,916		796,204	97
Greater than 12 months:
U.S. government obligations		-		-	-		305,055		7,472	3
States and political subdivisions --
general obligations		-		-	-		334,481		1,938	1
States and political subdivisions --
special revenue		-		-	-		25,190		379	1
Corporate		7,633,585		249,994	36		3,166,108		141,074	22
Total fixed maturities	$	11,466,585	$	294,773	55	$	22,544,653	$	1,016,032	145

Based on our review of the securities in an unrealized loss position at June 30, 2016 and December 31, 2015, no other-than-temporary impairments were deemed necessary. Management believes that the Company will fully recover its cost basis in the securities held at June 30, 2016, 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 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.

The amortized cost and estimated fair value of fixed maturities at June 30, 2016, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized		Estimated
	Cost		Fair Value
Due in one year or less	$	-	$	-
Due after one year through five years		2,067,384		2,093,965
Due after five years through ten years		13,563,010		13,513,005
Due after ten years		8,770,284		6,747,696
	$	24,400,678	$	24,354,666

15

Midwest Holding Inc. and Subsidiaries
Notes to Consolidated Financial Statements – Continued

The Company is required to hold assets on deposit for the benefit of policyholders in accordance with statutory rules and regulations. At June 30, 2016 and December 31, 2015, these required deposits had a total amortized cost of $7,701,787 and $6,186,865 and fair values of $7,759,577 and $6,000,376, respectively.

The components of net investment income for the three and six months ended June 30, 2016 and 2015 are as follows:

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Fixed maturities	$	207,495		$	161,652		$	417,151		$	320,615
Equity securities		-			162			5,250			186
Cash and short-term investments		1			1			5			2
Loss for equity method investments		-			(55,711	)		-			(16,650	)
Other		15,627			15,799			27,282			30,416
		223,123			121,903			449,688			334,569
Less investment expenses		(21,345	)		(21,782	)		(34,782	)		(38,824	)
	$	201,778		$	100,121		$	414,906		$	295,745

Proceeds for the three months ended June 30, 2016 and 2015 from sales of investments classified as available-for-sale were $3,897,138 and $2,840,976, respectively. Gross gains of $45,897 and $14,613 and gross losses of $35,026 and $89,156 were realized on those sales during the three months ended June 30, 2016 and 2015, respectively.Proceeds for the six months ended June 30, 2016 and 2015 from sales of investments classified as available-for-sale were $7,516,601 and $7,166,021, respectively. Gross gains of $69,653 and $118,401 and gross losses of $55,897 and $114,696 were realized on those sales during the six months ended June 30, 2016 and 2015, respectively.

As of June 30, 2016, all mortgage loans were sold. The following table summarizes the activity in the mortgage loans on real estate, held for investment account for the periods ended June 30, 2016 and December 31, 2015.

	Six months ended		Year ended
	June 30, 2016		December 31, 2015
Balance at beginning of period	$	-	$	349,386
Proceeds from settlement on mortgage loans on real estate, held for investment		-		(349,386	)
Balance at end of period	$	-	$	-

Note 5. Fair Values of Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. We use valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, accounting standards establish a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

● Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
 

● Level 2: Significant other 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.
 

● Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

16

Midwest Holding Inc. and Subsidiaries
Notes to Consolidated Financial Statements – Continued

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/out of the Level 3 category as of the beginning of the period in which the reclassifications occur.

A description of the valuation methodologies used for assets measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Fixed maturities: Fixed maturities are recorded at fair value on a recurring basis utilizing a third-party pricing source. The valuations are reviewed and validated quarterly through random testing by comparisons to separate pricing models or other third party pricing services. For the period ended June 30, 2016, there were no material changes to the valuation methods or assumptions used to determine fair values, and no broker or third party prices were changed from the values received. Securities with prices based on validated quotes from pricing services are reflected within Level 2.

Cost method investments: The cost method investments are comprised of New Mexico Capital Corporation. This security has no active trading and the fair value for this security is not readily determinable. Therefore, this investment has been omitted from the fair value disclosure tables.

Cash: The carrying value of cash and cash equivalents and short-term investments approximate the fair value because of the short maturity of the instruments.

Policy loans: Policy loans are stated at unpaid principal balances. As these loans are fully collateralized by the cash surrender value of the underlying insurance policies, the carrying value of the policy loans approximates their fair value. Policy loans are categorized as Level 3 in the fair value hierarchy.

Deposit-type contracts: The fair value for direct and assumed liabilities under deposit-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 nonperformance risk of the liabilities. Liabilities under deposit-type insurance contracts that are wholly ceded by Capital Reserve to a non-affiliated reinsurer are carried at cash surrender value which approximates fair value. These liabilities are categorized as Level 3 in the fair value hierarchy.

Surplus notes: The fair value for surplus notes is calculated using a discounted cash flow approach. Cash flows are projected utilizing scheduled repayments and discounted to the valuation date using market rates currently available for debt with similar remaining maturities. These notes are structured such that all interest is paid at maturity. In the following fair value tables, the Company has included accrued interest expense, which is recorded in the accounts payable and accrued expenses, of approximately $237,502 and $229,405 in carrying value of the surplus notes as of June 30, 2016 and December 31, 2015, respectively. These liabilities are categorized as Level 3 in the fair value hierarchy.

17

Midwest Holding Inc. and Subsidiaries
Notes to Consolidated Financial Statements – Continued

The following table presents the Company’s fair value hierarchy for those financial instruments measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015.

			Significant
	Quoted		Other		Significant
	In Active		Observable		Unobservable		Estimated
	Markets		Inputs		Inputs		Fair
	(Level 1)		(Level 2)		(Level 3)		Value
June 30, 2016
Fixed maturities:
U.S. government obligations	$	-	$	4,280,798	$	-	$	4,280,798
States and political subdivisions — general obligations		-		734,667		-		734,667
States and political subdivisions — special revenue		-		291,982		-		291,982
Corporate		-		19,047,219		-		19,047,219
Total fixed maturities	$	-	$	24,354,666	$	-	$	24,354,666
December 31, 2015
Fixed maturities:
U.S. government obligations	$	-	$	3,193,499	$	-	$	3,193,499
States and political subdivisions — general obligations		-		995,051		-		995,051
States and political subdivisions — special revenue		-		273,336		-		273,336
Corporate		-		18,809,391		-		18,809,391
	$	-	$	23,271,277	$	-	$	23,271,277

There were no transfers of financial instruments between any levels during the six months ended June 30, 2016 or during the year ended December 31, 2015.

Accounting standards require disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring basis are discussed above. There were no financial assets or financial liabilities measured at fair value on a non-recurring basis. Equity securities carried at cost are privately purchased common stocks. These common stocks are recorded using the cost basis of accounting. These securities have no active trading and the fair value for these securities is not readily determinable. The Company does not control these entities economically, and therefore does not consolidate these entities.

18

Midwest Holding Inc. and Subsidiaries
Notes to Consolidated Financial Statements – Continued

The following disclosure contains the carrying values, estimated fair values and their corresponding placement in the fair value hierarchy, for financial assets and financial liabilities as of June 30, 2016 and December 31, 2015, respectively:

	June 30, 2016
			Fair Value Measurements at Date Using
			Quoted Prices in
			Active Markets
			for Identical		Significant Other		Significant
			Assets and		Observable		Unobservable
	Carrying		Liabilities		Inputs		Inputs		Fair
	Amount		(Level 1)		(Level 2)		(Level 3)		Value
Assets:
Policy loans	$	393,492	$	-	$	-	$	393,492	$	393,492
Cash and cash equivalents		3,214,086		3,214,086		-		-		3,214,086
Liabilities:
Policyholder deposits
(Deposit-type contracts)		15,165,556		-		-		15,165,556		15,165,556
Surplus notes and accrued interest payable		795,599		-		-		791,798		791,798
	December 31, 2015
			Fair Value Measurements at Date Using
			Quoted Prices in
			Active Markets
			for Identical Assets and		Significant Other		Significant
					Observable		Unobservable
	Carrying		Liabilities		Inputs		Inputs		Fair
	Amount		(Level 1)		(Level 2)		(Level 3)		Value
Assets:
Policy loans	$	420,775	$	-	$	-	$	420,775	$	420,775
Cash and cash equivalents		1,192,336		1,192,336		-		-		1,192,336
Liabilities:
Policyholder deposits
(Deposit-type contracts)		13,897,421		-		-		13,897,421		13,897,421
Surplus notes and accrued interest payable		779,405		-		-		768,022		768,022

19

Midwest Holding Inc. and Subsidiaries
Notes to Consolidated Financial Statements – Continued

Note 6. Income Tax Matters

Significant components of the Company’s deferred tax assets and liabilities as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016			December 31, 2015
Deferred tax assets:
Loss carry forwards	$	9,563,021		$	8,962,587
Capitalized costs		628,768			667,264
Unrealized losses on investments		10,367			356,495
Benefit reserves		1,022,824			1,071,997
Total deferred tax assets		11,224,980			11,058,343
Less valuation allowance		(9,471,333	)		(9,287,024	)
Total deferred tax assets, net of valuation allowance		1,753,647			1,771,319
Deferred tax liabilities:
Policy acquisition costs		634,200			593,654
Due premiums		234,432			234,468
Value of business acquired		645,315			693,297
Intangible assets		238,000			238,000
Property and equipment		1,700			11,900
Total deferred tax liabilities		1,753,647			1,771,319
Net deferred tax assets	$	-		$	-

At June 30, 2016 and December 31, 2015, the Company recorded a valuation allowance of $9,471,333 and $9,287,024, respectively, on the deferred tax assets to reduce the total to an amount that management believes will ultimately be realized. Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income.

Loss carryforwards for tax purposes as of June 30, 2016, have expiration dates that range from 2024 through 2035.

There was no income tax expense for the three or six months ended June 30, 2016 and 2015. This differed from the amounts computed by applying the statutory U.S. federal income tax rate of 34% to pretax income, as a result of the following:

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Computed expected income tax benefit	$	(312,825	)	$	(279,849	)	$	(574,258	)	$	(545,090	)
Increase (reduction) in income taxes resulting from:
Meals, entertainment and political contributions		9,598			12,862			18,755			16,534
Dividends received deduction		-			(38	)		-			(44	)
Other		56,760			193,054			25,066			259,220
		66,358			205,878			43,821			275,710
Tax benefit before valuation allowance		(246,467	)		(73,971	)		(530,437	)		(269,380	)
Change in valuation allowance		246,467			73,971			530,437			269,380
Net income tax expense	$	-		$	-		$	-		$	-

20

Midwest Holding Inc. and Subsidiaries
Notes to Consolidated Financial Statements – Continued

Note 7. Reinsurance

A summary of significant reinsurance amounts affecting the accompanying consolidated financial statements as of June 30, 2016 and December 31, 2015 and for the three and six months ended June 30, 2016 and 2015 is as follows:

	June 30, 2016		December 31, 2015
Balance sheets:
Benefit and claim reserves assumed	$	2,695,539	$	2,763,779
Benefit and claim reserves ceded		11,859,279		12,212,656

	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015
Statements of comprehensive income:
Premiums assumed	$	5,466	$	6,417	$	12,231	$	13,668
Premiums ceded		84,117		75,748		150,274		157,370
Benefits assumed		25,135		47,370		30,158		51,959
Benefits ceded		216,531		273,537		571,656		532,493
Commissions assumed		9		6		17		10
Commissions ceded		650		900		1,288		1,854

The following table provides a summary of the significant reinsurance balances recoverable on paid and unpaid policy claims by reinsurer along with the A.M. Best credit rating as of June 30, 2016:

						Recoverable on				Total Amount
		Recoverable		Recoverable		Benefit		Ceded		Recoverable
	AM Best	on Paid		on Unpaid		Reserves/Deposit-		Due		from
Reinsurer	Rating	Losses		Losses		type Contracts		Premiums		Reinsurer
Optimum Re Insurance Company	A-	$	-	$	30,450	$	189,504	$	-	$	219,954
Sagicor Life Insurance Company	A-		-		281,272		11,597,158		239,105		11,639,325
		$	-	$	311,722	$	11,786,662	$	239,105	$	11,859,279

During 1999, Old Reliance entered into a 75% coinsurance agreement with Sagicor Life (Sagicor) whereby 75% of the business written by Old Reliance is ceded to Sagicor. During 2000, Old Reliance coinsured the remaining 25% with Sagicor. At June 30, 2016 and December 31, 2015 total benefit reserves, policy claims, deposit-type contracts, and due premiums ceded by Old Reliance to Sagicor were $11,639,325 and $11,873,254, respectively. Old Reliance remains contingently liable on this ceded reinsurance should Sagicor be unable to meet their obligations.

The use of reinsurance does not relieve the Company of its primary liability to pay the full amount of the insurance benefit in the event of the failure of a reinsurer to honor its contractual obligation. No reinsurer of business ceded by the Company has failed to pay policy claims (individually or in the aggregate) with respect to our ceded business.

The Company monitors several factors that it considers relevant to satisfy itself as to the ongoing ability of a reinsurer to meet all obligations of the reinsurance agreements. These factors include the credit rating of the reinsurer, the financial strength of the reinsurer, significant changes or events of the reinsurer, and any other relevant factors. If the Company believes that any reinsurer would not be able to satisfy its obligations with the Company, a separate contingency reserve may be established. At June 30, 2016 and December 31, 2015, no contingency reserve was established.

21

Midwest Holding Inc. and Subsidiaries
Notes to Consolidated Financial Statements – Continued

Note 8. Deposit-Type Contracts

The Company’s deposit-type contracts represent the contract value that has accrued to the benefit of the policyholder as of the balance sheet date. Liabilities for these deposit-type contracts are included without reduction for potential surrender charges. This liability is equal to the accumulated account deposits, plus interest credited, and less policyholder withdrawals. The following table provides information about deposit-type contracts for the six months ended June 30, 2016 and year ended December 31, 2015:

	Six Months Ended			Year Ended
	June 30, 2016			December 31, 2015
Beginning balance	$	13,897,421		$	10,722,227
First Wyoming Life beginning balance		-			799,990
Change in deposit-type contracts assumed from SNL		-			(1,200	)
Deposits received		1,339,406			2,387,104
Investment earnings		352,989			533,646
Withdrawals		(421,203	)		(533,762	)
Contract Charges		(3,057	)		(10,584	)
Ending Balance	$	15,165,556		$	13,897,421

Under the terms of American Life’s coinsurance agreement with SNL, American Life assumes certain deposit-type contract obligations, as shown in the table above. The remaining deposits, withdrawals and interest credited represent those for American Life’s direct business.

Note 9. Commitments and Contingencies

Legal Proceedings: We are involved in litigation incidental to our operations from time to time. We are not presently a party to any legal proceedings other than litigation arising in the ordinary course of our business, and we are not aware of any claims that could materially affect our financial position or results of operations.

Regulatory Matters: State and federal regulatory bodies regularly make inquiries and conduct examinations or investigations concerning the Company’s compliance with laws in relation to, but not limited to, insurance and securities. The issues involved in information requests and regulatory matters vary widely. The Company cooperates in these inquiries.

Office Lease: The Company leases office space in Lincoln, Nebraska under an agreement executed October 17, 2013 that expires on January 31, 2024. Great Plains entered into a lease on October 4, 2013 for office space in Mitchell, South Dakota, which expires on November 30, 2016. First Wyoming leases space in Cheynne, Wyoming, which expires on August 31, 2016. Rent expense for the three months ended June 30, 2016 and 2015 was $99,833 and $55,377 respectively. Rent expense for the six months ended June 30, 2016 and 2015 was $173,043 and $111,752 respectively. Future minimum payments rental are as follows:

2016	$	92,292
2017		149,481
2018		136,557
2019		141,412
2020		146,477
Later years		483,333
Total	$	1,149,552

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Midwest Holding Inc. and Subsidiaries
Notes to Consolidated Financial Statements – Continued

Note 10. Statutory Net Income and Surplus

American Life is required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the Arizona Department of Insurance. Likewise, Capital Reserve, Great Plains Life, and First Wyoming Life are required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the Missouri, South Dakota, and Wyoming Departments of Insurance, respectively Statutory practices primarily differ from GAAP by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions as well as valuing investments and certain assets and accounting for deferred taxes on a different basis. The following table summarizes the statutory net loss and statutory capital and surplus of American Life, Capital Reserve, and Great Plains Life, and First Wyoming Life as of June 30, 2016 and December 31, 2015 and for the six months ended June 30, 2016 and 2015.

	Statutory Capital and Surplus as of
	June 30, 2016			December 31, 2015
American Life	$	1,938,747		$	2,526,392
Capital Reserve		1,381,445			1,464,044
Great Plains Life		1,582,416			1,663,368
First Wyoming Life		2,625,322			2,715,494
	Statutory Net Income (Loss) for the six months ended June 30,
	2016			2015
American Life	$	(397,388	)	$	(697,981	)
Capital Reserve		(80,322	)		(25,490	)
Great Plains Life		(71,036	)		(261,506	)
First Wyoming Life		(223,940	)		(165,211	)

Note 11. Surplus Notes

The following provides a summary of the Company’s surplus notes along with issue dates, maturity dates, face amounts, and interest rates as of June 30, 2016:

Creditor	Issue Date	Maturity Date	Face Amount		Interest Rate
David G. Elmore	September 1, 2006	September 1, 2016	$	250,000	7%
David G. Elmore	August 4, 2011	August 1, 2016		300,000	5%

Any payments and/or repayments must be approved by the Nebraska Department of Insurance. As of June 30, 2016, the Company has accrued $245,599 of interest expense under accounts payable and accrued expenses on the consolidated balance sheet. No payments were made in the six months ending June 30, 2016, or during the year ended December 31, 2015. The surplus note for $300,000 matured on August 1, 2016. Due to the nature of surplus notes, a repayment cannot be made without the prior approval of the Nebraska regulators.

Note 12. Related Party Transactions

The Company commenced its third party administrative (“TPA”) services in 2012 as an additional revenue source. These agreements, for various levels of administrative services on behalf of each customer, generate fee income for the Company. Services provided to each customer vary based on their needs and can include some or all aspects of back-office accounting and policy administration. We have been able to perform our TPA services using our existing in-house resources. Fees earned during the three months ended June 30, 2016 and 2015 were $13,500 and $40,608, respectively. Fees earned during the six months ended June 30, 2016 and 2015 were $28,000 and $95,594, respectively.

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Midwest Holding Inc. and Subsidiaries
Notes to Consolidated Financial Statements – Continued

Note 13. Subsequent Events

All of the effects of subsequent events that provide additional evidence about conditions that existed at June 30, 2016, including the estimates inherent in the process of preparing consolidated financial statements, are recognized in the consolidated financial statements. The Company does not recognize subsequent events that provide evidence about conditions that did not exist at the date of the consolidated financial statements but arose after, but before the consolidated financial statements were available to be issued. In some cases, non-recognized subsequent events are disclosed to keep the consolidated financial statements from being misleading.

The Company has evaluated subsequent events through the date that the consolidated financial statements were issued and found no events to report.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the financial condition as of June 30, 2016, compared with December 31, 2015, and the results of operations for the three and six months ended June 30, 2016, compared with the corresponding periods in 2015 of Midwest Holding Inc. and its consolidated subsidiaries. The MD&A is provided as a supplement to, and should be read in conjunction with our consolidated financial statements and the accompanying notes to the consolidated financial statements (“Notes”) presented in “Part 1 – Item 1. Financial Statements”; our Form 10-K for the year ended December 31, 2015 (“2015 Form 10-K”), including the sections entitled “Part I – Item 1A. Risk Factors,” and “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Cautionary Note Regarding Forward-Looking Statements

Except for certain historical information contained herein, this report contains certain statements that may be considered "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Section 27A of the Securities Act of 1933, as amended, and such statements are subject to the safe harbor created by those sections. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including without limitation: any projections of revenues, earnings, cash flows, capital expenditures, or other financial items; any statement of plans, strategies, and objectives of management for future operations; any statements concerning proposed acquisition plans, new services, or developments; any statements regarding future economic conditions or performance; and any statements of belief and any statement of assumptions underlying any of the foregoing. Words such as "believe," "may," "could," "expects," "hopes," "estimates," "projects," "intends," "anticipates," and "likely," and variations of these words, or similar expressions, terms, or phrases, are intended to identify such forward-looking statements. Forward-looking statements are inherently subject to risks, assumptions, and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled "Item 1A. Risk Factors," set forth in our 2015 Form 10-K.

All such forward-looking statements speak only as of the date of this Form 10-Q. You are cautioned not to place undue reliance on such forward-looking statements. We expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the our expectations with regard thereto or any change in the events, conditions, or circumstances on which any such statement is based.

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Overview

Midwest Holding Inc., a Nebraska corporation, (“we”, “us”, “our”, “Midwest”, “the Company” or “the Registrant”) was formed on October 31, 2003 for the primary purpose of becoming a financial services holding company. We presently conduct our business through our wholly owned life insurance subsidiary, American Life & Security Corp. (“American Life”). Capital Reserve Life Insurance Company of Jefferson City, Missouri (“Capital Reserve”) is a dormant, wholly owned subsidiary of American Life. On August 5, 2014, Great Plains Financial (“Great Plains”) was acquired by us. The wholly owned subsidiary of Great Plains, Great Plains Life Assurance Company (“Great Plains Life”) became a subsidiary of Midwest and then became a wholly owned subsidiary of American Life through a capital contribution from us. On October 27, 2015, we acquired First Wyoming Capital Corporation (“First Wyoming”). The subsidiary of First Wyoming, First Wyoming Life Insurance Company (“First Wyoming Life”), became a 99.9% owned subsidiary of ours.

From our inception, we have raised approximately $18.0 million through sales of shares of voting common stock and convertible non-voting preferred stock in several private placements exempt from registration under Section 4(2) of the Securities Act of 1933, Regulation D thereunder and an intrastate offering in the State of Nebraska.

The Company was a development stage company until American Life commenced insurance operations in 2009. We have incurred significant net losses since inception in 2003 totaling approximately $25.4 million through June 30, 2016. These losses have resulted primarily from costs incurred while raising capital and establishing American Life. We expect to continue to incur significant operating losses until we achieve a volume of in-force life insurance policies that provides premiums that are sufficient to cover our operating expenses.

In July 2016, Midwest’s wholly owned subsidiary, American Life, received regulatory approval to change its state of domicile from Arizona to Nebraska.

Critical Accounting Policies and Estimates

The MD&A included in our 2015 Form 10-K contains a detailed discussion of our critical accounting policies and estimates. This report should be read in conjunction with the “Critical Accounting Policies and Estimates” discussed in our 2015 Form 10-K.

Consolidated Results of Operations – Three Months Ended June 30, 2016

Revenues are primarily generated from premium revenues and investment income. Revenues for the three months ended June 30, 2016 and 2015 are summarized in the table below.

	Three months ended June 30,
	2016			2015
Premiums	$	932,042		$	993,554
Investment income, net of expenses		201,778			100,121
Net realized gain (loss) on investments		(56,629	)		(74,543	)
Miscellaneous income		13,250			44,392
	$	1,090,441		$	1,063,524

Premium revenue: Premium revenue for the three months ended June 30, 2016 decreased compared to the same period in 2015 primarily due to the reduction of our selling efforts in the last twelve months to preserve our regulatory capital and surplus. We expect to have limited production of new business in order to preserve surplus for the next twelve months. The decline is also related to the GAAP accounting for premiums from our Accumulator life insurance product (our primary product). We recognize 100% of the first year payments received for our Accumulator life insurance products as premiums earned when due. In subsequent years, 50% of the payments received on the Accumulator life insurance products are applied toward the traditional life insurance premium and the other 50% of the payments received are applied towards the annuity premium which is recognized as deposits to policyholder account balances rather than revenues. These decreases were offset by $100,000 of premium earned by First Wyoming as a result of our purchase of First Wyoming which were not included in the 2015 results.

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Investment income, net of expenses: The components of net investment income for the three months ended June 30, 2016 and 2015 are as follows:

	Three months ended June 30,
	2016			2015
Fixed maturities	$	207,495		$	161,652
Equity securities		-			162
Cash and short-term investments		1			1
Loss for equity method investments		-			(55,711	)
Other		15,627			15,799
		223,123			121,903
Less investment expenses		(21,345	)		(21,782	)
	$	201,778		$	100,121

The increase in investment income was due primarily to the increased size of our bond portfolio due to the cash of $2.4 million received from our acquisition of Northstar which was partially invested, the consolidation of First Wyoming Life and its investment income of $63,000, and the losses from equity method investments decreasing due to restating prior year treatment for the investment in Pacific Northwest Corporation from cost to equity method of accounting. Policy loan interest, real estate investments, and miscellaneous investment income is included in the “Other” line item above.

Miscellaneous income: Miscellaneous income decreased primarily due to decreased third party administration fee income due to the acquisition of First Wyoming in 2015 and the acquisition of Northstar in March 2016. We expect this source of revenue to remain small as these services are not performed for any companies in which we do not have an equity ownership. At June 30, 2016, we had two customers for whom we performed these services. Fees earned during the three months ended June 30, 2016 and 2015 were $13,500 and $40,608, respectively.

Expenses for the three months ended June 30, 2016 and 2015 are summarized in the table below.

	Three months ended June 30,
	2016		2015
Death and other benefits	$	179,096	$	262,432
Interest credited		182,395		126,246
Increase in benefit reserves		224,644		247,927
Amortization of deferred acquisition costs		25,233		123,503
Salaries and benefits		593,093		479,284
Other operating expenses		806,055		647,217
	$	2,010,516	$	1,886,609

Death and other benefits: Death benefits decreased compared to the same period in 2015. A decrease in our pending claims and incurred but not reported claims contributed to the change. Death benefits are expected to continue on the Old Reliance block of business as a result of the age of the block and the type of policy sold prior to the acquisition by Midwest in 2010. The Company maintains policy reserves to offset the effect of such claims. No claims have been incurred on the new business written as of the three months ended June 30, 2016, or related to the inclusion of First Wyoming.

Interest credited: The increase was due to the increase in the deposit-type liabilities owed to the policyholders and inclusion of First Wyoming which added $967,000 of annuities.

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Increase in benefit reserves: The decrease in benefit reserves reflects the maturity of our in-force block of business, the decrease in new business written, and the increase in surrenders. The decrease was offset by the inclusion of First Wyoming which added $4,000 of reserves.

Amortization of deferred acquisition costs: The decline was due primarily to the decrease in surrenders in 2016 and the decline in new business written to conserve capital and surplus.

Salaries and benefits: The increase was due the salaries that were previously related to Northstar of $76,000 and the inclusion of First Wyoming salaries and benefits of $49,000. These were offset by decreases in salaries and benefits due to staff reductions.

Other operating expenses: Other operating expenses increased due to the inclusion of First Wyoming of $107,000, stock transfer, legal, and other expenses related to the Northstar acquisition of $70,000, travel due to capital raising of $30,000, legal expenses related to insurance subsidiary redomestication and merger of $27,000, and various other smaller net increases. These increases were offset by a decrease in marketing fees of $65,000.

Net Loss: Net loss was ($920,075) for the three months ended June 30, 2016, compared to a net loss of ($823,085) for the same period in 2015. The increase in net loss was primarily due to a decrease in premium revenue and the net loss of $93,000 as a result of the inclusion of First Wyoming, and non-recurring expenses relating to the Northstar merger and redomestication of our life insurance subsidiaries, offset by a decrease in death benefits, an increase in investment income, and a decrease in the amortization of deferred acquisition costs.

Consolidated Results of Operations – Six Months Ended June 30, 2016

Revenues are primarily generated from premium revenues and investment income. Revenues for the six months ended June 30, 2016 and 2015 are summarized in the table below.

	Six months ended June 30,
	2016			2015
Premiums		1,859,475		$	1,872,105
Investment income, net of expenses		414,906			295,745
Net realized gain (loss) on investments		(53,744	)		3,705
Miscellaneous income		63,557			99,244
	$	2,284,194		$	2,270,799

Premium revenue: Premium revenue for the six months ended June 30, 2016 decreased compared to the same period in 2015 primarily due to the reduction of our selling efforts in the last twelve months to preserve our regulatory capital and surplus. We expect to have limited production of new business over the next year in order to preserve surplus. The decline was also related to the GAAP accounting for premiums from our Accumulator life insurance product (our primary product). We recognize 100% of the first year payments received for our Accumulator life insurance products as premiums earned when due. In subsequent years, 50% of the payments received on the Accumulator life insurance products are applied toward the traditional life insurance premium and the other 50% of the payments received are applied towards the annuity premium which is recognized as deposits to policyholder account balances rather than revenues. These decreases were offset by $200,000 of premiums earned by First Wyoming as a result of our purchase of First Wyoming which was not included in prior year results.

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Investment income, net of expenses: The components of net investment income for the six months ended June 30, 2016 and 2015 are as follows:

	Six months ended June 30,
	2016			2015
Fixed maturities	$	417,151		$	320,615
Equity securities		5,250			186
Cash and short-term investments		5			2
Loss from equity method investments		-			(16,650	)
Other		27,282			30,416
		449,688			334,569
Less investment expenses		(34,782	)		(38,824	)
	$	414,906		$	295,745

The increase in investment income was due primarily to the increased size of our bond portfolio due to the cash of $2.4 million received from our acquisition of Northstar which was partially invested, the consolidation of First Wyoming Life investment income of $63,000, and the losses from equity method investments decreasing due to restating prior year treatment for the investment in Pacific Northwest Corporation from cost to equity method of accounting. Policy loan interest, real estate investments, and miscellaneous investment income is included in the “Other” line item above.

Miscellaneous income: Miscellaneous income decreased primarily due to our TPA (as discussed above) fee income declined due to the First Wyoming and Northstar mergers. We expect this source of revenue to remain small as these services are not performed for any companies in which we do not have an equity ownership. At June 30, 2016, we had two customers for whom we performed these services. Fees earned during the six months ended June 30, 2016 and 2015 were $28,000 and $95,594, respectively.

Expenses for the six months ended June, 2016 and 2015 are summarized in the table below.

	Six months ended June 30,
	2016		2015
Death and other benefits	$	408,118	$	461,299
Interest credited		352,989		255,598
Increase in benefit reserves		391,669		498,551
Amortization of deferred acquisition costs		147,727		253,850
Salaries and benefits		1,113,323		991,835
Other operating expenses		1,559,363		1,412,871
	$	3,973,189	$	3,874,004

Death and other benefits: Death benefits decreased compared to the same period in 2015, as a decrease in our pending claims and incurred but not reported claims for American Life contributed primarily to the change. Death benefits are expected to continue on the Old Reliance block of business as a result of the age of the block and the type of policy sold prior to the acquisition of Midwest in 2010. The Company maintains policy reserves to offset the effect of such claims. No claims have been incurred on the new business written during the first six months ended June 30, 2016 for American Life or Great Plains Life. These decreases were offset by $30,000 of claims relating to the inclusion of First Wyoming.

Interest credited: The increase was due to the increase in the deposit-type liabilities owed to the policyholders and the inclusion of First Wyoming which added $967,000 of annuities.

Increase in benefit reserves: The decrease in benefit reserves reflects the maturity of our in-force block of business, the decrease in new business written and the increase in surrenders. These decreases were offset by First Wyoming which added $31,000.

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Amortization of deferred acquisition costs: The decline is due primarily to the decrease in surrenders in 2016 and the decline in new business written to conserve capital and surplus.

Salaries and benefits: The increase was due to the inclusion of First Wyoming salaries and benefits of $160,000.

Other operating expenses: Other operating expenses increased due to the inclusion of First Wyoming of $239,000, expenses related to Northstar and First Wyoming mergers and the redomestication and merger of our life subsidiaries of $186,000, and increase in travel expenses due to capital raising efforts of $35,000, offset by decreases in marketing fees of $88,000, and the reimbursement for Great Plains Life examination fees of $67,000.

Net Loss: Net loss was ($1,688,995) for the six months ended June 30, 2016, compared to a net loss of ($1,603,205) for the same period in 2015. The increase in net loss was due to the net loss of $185,000 as a result of the inclusion of First Wyoming, the decline in premium revenue, increase in interest credited, and other operating expenses, offset by higher investment income, lower death benefits, decrease in reserves, and decrease in amortization of deferred acquisition costs.

Investments

The Company’s overall investment philosophy is reflected in the allocation of its investments. The Company emphasizes investment grade debt securities, with smaller holdings in equity securities, real estate held for investment, and policy loans. The following table shows the carrying value of our investments by investment category and cash and cash equivalents, and the percentage of each to total invested assets as of June 30, 2016 and December 31, 2015.

	June 30, 2016				December 31, 2015
	Carrying		Percent		Carrying		Percent
	Value		of Total		Value		of Total
Fixed maturity securities:
U.S. government obligations	$	4,280,798	15.0	%	$	3,193,499	12.5	%
States and political subdivisions - general
obligation		734,667	2.6			822,094	3.2
States and political subdivisions - special revenue		291,982	1.0			334,481	1.3
Corporate		19,047,219	66.7			18,921,203	74.0
Total fixed maturity securities		24,354,666	85.3			23,271,277	91.0
Cash and cash equivalents		3,214,086	11.3			1,192,336	4.8
Equity securities, at cost		53,816	0.2			140,250	0.5
Other investments:
Real estate, held for investment		523,749	1.8			529,769	2.1
Policy loans		393,492	1.4			420,775	1.6
Total	$	28,539,809	100.0	%	$	25,554,407	100.0	%

Increases in fixed maturity securities primarily resulted from the acquisition of Northstar.

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The following table shows the distribution of the credit ratings of our portfolio of fixed maturity securities by carrying value as of June 30, 2016 and December 31, 2015.

	June 30, 2016				December 31, 2015
	Carrying				Carrying
	Value		Percent		Value		Percent
AAA and U.S. Government	$	4,498,321	18.5	%	$	3,406,770	14.6	%
AA		1,713,445	7.0			1,711,366	7.4
A		6,136,744	25.2			6,341,991	27.2
BBB		11,837,883	48.6			11,534,042	49.6
Total investment grade		24,186,393	99.3			22,994,169	98.8
BB and other		168,273	0.7			277,108	1.2
Total	$	24,354,666	100.0	%	$	23,271,277	100.0	%

Reflecting the quality of securities maintained by the Company, 99.3% and 98.8% of all fixed maturity securities were investment grade as of June 30, 2016 and December 31, 2015, respectively. Due to the low interest rate environment, the Company has invested in bonds with “A” or “BBB” ratings.

Market Risks of Financial Instruments

The Company holds a portfolio of investments that primarily includes cash, bonds, stocks, and real estate, held for investment. Each of these investments is subject to market risks that can affect their return and their fair value. A majority of the investments are fixed maturity securities including debt issues of corporations, U.S. Treasury securities, or securities issued by government agencies. The primary market risks affecting the investment portfolio are interest rate risk, credit risk, and equity risk.

Interest Rate Risk

Interest rate risk arises from the price sensitivity of investments to changes in interest rates. Interest and dividend income represent the greatest portion of an investment’s return for most fixed maturity securities in stable interest rate environments. The changes in the fair value of such investments are inversely related to changes in market interest rates. As interest rates fall, the interest and dividend streams of existing fixed-rate investments become more valuable and fair values rise. As interest rates rise, the opposite effect occurs.

The Company seeks to mitigate its exposure to adverse interest rate movements through staggering the maturities of the fixed maturity investments and through maintaining cash and other short term investments to assure sufficient liquidity to meet its obligations and to address reinvestment risk considerations. Due to the composition of our book of insurance business, we believe it is unlikely that we would encounter large surrender activity due to an interest rate increase that would force the disposal of fixed maturities at a loss.

Credit Risk

The Company is exposed to credit risk through counterparties and within the investment portfolio. Credit risk relates to the uncertainty associated with an obligor’s ability to make timely payments of principal and interest in accordance with the contractual terms of an instrument or contract. The Company manages its credit risk through established investment credit policies and guidelines which address the quality of creditors and counterparties, concentration limits, diversification practices and acceptable risk levels. These policies and guidelines are regularly reviewed and approved by senior management.

Liquidity and Capital Resources

Since inception in 2003, the Company’s operations have been financed primarily through the sale of voting common stock and non-voting preferred stock. Its operations have not been profitable and have generated significant operating losses.

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Premium income, deposits to policyholder account balances, and investment income are the primary sources of funds while withdrawals of policyholder account balances, investment purchases, policy benefits in the form of claims, and operating expenses are the primary uses of funds. To ensure we will be able to pay future commitments, the funds received as premium payments and deposits are invested in primarily fixed income securities. Funds are invested with the intent that the income from investments, plus proceeds from maturities, will meet our ongoing cash flow needs. The approach of matching asset and liability durations and yields requires an appropriate mix of investments. The Company’s investments consist primarily of marketable debt securities that could be readily converted to cash for liquidity needs. Cash flow projections and cash flow tests under various market interest 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.

Net cash used by operating activities was $1,172,505 for the six months ended June 30, 2016. The primary sources of cash from operating activities were from premium receipts and collection amounts due from reinsurers. The primary uses of cash from operating activities were from payments of commissions to agents and policy liabilities. Net cash provided by investing activities was $2,297,612. The primary source of cash was from the acquisition of Northstar Financial Corporation and sales of available-for-sale securities. Offsetting this source of cash was the Company’s investments in available-for-sale securities and the purchase of property and equipment. Net cash provided by financing activities was $896,643. The primary source of cash was receipts on deposit type contracts. These were offset by withdrawals on deposit type contracts and a preferred stock dividend.

At June 30, 2016, the Company had cash and cash equivalents totaling $3,214,086. The Company believes that its existing cash and cash equivalents will be sufficient to fund the anticipated operating expenses and capital expenditures for at least twelve months. The Company has based this estimate upon assumptions that may prove to be wrong and the Company could use its capital resources sooner than they currently expect. The surplus notes for $300,000 and $200,000 matured on August 1, 2016 and September 1, 2016, respectively. Due to the nature of surplus notes a repayment cannot be made without the prior approval of the Nebraska regulators.

Although we believe we have sufficient cash to fund anticipated operating expenses and pay claims for at least the next twelve months, at present, we do not have sufficient regulatory capital and surplus for our life insurance subsidiaries in order to seek to sell a meaningful amount of new life insurance products. We are seeking to address this lack of capital through (i) our recent acquisition of Northstar, in which we contributed approximately $1.0 million of capital to American Life, our primary insurance subsidiary, (ii) we intend to seek to raise additional equity capital during the last half of 2016, and (iii) we are in the process of redomesticating First Wyoming Life in Nebraska and merge it into American Life, which will significantly increase the capital and surplus of American Life. However, we cannot assure investors in our company that we will be able to alleviate our capital constraints. A lack of new insurance policy sales will have a negative long-term impact on our profitability.

Impact of Inflation

Insurance premiums are established before the amount of losses and loss adjustment expenses, or the extent to which inflation may affect such losses and expenses, are known. The Company attempts, in establishing premiums, to anticipate the potential impact of inflation. If, for competitive reasons, premiums cannot be increased to anticipate inflation, this cost would be absorbed by us. Inflation also affects the rate of investment return on the investment portfolio with a corresponding effect on investment income.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Contractual Obligations

As a “smaller reporting company” the Company is not required to provide the table of contractual obligations required pursuant to this Item.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a “smaller reporting company,” the Company is not required to provide disclosure pursuant to this Item.

ITEM 4. CONTROLS AND PROCEDURES.

We have established disclosure controls and procedures to ensure, among other things, material information relating to our Company, including our consolidated subsidiaries, is made known to our officers who certify our financial reports and to the other members of our senior management and the Board of Directors.

As required by Exchange Act Rule 13a-15(b), management of the Company, including the Chief Executive Officer and the Vice President, conducted an evaluation as of the end of the period covered by this report, of the effectiveness of the Company’s disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e). Based upon an evaluation at the end of the period, the Chief Executive Officer and the Vice President concluded that disclosure controls and procedures are effective in timely alerting them to material information relating to us and our consolidated subsidiaries required to be disclosed in our periodic reports under the Exchange Act.

There were no changes to the Company’s internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) during the six months ended June 30, 2016 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We are involved in litigation incidental to our operations from time to time. We are not presently a party to any legal proceedings other than litigation arising in the ordinary course of our business, and we are not aware of any claims that could materially affect our financial position or results of operations.

ITEM 1A. RISK FACTORS.

There have been no material changes from the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 in response to Item 1A of Part I of such Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

32

ITEM 6. EXHIBITS.

EXHIBIT
NUMBER	DESCRIPTION
31.1*	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32*	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS **	XBRL Instance Document.
101.SCH **	XBRL Taxonomy Extension Schema Document.
101.CAL **	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB **	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE **	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF **	XBRL Taxonomy Extension Definition Linkbase Document.

__________________

*	Filed herewith.
**	Furnished herewith.

33

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: August 12, 2016

MIDWEST HOLDING INC.
By:	/s/ Mark A. Oliver
Name:	Mark A. Oliver
Title:	Chief Executive Officer
	(Principal Executive Officer,
	Principal Financial Officer, and
	Principal Accounting Officer)

34

EX-31.1

Exhibit 31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Mark A. Oliver, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Midwest Holding Inc. and subsidiaries (the “Company”);
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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer 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: August 12, 2016	/s/ Mark A. Oliver
	Mark A. Oliver
	Chief Executive Officer
	Principal Executive Officer & Principal Financial Officer

35

EX-31.2

Exhibit 31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Mark A. Oliver, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Midwest Holding Inc. and subsidiaries (the “Company”);
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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer 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: August 12, 2016	/s/ Mark A. Oliver
	Mark A. Oliver
	Chief Executive Officer
	Principal Accounting Officer

36

EX-32

Exhibit 32

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

In connection with the Quarterly Report of Midwest Holding Inc. and subsidiaries (the “Company”) on Form 10-Q for the quarter ended June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

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

Date: August 12, 2016	/s/ Mark A. Oliver
	Mark A. Oliver
	Chief Executive Officer
	Principal Executive Officer & Principal Financial Officer,
	& Principal Accounting Officer

37

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 01, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	MIDWEST HOLDING INC.
Entity Central Index Key	0000355379
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		22,558,956
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2016

XML

Consolidated Balance Sheets - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Investments, available for sale, at fair value
Fixed maturities (amortized cost: $24,400,678 and $24,279,231, respectively)	$ 24,354,666	$ 23,271,277
Equity securities, at cost	53,816	140,250
Real estate, held for investment	523,749	529,769
Policy Loans	393,492	420,775
Total investments	25,325,723	24,362,071
Cash and cash equivalents	3,214,086	1,192,336
Amounts recoverable from reinsurers	11,859,279	12,212,656
Interest and dividends due and accrued	261,206	264,791
Due premiums	636,734	640,073
Deferred acquisition costs, net	2,649,927	2,765,063
Value of business acquired, net	1,897,986	2,039,110
Intangible assets	700,000	700,000
Goodwill	1,129,824	1,129,824
Property and equipment, net	191,053	217,565
Assets associated with business held for sale (see Note 3)	16,345,892	16,870,241
Other assets	1,141,958	532,674
Total assets	65,353,668	62,926,404
Liabilities:
Benefit reserves	24,459,542	24,155,140
Policy claims	461,792	839,859
Deposit-type contracts	15,165,556	13,897,421
Advance premiums	56,481	57,699
Total policy liabilities	40,143,371	38,950,119
Accounts payable and accrued expenses	1,088,578	1,013,313
Liabilities associated with business held for sale (see Note 3)	14,988,764	15,508,998
Surplus notes	550,000	550,000
Total liabilities	56,770,713	56,022,430
Commitments and Contingencies (See Note 9)
Stockholders' Equity:
Common stock, $0.001 par value. Authorized 120,000,000 shares; issued and outstanding 22,558,956 as of June 30, 2016 and 18,006,301 shares as of December 31, 2015	22,559	18,006
Additional paid-in capital	33,964,290	31,584,529
Accumulated deficit	(25,374,520)	(23,685,525)
Accumulated other comprehensive loss	(29,551)	(1,013,213)
Total stockholders' equity	8,582,955	6,903,974
Total liabilities and stockholders' equity	65,353,668	62,926,404
Series B Preferred Stock [Member]
Stockholders' Equity:
Preferred stock	103	103
Series A Preferred Stock [Member]
Stockholders' Equity:
Preferred stock	$ 74	$ 74

XML

Consolidated Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Amortized costs of fixed maturities (in dollars)	$ 24,400,678	$ 24,279,231
Preferred stock, shares authorized	20,000,000	20,000,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	120,000,000	120,000,000
Common stock, shares issued	22,558,956	18,006,301
Common stock, shares outstanding	22,558,956	18,006,301
Series B Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, liquidation preference per share	$ 6.00	$ 6.00
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	102,669	102,669
Preferred stock, shares outstanding	102,669	102,669
Series A Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, liquidation preference per share	$ 6.00	$ 6.00
Preferred stock, shares authorized	2,000,000	2,000,000
Preferred stock, shares issued	74,159	74,159
Preferred stock, shares outstanding	74,159	74,159

XML

Consolidated Statements of Comprehensive Income - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income:
Premiums	$ 932,042	$ 993,554	$ 1,859,475	$ 1,872,105
Investment income, net of expenses	201,778	100,121	414,906	295,745
Net realized (loss) gain on investments	(56,629)	(74,543)	(53,744)	3,705
Miscellaneous income	13,250	44,392	63,557	99,244
Total Income	1,090,441	1,063,524	2,284,194	2,270,799
Expenses:
Death and other benefits	179,096	262,432	408,118	461,299
Interest credited	182,395	126,246	352,989	255,598
Increase in benefit reserves	224,644	247,927	391,669	498,551
Amortization of deferred acquisition costs	25,233	123,503	147,727	253,850
Salaries and benefits	593,093	479,284	1,113,323	991,835
Other operating expenses	806,055	647,217	1,559,363	1,412,871
Total Expenses	2,010,516	1,886,609	3,973,189	3,874,004
Loss before income taxes	(920,075)	(823,085)	(1,688,995)	(1,603,205)
Income tax expense
Net loss	(920,075)	(823,085)	(1,688,995)	(1,603,205)
Comprehensive income:
Unrealized gains (losses) on investments arising during period	478,024	(646,053)	929,918	(501,910)
Less: reclassification adjustment for net realized losses (gains) on investments	56,629	74,543	53,744	(3,705)
Other comprehensive income	534,653	(571,510)	983,662	(505,615)
Comprehensive (loss)	$ (385,422)	$ (1,394,595)	$ (705,333)	$ (2,108,820)
Net loss per common share, basic and diluted	$ (0.04)	$ (0.06)	$ (0.08)	$ (0.12)

XML

Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash Flows from Operating Activities:
Net loss	$ (1,688,995)	$ (1,603,205)
Adjustments to reconcile net loss to net cash and cash equivalents provided by (used in) operating activities:
Net adjustment for premium and discount on investments	105,673	74,421
Depreciation and amortization	208,235	196,192
Deferred acquisition costs capitalized	(66,951)	(453,647)
Amortization of deferred acquisition costs	147,727	253,850
Net realized loss (gain) on investments	53,744	(4,768)
Loss from equity method investments		16,650
Changes in operating assets and liabilities:
Amounts recoverable from reinsurers	353,377	388,325
Interest and dividends due and accrued	3,585	(1,085)
Due premiums	3,339	522
Policy liabilities	275,049	677,602
Other assets and liabilities	(569,165)	(202,324)
Other assets and liabilities held for sale	1,877	(76,993)
Net cash (used for) operating activities	(1,172,505)	(734,460)
Securities available for sale:
Purchases	(7,878,585)	(8,324,853)
Proceeds from sale or maturity	7,671,898	7,129,385
Securities held for sale:
Purchases		(305,675)
Proceeds from sale or maturity	52,703	287,236
Net change in equity securities carried at cost:
Proceeds from sale or maturity	26,434	6,000
Proceeds from payments on mortgage loans on real estate, held for investment		349,386
Acquisition of Northstar Financial Corporation	2,427,394
Net change in policy loans	27,283	(35,686)
Purchases of property and equipment	(29,515)	(4,566)
Net cash provided by (used for) investing activities	2,297,612	(898,773)
Cash Flows from Financing Activities:
Issuance of common stock		214,720
Preferred stock dividend	(21,560)	(34,497)
Receipts on deposit-type contracts	1,339,406	1,191,753
Withdrawals on deposit-type contracts	(421,203)	(288,496)
Net cash provided by financing activities	896,643	1,083,480
Net increase (decrease) in cash and cash equivalents	2,021,750	(549,753)
Cash and cash equivalents:
Beginning	1,192,336	2,310,047
Ending	3,214,086	1,760,294
Supplemental Disclosure of Non-Cash Information
Common stock issued on Northstar Acquisition	2,405,874
Total Non-Cash Information	$ 2,405,874	$ 1,811,612

XML

Nature of Operations and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Nature of Operations and Summary of Significant Accounting Policies

Note 1. Nature of Operations and Summary of Significant Accounting Policies

Nature of operations: Midwest Holding Inc. and its wholly owned subsidiaries (“Midwest” or the “Company,” which also may be referred to as “we,” “our” or “us”) operate multiple insurance businesses through one business segment. These insurance companies are: American Life & Security Corporation (“American Life”), Capital Reserve Life Insurance Company (“Capital Reserve”), First Wyoming Life Insurance Company (“First Wyoming Life”) and Great Plains Life Assurance Company (“Great Plains”). Through these insurance companies we sell traditional, non-traditional and multi-benefit life insurance policies.

Basis of presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with United States of America generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions from the Securities and Exchange Commission (“SEC”) Quarterly Report on Form 10-Q, including Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Therefore, the information contained in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2105 (“2015 Form 10-K”), should be read in connection with the reading of these interim unaudited consolidated financial statements.

In the opinion of management, these statements include all normal recurring adjustments necessary for a fair presentation of the Company’s results. Operating results for the six month period ended June 30, 2016, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016. All material inter-company accounts and transactions have been eliminated in consolidation.

Investments: All fixed maturities and a portion of the equity securities owned by the Company are considered available-for-sale and are included in the consolidated financial statements at their fair value as of the financial statement date. Bond premiums and discounts are amortized using the scientific-yield method (calculated by multiplying the adjusted basis by the yield at issuance and then subtracting the coupon interest) over the term of the bonds. Realized gains and losses on securities sold during the year are determined by the specific security sold. Unrealized holding gains and losses, net of applicable income taxes, are included in comprehensive loss.

Declines in the fair value of available for sale securities below their amortized cost are evaluated to assess whether any other-than-temporary impairment loss should be recorded. In determining if these losses are expected to be other-than-temporary, we consider severity of impairment, duration of impairment, forecasted recovery period, industry outlook, financial condition of the issuer, issuer credit ratings and the intent and ability of us to hold the investment until the recovery of the cost.

The recognition of other-than-temporary impairment losses on debt securities is dependent on the facts and circumstances related to the specific security. If the Company intends to sell a security or it is more likely than not that the Company would be required to sell a security prior to recovery of the amortized cost, the difference between amortized cost and fair value is recognized in the statement of comprehensive income as an other-than-temporary impairment. If the Company does not expect to recover the amortized basis, does not plan to sell the security and if it is not more likely than not that the Company would be required to sell a security before the recovery of its amortized cost, the recognition of the other-than-temporary impairment is bifurcated. The Company recognizes the credit loss portion in the income statement and the noncredit loss portion in accumulated other comprehensive loss. The credit component of the other-than-temporary impairment is determined by comparing the net present value of projected cash flows with the amortized cost basis of the debt security. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the fixed income security at the date of acquisition. Cash flow estimates are driven by assumptions regarding probability of default, including changes in credit ratings, and estimates regarding timing and amount of recoveries associated with a default. No other-than-temporary impairments were recognized during the six months ended June 30, 2016 or 2015.

Investment income consists of interest, dividends, gains and losses from equity method investments, and real estate income, which are recognized on an accrual basis and amortization of premiums and discounts.

Included within the Company’s equity securities are certain privately purchased common stocks. These investments are recorded using the cost basis method of accounting. These securities do not have a readily determinable fair value. The Company does not control these entities economically, and therefore does not consolidate these entities in its financial statements.

Policy loans: 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. No valuation allowance is established for these policy loans as the amount of the loan is fully secured by the death benefit of the policy and cash surrender value.

Real estate, held for investment: Real estate, held for investment is comprised of ten condominiums in Hawaii. Real estate is carried at depreciated cost. Depreciation on residential real estate is computed on a straight-line basis over 50 years.

Cash and cash equivalents: The Company considers all liquid investments with original maturities of three months or less when purchased to be cash equivalents. At June 30, 2016 and December 31, 2015, the Company had no cash equivalents. The Company has cash on deposit with financial institutions which at times may exceed the Federal Deposit Insurance Corporation insurance limits. The Company has not suffered any losses in the past and does not believe it is exposed to any significant credit risk in these balances.

Deferred acquisition costs: Deferred acquisition costs consist of incremental direct costs, net of amounts ceded to reinsurers, that result directly from and are essential to the contract acquisition transaction and would not have been incurred by the Company had the contract acquisition not occurred. These costs are capitalized, to the extent recoverable, and amortized over the life of the premiums produced. The Company evaluates the types of acquisition costs it capitalizes. The Company capitalizes agent compensation and benefits and other expenses that are directly related to the successful acquisition of contracts. The Company also capitalizes expenses directly related to activities performed by the Company, such as underwriting, policy issuance, and processing fees incurred in connection with successful contract acquisitions.

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. The Company performs a recoverability analysis annually in the fourth quarter of its fiscal year unless events occur which require an immediate review. The Company determined during its December 31, 2015 analysis that all deferred acquisition costs were recoverable.

The following table provides information about deferred acquisition costs for the periods ended June 30, 2016 and December 31, 2015, respectively.

	Six Months Ended			Year Ended
	June 30,			December 31,
	2016			2015
Balance at beginning of period	$	2,765,063		$	2,646,970
Capitalization of commissions, sales and issue expenses		66,951			552,466
Change in DAC due to unrealized investment (gains) losses		(34,360	)		35,301
Gross amortization		(147,727	)		(469,674	)
Balance at end of period	$	2,649,927		$	2,765,063

Value of business acquired: Value of business acquired represents the estimated value assigned to purchased companies or insurance in force of the assumed policy obligations at the date of acquisition of a block of policies. American Life purchased Capital Reserve during 2010, resulting in an initial capitalized asset for value of business acquired of $116,326. Additionally, the Company paid an upfront ceding commission of $375,000 to Security National Life (“SNL”) in respect of the purchase of Capital Reserve. An initial asset was established for the value of this business acquired totaling $348,010, representing primarily the ceding commission. The agreement has an automatic renewal provision unless the Company notifies SNL of its intention not to renew, no less than 180 days prior to the expiration of the then current agreement. Each automatic renewal period is for one year. This reinsurance remains in place. The remaining capitalized and SNL asset balances at June 30, 2016, of $43,622 and $130,504, respectively, will be included in the accounting for the anticipated sale of Capital Reserve in the second half of 2016. Midwest acquired Great Plains Financial in 2014 and established an asset for value of business acquired of $1,288,207. Midwest acquired First Wyoming Capital during 2015 and established an asset for value of business acquired of $506,600. These assets are being amortized on a straight-line basis, which approximates the earnings pattern of the related policies, over ten years. The accounting for the First Wyoming acquisition is still preliminary and is expected to be final in the third quarter of 2016. The Company recognized amortization expense of $56,478 and $43,814 for the three months ended June 30, 2016 and 2015, respectively relative to these transactions. The Company recognized amortization expense of $112,957 and $87,627 for the six months ended June 30, 2016 and 2015, respectively related to these transactions.

Additionally, American Life purchased Old Reliance in August 2011, resulting in an initial capitalized asset for value of business acquired of $824,485. This asset is being amortized over the life of the related policies (refer to “revenue recognition and related expenses” discussed later regarding amortization methods). Amortization recognized during the three months ended June 30, 2016 totaled $13,135 and the accretion recognized during the three months ended June 30, 2015 totaled $653. Amortization recognized during the six months ended June 30, 2016 and 2015 totaled $28,166 and $99, respectively.

Recoverability of value of business acquired 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. If this current estimate is less than the existing balance, the difference is charged to expense. Management has determined that no events occurred in the six months ended June 30, 2016 that suggest a review should be undertaken.

Goodwill and Other Intangible Assets: Goodwill represents the excess of the amounts paid to acquire subsidiaries and other businesses over the fair value of their net assets at the date of acquisition. Goodwill is tested for impairment at least annually in the fourth quarter or more frequently if events or circumstances change that would indicate that a triggering event has occurred. Management has determined that no events occurred in the six months ended June 30, 2016 that suggest a review should be undertaken.

The Company assesses the recoverability of indefinite-lived intangible assets at least annually or whenever events or circumstances suggest that the carrying value of an identifiable indefinite-lived intangible asset may exceed the sum of the future discounted cash flows expected to result from its use and eventual disposition. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. Management has determined that no events occurred in the six months ended June 30, 2016 that suggest a review should be undertaken.

Property and equipment: Property and equipment are stated at cost net of accumulated depreciation. Annual depreciation is primarily computed using straight-line methods for financial reporting and straight-line and accelerated methods for tax purposes. Furniture and equipment is depreciated over 3 to 7 years and computer software and equipment is generally depreciated over 3 years. Depreciation expense totaled $25,601 and $40,342 for the three months ended June 30, 2016 and 2015, respectively. Depreciation expense totaled $61,091 and 82,834 for the six months ended June 30, 2016 and 2015, respectively. Accumulated depreciation totaled $925,617 and $864,526 as of June 30, 2016 and December 31, 2015, respectively.

Maintenance and repairs are expensed as incurred. Replacements and improvements which extend the useful life of the asset are capitalized. The net book value of assets sold or retired are removed from the accounts, and any resulting gain or loss is reflected in earnings.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized if the carrying amount of an asset may not be recoverable and exceeds estimated future undiscounted cash flows of the asset. A recognized impairment loss reduces the carrying amount of the asset to its fair value. Management has determined that no such events occurred in the six months ended June 30, 2016 that would indicate the carrying amounts may not be recoverable.

Reinsurance: In the normal course of business, the Company seeks to limit any single exposure to losses on large risks by purchasing reinsurance. The amounts reported in the consolidated balance sheets as reinsurance recoverable include amounts billed to reinsurers on losses paid as well as estimates of amounts expected to be recovered from reinsurers on insurance liabilities that have not yet been paid. Reinsurance recoverable on unpaid losses are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Insurance liabilities are reported gross of reinsurance recoverable. Management believes the recoverables are appropriately established. The Company generally strives to diversify its credit risks related to reinsurance ceded. Reinsurance premiums are generally reflected in income in a manner consistent with the recognition of premiums on the reinsured contracts. Reinsurance does not extinguish the Company’s primary liability under the policies written. Therefore, the Company regularly evaluates the financial condition of its reinsurers including their activities with respect to claim settlement practices and commutations, and establishes allowances for uncollectible reinsurance recoverable as appropriate. There were no allowances as of June 30, 2016 or December 31, 2015.

Benefit reserves: The Company establishes liabilities for amounts payable under insurance policies, including traditional life insurance and annuities. Generally, amounts are payable over an extended period of time. Liabilities for future policy benefits of traditional life insurance have been computed by a net level premium method based upon estimates at the time of issue for investment yields, mortality and withdrawals. These estimates include provisions for experience less favorable than initially expected. Mortality assumptions are based on industry experience expressed as a percentage of standard mortality tables.

Policy claims: Policy claims are based on reported claims plus estimated incurred but not reported claims developed from trends of historical data applied to current exposure.

Deposit-type contracts: Deposit-type contracts consist of amounts on deposit associated with deferred annuity riders, premium deposit funds and supplemental contracts without life contingencies.

Income taxes: The Company is subject to income taxes in the U.S. federal and various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state or local tax examinations by tax authorities for the years before 2010. The provision for income taxes is based on income as reported in the financial statements. The income tax provision is calculated under the asset and liability method. Deferred tax assets are recorded based on the differences between the financial statement and tax basis of assets and liabilities at the enacted tax rates. The principal assets and liabilities giving rise to such differences are investments, insurance reserves, and deferred acquisition costs. A deferred tax asset valuation allowance is established when there is uncertainty that such assets would be realized. The Company has no uncertain tax positions that it believes are more-likely-than not that the benefit will not to be realized. When applicable, the Company recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense. The Company had no accruals for payments of interest and penalties at June 30, 2016 and December 31, 2015.

Revenue recognition and related expenses: Revenues on traditional life insurance products consist of direct and assumed premiums reported as earned when due.

Amounts received as payment for annuities and/or non-traditional contracts such as interest sensitive whole life contracts, single payment endowment contracts, single payment juvenile contracts and other contracts without life contingencies are recognized as deposits to policyholder account balances and included in future insurance policy benefits. Revenues from these contracts are comprised of fees earned for administrative and contract-holder services and cost of insurance, which are recognized over the period of the contracts, and included in revenue. Deposits are shown as a financing activity in the Consolidated Statements of Cash Flows.

Amounts received under our multi-benefit policy form are allocated to the life insurance portion of the multi-benefit life insurance arrangement and the annuity portion based upon the signed policy.

Liabilities for future policy benefits are provided and acquisition costs are amortized by associating benefits and expenses with earned premiums to recognize related profits over the life of the contracts. Acquisition costs are amortized over the premium paying period using the net level premium method. Traditional life insurance products are treated as long duration contracts, which generally remain in force for the lifetime of the insured.

Comprehensive loss: Comprehensive loss is comprised of net loss and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses from marketable securities classified as available-for-sale, net of applicable taxes.

Common and preferred stock and earnings (loss) per share: The par value per common share is $0.001 with 100,000,000 shares authorized and 20,000,000 preferred shares authorized. At June 30, 2016 and December 31, 2015, the Company had 22,558,956 and 18,006,301 common shares issued and outstanding, respectively.

At June 30, 2016 and December 31, 2015, the Company had 1,179 warrants outstanding. The warrants are exercisable through December 31, 2016 for 10 shares of voting common stock at an exercise price of $6.50 per share.

The Class A preferred shares are non-cumulative, non-voting and convertible by the holder to voting common shares after May 2015, at a rate of 1.3 common shares for each preferred share (subject to customary anti-dilution adjustments). There is no stated dividend rate on the Class A shares, but the holders of Class A shares will receive a dividend on each outstanding share of Class A preferred stock in an amount equal to the amount of the dividend payable on each share of common stock. The par value per preferred Class A share is $0.001 with 2,000,000 shares authorized. At June 30, 2016 and December 31, 2015, the Company had 74,159 Class A preferred shares issued and outstanding.

The Class B preferred shares are non-cumulative, non-voting and convertible by the holder to voting common shares after May 1, 2017 at a rate of 2.0 common shares for each preferred share. The Company may only affect a conversion through a deemed liquidation or initial public offering. The par value per preferred Class B share is $0.001 with 1,000,000 shares authorized. The stated dividend rate on the Class B preferred shares is 7%. Dividends of $21,560 and $56,057 were paid as of June 30, 2016 and December 31, 2015 respectively. At June 30, 2016, and December 31, 2015, the Company had 102,669 Class B preferred shares issued and outstanding.

Earnings (loss) per share attributable to the Company’s common stockholders were computed based on the weighted average number of shares outstanding during each period. The weighted average number of shares outstanding during the three months ended June 30, 2016 and 2015 were 22,558,956 and 13,212,653 shares, respectively. The weighted average number of shares outstanding during the six months ended June 30, 2016 and 2015 were 20,682,546 and 13,195,416 shares, respectively.

Risk and uncertainties: Certain risks and uncertainties are inherent in our day-to-day operations and in the process of preparing our consolidated financial statements. The more significant of those risks and uncertainties, as well as the Company’s method for mitigating the risks, can be referenced in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2105 (“2015 Form 10-K”), and should be read in connection with the reading of these interim unaudited consolidated financial statements.

New accounting standards: In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326). Under the new guidance, this replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to perform credit loss estimates. This update changes the methodology from an incurred loss to an expected credit loss. An allowance for the expected credit loss will be set up and the net income will be impacted. The credit losses will be evaluated in the current period and an adjustment to the allowance can be made. The new standard becomes effective after December 15, 2019. We are currently evaluating the impact of our pending adoption of the new standard on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-07, Investments – Equity Method and Joint Ventures (Topic323). Under the new guidance, when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, requires that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The new standard becomes effective December 15, 2016. Early adoption of this update is permitted and we will adopt this Update should an investment change from the cost method to the equity method due to a change in ownership or degree of influence.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently evaluating the impact of our pending adoption of the new standard on our consolidated financial statements.

In January 2016, the FASB issued ASU 2016-1, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This guidance changes how entities account for equity investments that do not result in consolidation and are not accounted for under the equity method of accounting. Entities will be required to measure these investments at fair value at the end of each reporting period and recognize changes in fair value in net income. A practicability exception will be available for equity investments that do not have readily determinable fair values; however; the exception requires the Company to adjust the carrying amount for impairment and observable price changes in orderly transactions for the identical or a similar investment of the same issuer. This guidance also changes certain disclosure requirements and other aspects of current GAAP. This guidance is effective for fiscal years beginning after December 15, 2017, and is applicable to the Company in fiscal 2018. The Company is currently evaluating the impact of the adoption of ASU 2016-01 on its consolidated financial statements.

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Acquisitions

6 Months Ended

Jun. 30, 2016

Business Combinations [Abstract]

Acquisitions

Note 2. Acquisitions

On March 15, 2016, Midwest acquired Northstar Financial Corporation (“Northstar”), an inactive Minnesota corporation, pursuant to an Agreement and Plan of Merger dated December 18, 2015, under which Midwest Acquisition Minnesota, Inc. (“Acquisition”) a wholly owned subsidiary of Midwest merged (the “Merger”) with and into Northstar, with Northstar being the survivor. Pursuant to the Merger, Midwest exchanged 1.27 shares of its voting common stock for each share of Northstar common stock, or approximately 4,553,000 shares.

We are treating the merger of Northstar into Midwest as an asset acquisition. The assets (primarily cash) and liabilities of Northstar were recorded in the Company’s consolidated financial statements at their estimated fair values as of the acquisition date.

On October 27, 2015, Midwest acquired 100% of the remaining outstanding shares of First Wyoming, a Wyoming corporation, that it did not previously own pursuant to an Agreement and Plan of Merger dated July 31, 2015. The accounting for this acquisition is still preliminary. The fair value of the Midwest common stock issued as consideration, the fair value of our previously held equity interest in First Wyoming, and the assets acquired and liabilities assumed from our acquisition of First Wyoming was based on a preliminary valuation and our estimates and assumptions are subject to change within the measurement period of approximately twelve months. The primary areas that are not yet finalized are related to the fair value of Midwest common stock issued, the fair value of our previously held equity interest in First Wyoming, and the fair value of Value of Business Acquired (“VOBA”). Measurement period adjustments will be applied to the period that the adjustment is identified in our consolidated financial statements.

The following table presents unaudited pro forma consolidated total income and net loss as if the acquisition had occurred as of January 1, 2015.

	Three months ended			Six months ended
	June 30, 2015			June 30, 2015
	(unaudited)			(unaudited)
Premiums	$	1,101,124		$	2,094,691
Investment income		99,727			361,485
Miscellaneous income		5,872			34,750
Total income	$	1,206,723		$	2,490,926
Net loss	$	(1,017,758	)	$	(2,018,728	)

The unaudited pro forma total income and net loss above was adjusted to eliminate the equity method investment loss of $55,711 for the three months ended June 30, 2015 and a loss of $16,650 for the six months ended June 30, 2015. The elimination of TPA fees paid by First Wyoming to Midwest of $38,620 for the three months ended June 30, 2015 and of $64,594 for the six months ended June 30, 2015. The unaudited pro forma net loss presented above also includes adjustments for the amortization of VOBA for the three months ended June 30, 2015 of $12,665 and for the six months ended June 30, 2015 of $25,330.

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Assets and Liabilities Held for Sale

6 Months Ended

Jun. 30, 2016

Discontinued Operations and Disposal Groups [Abstract]

Assets and Liabilities Held for Sale

Note 3. Assets and Liabilities Held for Sale

In December, 2015, American Life entered into a purchase agreement with an outside third party to sell its interest in Capital Reserve Life Insurance Company (“Capital Reserve”), which is dormant. Under the terms of the purchase agreement, American Life will receive cash which approximates the statutory surplus of Capital Reserve. American Life does not anticipate any gain or loss from this transaction to be significant. The sale of Capital Reserve is subject to insurance regulatory approval.

As of June 30, 2016 and December 31, 2015, Midwest classified $16.3 million and $16.9 million, respectively, of assets related to Capital Reserve as a business held-for-sale within total assets and $15.0 million and $15.5 million, respectively, of liabilities related to Capital Reserve as a business held-for-sale within total liabilities on the Consolidated Balance Sheet. The held for sale assets are primarily comprised of amounts recoverable from reinsurers, and the held for sale liabilities are primarily comprised of benefit reserves and deposit-type contracts. Closing is expected in the fourth quarter 2016.

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Investments

6 Months Ended

Jun. 30, 2016

Marketable Securities [Abstract]

Investments

Note 4. Investments

See Note 1 in our 2015 Form 10-K for information regarding our accounting policy relating to available-for-sale (“AFS”) securities, which also includes additional disclosures regarding our fair value measurements.

The cost or amortized cost and estimated fair value of investments classified as available-for-sale as of June 30, 2016 and December 31, 2015 are as follows:

	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
June 30, 2016:
Fixed maturities:
U.S. government obligations	$	4,206,158	$	74,749	$	109	$	4,280,798
States and political subdivisions -- general obligations		721,784	$	12,883		-		734,667
States and political subdivisions -- special revenue		275,307	$	16,675		-		291,982
Corporate		19,197,429	$	144,454		294,664		19,047,219
Total fixed maturities	$	24,400,678	$	248,761	$	294,773	$	24,354,666
December 31, 2015:
Fixed maturities:
U.S. government obligations	$	3,256,704	$	6,610	$	69,815	$	3,193,499
States and political subdivisions -- general obligations		1,001,993		-		6,942		995,051
States and political subdivisions -- special revenue		275,333		-		1,997		273,336
Corporate		19,745,201		1,468		937,278		18,809,391
Total fixed maturities	$	24,279,231	$	8,078	$	1,016,032	$	23,271,277

The Company has six securities that individually exceed 10% of the total of the state and political subdivisions categories as of June 30, 2016. The amortized cost, fair value, credit ratings, and description of the security is as follows:

	Amortized		Estimated
	Cost		Fair Value		Credit Rating
June 30, 2016:
Fixed maturities:
States and political subdivisions -- general obligations
Bellingham Wash	$	111,501	$	116,242	AA+
Longview Washington Refunding		164,760		168,273	NR
Memphis Tenn		110,369		114,872	AA
Maricopa County Arizona School District No. 31		335,154		335,280	AA
States and political subdivisions -- special revenue
Philadelphia PA Auth For Indl Dev City Svc Agreem		149,385		155,741	AA
Riviera Beach FLA Pub Impt Rev		100,407		110,485	AA
Total	$	971,576	$	1,000,893

The following table summarizes, for all securities in an unrealized loss position at June 30, 2016 and December 31, 2015, 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.

	June 30, 2016					December 31, 2015
			Gross		Number			Gross		Number
	Estimated		Unrealized		of	Estimated		Unrealized		of
	Fair Value		Loss		Securities	Fair Value		Loss		Securities
Fixed Maturities:
Less than 12 months:
U.S. government obligations	$	8,299	$	109	1	$	2,484,188	$	62,343	14
States and political subdivisions --
general obligations		-		-	-		660,569		5,004	5
States and political subdivisions --
special revenue		-		-	-		248,146		1,618	2
Corporate		3,824,751		44,670	18		15,320,916		796,204	97
Greater than 12 months:
U.S. government obligations		-		-	-		305,055		7,472	3
States and political subdivisions --
general obligations		-		-	-		334,481		1,938	1
States and political subdivisions --
special revenue		-		-	-		25,190		379	1
Corporate		7,633,585		249,994	36		3,166,108		141,074	22
Total fixed maturities	$	11,466,585	$	294,773	55	$	22,544,653	$	1,016,032	145

Based on our review of the securities in an unrealized loss position at June 30, 2016 and December 31, 2015, no other-than-temporary impairments were deemed necessary. Management believes that the Company will fully recover its cost basis in the securities held at June 30, 2016, 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 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.

The amortized cost and estimated fair value of fixed maturities at June 30, 2016, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized		Estimated
	Cost		Fair Value
Due in one year or less	$	-	$	-
Due after one year through five years		2,067,384		2,093,965
Due after five years through ten years		13,563,010		13,513,005
Due after ten years		8,770,284		6,747,696
	$	24,400,678	$	24,354,666

The Company is required to hold assets on deposit for the benefit of policyholders in accordance with statutory rules and regulations. At June 30, 2016 and December 31, 2015, these required deposits had a total amortized cost of $7,701,787 and $6,186,865 and fair values of $7,759,577 and $6,000,376, respectively.

The components of net investment income for the three and six months ended June 30, 2016 and 2015 are as follows:

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Fixed maturities	$	207,495		$	161,652		$	417,151		$	320,615
Equity securities		-			162			5,250			186
Cash and short-term investments		1			1			5			2
Loss for equity method investments		-			(55,711	)		-			(16,650	)
Other		15,627			15,799			27,282			30,416
		223,123			121,903			449,688			334,569
Less investment expenses		(21,345	)		(21,782	)		(34,782	)		(38,824	)
	$	201,778		$	100,121		$	414,906		$	295,745

Proceeds for the three months ended June 30, 2016 and 2015 from sales of investments classified as available-for-sale were $3,897,138 and $2,840,976, respectively. Gross gains of $45,897 and $14,613 and gross losses of $35,026 and $89,156 were realized on those sales during the three months ended June 30, 2016 and 2015, respectively.Proceeds for the six months ended June 30, 2016 and 2015 from sales of investments classified as available-for-sale were $7,516,601 and $7,166,021, respectively. Gross gains of $69,653 and $118,401 and gross losses of $55,897 and $114,696 were realized on those sales during the six months ended June 30, 2016 and 2015, respectively.

As of June 30, 2016, all mortgage loans were sold. The following table summarizes the activity in the mortgage loans on real estate, held for investment account for the periods ended June 30, 2016 and December 31, 2015.

	Six months ended		Year ended
	June 30, 2016		December 31, 2015
Balance at beginning of period	$	-	$	349,386
Proceeds from settlement on mortgage loans on real estate, held for investment		-		(349,386	)
Balance at end of period	$	-	$	-

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Fair Values of Financial Instruments

6 Months Ended

Jun. 30, 2016

Investments, All Other Investments [Abstract]

Fair Values of Financial Instruments

Note 5. Fair Values of Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. We use valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, accounting standards establish a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

● Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
 

● Level 2: Significant other 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.
 

● Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

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/out of the Level 3 category as of the beginning of the period in which the reclassifications occur.

A description of the valuation methodologies used for assets measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Fixed maturities: Fixed maturities are recorded at fair value on a recurring basis utilizing a third-party pricing source. The valuations are reviewed and validated quarterly through random testing by comparisons to separate pricing models or other third party pricing services. For the period ended June 30, 2016, there were no material changes to the valuation methods or assumptions used to determine fair values, and no broker or third party prices were changed from the values received. Securities with prices based on validated quotes from pricing services are reflected within Level 2.

Cost method investments: The cost method investments are comprised of New Mexico Capital Corporation. This security has no active trading and the fair value for this security is not readily determinable. Therefore, this investment has been omitted from the fair value disclosure tables.

Cash: The carrying value of cash and cash equivalents and short-term investments approximate the fair value because of the short maturity of the instruments.

Policy loans: Policy loans are stated at unpaid principal balances. As these loans are fully collateralized by the cash surrender value of the underlying insurance policies, the carrying value of the policy loans approximates their fair value. Policy loans are categorized as Level 3 in the fair value hierarchy.

Deposit-type contracts: The fair value for direct and assumed liabilities under deposit-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 nonperformance risk of the liabilities. Liabilities under deposit-type insurance contracts that are wholly ceded by Capital Reserve to a non-affiliated reinsurer are carried at cash surrender value which approximates fair value. These liabilities are categorized as Level 3 in the fair value hierarchy.

Surplus notes: The fair value for surplus notes is calculated using a discounted cash flow approach. Cash flows are projected utilizing scheduled repayments and discounted to the valuation date using market rates currently available for debt with similar remaining maturities. These notes are structured such that all interest is paid at maturity. In the following fair value tables, the Company has included accrued interest expense, which is recorded in the accounts payable and accrued expenses, of approximately $237,502 and $229,405 in carrying value of the surplus notes as of June 30, 2016 and December 31, 2015, respectively. These liabilities are categorized as Level 3 in the fair value hierarchy.

The following table presents the Company’s fair value hierarchy for those financial instruments measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015.

			Significant
	Quoted		Other		Significant
	In Active		Observable		Unobservable		Estimated
	Markets		Inputs		Inputs		Fair
	(Level 1)		(Level 2)		(Level 3)		Value
June 30, 2016
Fixed maturities:
U.S. government obligations	$	-	$	4,280,798	$	-	$	4,280,798
States and political subdivisions — general obligations		-		734,667		-		734,667
States and political subdivisions — special revenue		-		291,982		-		291,982
Corporate		-		19,047,219		-		19,047,219
Total fixed maturities	$	-	$	24,354,666	$	-	$	24,354,666
December 31, 2015
Fixed maturities:
U.S. government obligations	$	-	$	3,193,499	$	-	$	3,193,499
States and political subdivisions — general obligations		-		995,051		-		995,051
States and political subdivisions — special revenue		-		273,336		-		273,336
Corporate		-		18,809,391		-		18,809,391
	$	-	$	23,271,277	$	-	$	23,271,277

There were no transfers of financial instruments between any levels during the six months ended June 30, 2016 or during the year ended December 31, 2015.

Accounting standards require disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring basis are discussed above. There were no financial assets or financial liabilities measured at fair value on a non-recurring basis. Equity securities carried at cost are privately purchased common stocks. These common stocks are recorded using the cost basis of accounting. These securities have no active trading and the fair value for these securities is not readily determinable. The Company does not control these entities economically, and therefore does not consolidate these entities.

The following disclosure contains the carrying values, estimated fair values and their corresponding placement in the fair value hierarchy, for financial assets and financial liabilities as of June 30, 2016 and December 31, 2015, respectively:

	June 30, 2016
			Fair Value Measurements at Date Using
			Quoted Prices in
			Active Markets
			for Identical		Significant Other		Significant
			Assets and		Observable		Unobservable
	Carrying		Liabilities		Inputs		Inputs		Fair
	Amount		(Level 1)		(Level 2)		(Level 3)		Value
Assets:
Policy loans	$	393,492	$	-	$	-	$	393,492	$	393,492
Cash and cash equivalents		3,214,086		3,214,086		-		-		3,214,086
Liabilities:
Policyholder deposits
(Deposit-type contracts)		15,165,556		-		-		15,165,556		15,165,556
Surplus notes and accrued interest payable		795,599		-		-		791,798		791,798
	December 31, 2015
			Fair Value Measurements at Date Using
			Quoted Prices in
			Active Markets
			for Identical Assets and		Significant Other		Significant
					Observable		Unobservable
	Carrying		Liabilities		Inputs		Inputs		Fair
	Amount		(Level 1)		(Level 2)		(Level 3)		Value
Assets:
Policy loans	$	420,775	$	-	$	-	$	420,775	$	420,775
Cash and cash equivalents		1,192,336		1,192,336		-		-		1,192,336
Liabilities:
Policyholder deposits
(Deposit-type contracts)		13,897,421		-		-		13,897,421		13,897,421
Surplus notes and accrued interest payable		779,405		-		-		768,022		768,022

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Income Tax Matters

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Tax Matters

Note 6. Income Tax Matters

Significant components of the Company’s deferred tax assets and liabilities as of June 30, 2016 and December 31, 2015 are as follows:

	June 30, 2016			December 31, 2015
Deferred tax assets:
Loss carry forwards	$	9,563,021		$	8,962,587
Capitalized costs		628,768			667,264
Unrealized losses on investments		10,367			356,495
Benefit reserves		1,022,824			1,071,997
Total deferred tax assets		11,224,980			11,058,343
Less valuation allowance		(9,471,333	)		(9,287,024	)
Total deferred tax assets, net of valuation allowance		1,753,647			1,771,319
Deferred tax liabilities:
Policy acquisition costs		634,200			593,654
Due premiums		234,432			234,468
Value of business acquired		645,315			693,297
Intangible assets		238,000			238,000
Property and equipment		1,700			11,900
Total deferred tax liabilities		1,753,647			1,771,319
Net deferred tax assets	$	-		$	-

At June 30, 2016 and December 31, 2015, the Company recorded a valuation allowance of $9,471,333 and $9,287,024, respectively, on the deferred tax assets to reduce the total to an amount that management believes will ultimately be realized. Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income.

Loss carryforwards for tax purposes as of June 30, 2016, have expiration dates that range from 2024 through 2035.

There was no income tax expense for the three or six months ended June 30, 2016 and 2015. This differed from the amounts computed by applying the statutory U.S. federal income tax rate of 34% to pretax income, as a result of the following:

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Computed expected income tax benefit	$	(312,825	)	$	(279,849	)	$	(574,258	)	$	(545,090	)
Increase (reduction) in income taxes resulting from:
Meals, entertainment and political contributions		9,598			12,862			18,755			16,534
Dividends received deduction		-			(38	)		-			(44	)
Other		56,760			193,054			25,066			259,220
		66,358			205,878			43,821			275,710
Tax benefit before valuation allowance		(246,467	)		(73,971	)		(530,437	)		(269,380	)
Change in valuation allowance		246,467			73,971			530,437			269,380
Net income tax expense	$	-		$	-		$	-		$	-

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Reinsurance

6 Months Ended

Jun. 30, 2016

Reinsurance Disclosures [Abstract]

Reinsurance

Note 7. Reinsurance

A summary of significant reinsurance amounts affecting the accompanying consolidated financial statements as of June 30, 2016 and December 31, 2015 and for the three and six months ended June 30, 2016 and 2015 is as follows:

	June 30, 2016		December 31, 2015
Balance sheets:
Benefit and claim reserves assumed	$	2,695,539	$	2,763,779
Benefit and claim reserves ceded		11,859,279		12,212,656

	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015
Statements of comprehensive income:
Premiums assumed	$	5,466	$	6,417	$	12,231	$	13,668
Premiums ceded		84,117		75,748		150,274		157,370
Benefits assumed		25,135		47,370		30,158		51,959
Benefits ceded		216,531		273,537		571,656		532,493
Commissions assumed		9		6		17		10
Commissions ceded		650		900		1,288		1,854

The following table provides a summary of the significant reinsurance balances recoverable on paid and unpaid policy claims by reinsurer along with the A.M. Best credit rating as of June 30, 2016:

						Recoverable on				Total Amount
		Recoverable		Recoverable		Benefit		Ceded		Recoverable
	AM Best	on Paid		on Unpaid		Reserves/Deposit-		Due		from
Reinsurer	Rating	Losses		Losses		type Contracts		Premiums		Reinsurer
Optimum Re Insurance Company	A-	$	-	$	30,450	$	189,504	$	-	$	219,954
Sagicor Life Insurance Company	A-		-		281,272		11,597,158		239,105		11,639,325
		$	-	$	311,722	$	11,786,662	$	239,105	$	11,859,279

During 1999, Old Reliance entered into a 75% coinsurance agreement with Sagicor Life (Sagicor) whereby 75% of the business written by Old Reliance is ceded to Sagicor. During 2000, Old Reliance coinsured the remaining 25% with Sagicor. At June 30, 2016 and December 31, 2015 total benefit reserves, policy claims, deposit-type contracts, and due premiums ceded by Old Reliance to Sagicor were $11,639,325 and $11,873,254, respectively. Old Reliance remains contingently liable on this ceded reinsurance should Sagicor be unable to meet their obligations.

The use of reinsurance does not relieve the Company of its primary liability to pay the full amount of the insurance benefit in the event of the failure of a reinsurer to honor its contractual obligation. No reinsurer of business ceded by the Company has failed to pay policy claims (individually or in the aggregate) with respect to our ceded business.

The Company monitors several factors that it considers relevant to satisfy itself as to the ongoing ability of a reinsurer to meet all obligations of the reinsurance agreements. These factors include the credit rating of the reinsurer, the financial strength of the reinsurer, significant changes or events of the reinsurer, and any other relevant factors. If the Company believes that any reinsurer would not be able to satisfy its obligations with the Company, a separate contingency reserve may be established. At June 30, 2016 and December 31, 2015, no contingency reserve was established.

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Deposit-Type Contracts

6 Months Ended

Jun. 30, 2016

Separate Accounts Disclosure [Abstract]

Deposit-Type Contracts

Note 8. Deposit-Type Contracts

The Company’s deposit-type contracts represent the contract value that has accrued to the benefit of the policyholder as of the balance sheet date. Liabilities for these deposit-type contracts are included without reduction for potential surrender charges. This liability is equal to the accumulated account deposits, plus interest credited, and less policyholder withdrawals. The following table provides information about deposit-type contracts for the six months ended June 30, 2016 and year ended December 31, 2015:

	Six Months Ended			Year Ended
	June 30, 2016			December 31, 2015
Beginning balance	$	13,897,421		$	10,722,227
First Wyoming Life beginning balance		-			799,990
Change in deposit-type contracts assumed from SNL		-			(1,200	)
Deposits received		1,339,406			2,387,104
Investment earnings		352,989			533,646
Withdrawals		(421,203	)		(533,762	)
Contract Charges		(3,057	)		(10,584	)
Ending Balance	$	15,165,556		$	13,897,421

Under the terms of American Life’s coinsurance agreement with SNL, American Life assumes certain deposit-type contract obligations, as shown in the table above. The remaining deposits, withdrawals and interest credited represent those for American Life’s direct business.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 9. Commitments and Contingencies

Legal Proceedings: We are involved in litigation incidental to our operations from time to time. We are not presently a party to any legal proceedings other than litigation arising in the ordinary course of our business, and we are not aware of any claims that could materially affect our financial position or results of operations.

Regulatory Matters: State and federal regulatory bodies regularly make inquiries and conduct examinations or investigations concerning the Company’s compliance with laws in relation to, but not limited to, insurance and securities. The issues involved in information requests and regulatory matters vary widely. The Company cooperates in these inquiries.

Office Lease: The Company leases office space in Lincoln, Nebraska under an agreement executed October 17, 2013 that expires on January 31, 2024. Great Plains entered into a lease on October 4, 2013 for office space in Mitchell, South Dakota, which expires on November 30, 2016. First Wyoming leases space in Cheynne, Wyoming, which expires on August 31, 2016. Rent expense for the three months ended June 30, 2016 and 2015 was $99,833 and $55,377 respectively. Rent expense for the six months ended June 30, 2016 and 2015 was $173,043 and $111,752 respectively. Future minimum payments rental are as follows:

2016	$	92,292
2017		149,481
2018		136,557
2019		141,412
2020		146,477
Later years		483,333
Total	$	1,149,552

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Statutory Net Income and Surplus

6 Months Ended

Jun. 30, 2016

Statutory Net Income and Surplus [Abstract]

Statutory Net Income and Surplus

Note 10. Statutory Net Income and Surplus

American Life is required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the Arizona Department of Insurance. Likewise, Capital Reserve, Great Plains Life, and First Wyoming Life are required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the Missouri, South Dakota, and Wyoming Departments of Insurance, respectively Statutory practices primarily differ from GAAP by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions as well as valuing investments and certain assets and accounting for deferred taxes on a different basis. The following table summarizes the statutory net loss and statutory capital and surplus of American Life, Capital Reserve, and Great Plains Life, and First Wyoming Life as of June 30, 2016 and December 31, 2015 and for the six months ended June 30, 2016 and 2015.

	Statutory Capital and Surplus as of
	June 30, 2016			December 31, 2015
American Life	$	1,938,747		$	2,526,392
Capital Reserve		1,381,445			1,464,044
Great Plains Life		1,582,416			1,663,368
First Wyoming Life		2,625,322			2,715,494
	Statutory Net Income (Loss) for the six months ended June 30,
	2016			2015
American Life	$	(397,388	)	$	(697,981	)
Capital Reserve		(80,322	)		(25,490	)
Great Plains Life		(71,036	)		(261,506	)
First Wyoming Life		(223,940	)		(165,211	)

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Surplus Notes

6 Months Ended

Jun. 30, 2016

Surplus Notes [Abstract]

Surplus Notes

Note 11. Surplus Notes

The following provides a summary of the Company’s surplus notes along with issue dates, maturity dates, face amounts, and interest rates as of June 30, 2016:

Creditor	Issue Date	Maturity Date	Face Amount		Interest Rate
David G. Elmore	September 1, 2006	September 1, 2016	$	250,000	7%
David G. Elmore	August 4, 2011	August 1, 2016		300,000	5%

Any payments and/or repayments must be approved by the Nebraska Department of Insurance. As of June 30, 2016, the Company has accrued $245,599 of interest expense under accounts payable and accrued expenses on the consolidated balance sheet. No payments were made in the six months ending June 30, 2016, or during the year ended December 31, 2015. The surplus note for $300,000 matured on August 1, 2016. Due to the nature of surplus notes, a repayment cannot be made without the prior approval of the Nebraska regulators.

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Related Party Transactions

6 Months Ended

Jun. 30, 2016

Related Party Transactions [Abstract]

Related Party Transactions

Note 12. Related Party Transactions

The Company commenced its third party administrative (“TPA”) services in 2012 as an additional revenue source. These agreements, for various levels of administrative services on behalf of each customer, generate fee income for the Company. Services provided to each customer vary based on their needs and can include some or all aspects of back-office accounting and policy administration. We have been able to perform our TPA services using our existing in-house resources. Fees earned during the three months ended June 30, 2016 and 2015 were $13,500 and $40,608, respectively. Fees earned during the six months ended June 30, 2016 and 2015 were $28,000 and $95,594, respectively.

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Subsequent Events

6 Months Ended

Jun. 30, 2016

Subsequent Events [Abstract]

Subsequent Events

Note 13. Subsequent Events

All of the effects of subsequent events that provide additional evidence about conditions that existed at June 30, 2016, including the estimates inherent in the process of preparing consolidated financial statements, are recognized in the consolidated financial statements. The Company does not recognize subsequent events that provide evidence about conditions that did not exist at the date of the consolidated financial statements but arose after, but before the consolidated financial statements were available to be issued. In some cases, non-recognized subsequent events are disclosed to keep the consolidated financial statements from being misleading.

The Company has evaluated subsequent events through the date that the consolidated financial statements were issued and found no events to report.

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Nature of Operations and Summary of Significant Accounting Policies (Policy)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Basis of presentation

Basis of presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with United States of America generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions from the Securities and Exchange Commission (“SEC”) Quarterly Report on Form 10-Q, including Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Therefore, the information contained in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2105 (“2015 Form 10-K”), should be read in connection with the reading of these interim unaudited consolidated financial statements.

In the opinion of management, these statements include all normal recurring adjustments necessary for a fair presentation of the Company’s results. Operating results for the six month period ended June 30, 2016, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016. All material inter-company accounts and transactions have been eliminated in consolidation.

Investments

Investments: All fixed maturities and a portion of the equity securities owned by the Company are considered available-for-sale and are included in the consolidated financial statements at their fair value as of the financial statement date. Bond premiums and discounts are amortized using the scientific-yield method (calculated by multiplying the adjusted basis by the yield at issuance and then subtracting the coupon interest) over the term of the bonds. Realized gains and losses on securities sold during the year are determined by the specific security sold. Unrealized holding gains and losses, net of applicable income taxes, are included in comprehensive loss.

Declines in the fair value of available for sale securities below their amortized cost are evaluated to assess whether any other-than-temporary impairment loss should be recorded. In determining if these losses are expected to be other-than-temporary, we consider severity of impairment, duration of impairment, forecasted recovery period, industry outlook, financial condition of the issuer, issuer credit ratings and the intent and ability of us to hold the investment until the recovery of the cost.

The recognition of other-than-temporary impairment losses on debt securities is dependent on the facts and circumstances related to the specific security. If the Company intends to sell a security or it is more likely than not that the Company would be required to sell a security prior to recovery of the amortized cost, the difference between amortized cost and fair value is recognized in the statement of comprehensive income as an other-than-temporary impairment. If the Company does not expect to recover the amortized basis, does not plan to sell the security and if it is not more likely than not that the Company would be required to sell a security before the recovery of its amortized cost, the recognition of the other-than-temporary impairment is bifurcated. The Company recognizes the credit loss portion in the income statement and the noncredit loss portion in accumulated other comprehensive loss. The credit component of the other-than-temporary impairment is determined by comparing the net present value of projected cash flows with the amortized cost basis of the debt security. The net present value is calculated by discounting the Company’s best estimate of projected future cash flows at the effective interest rate implicit in the fixed income security at the date of acquisition. Cash flow estimates are driven by assumptions regarding probability of default, including changes in credit ratings, and estimates regarding timing and amount of recoveries associated with a default. No other-than-temporary impairments were recognized during the six months ended June 30, 2016 or 2015.

Investment income consists of interest, dividends, gains and losses from equity method investments, and real estate income, which are recognized on an accrual basis and amortization of premiums and discounts.

Included within the Company’s equity securities are certain privately purchased common stocks. These investments are recorded using the cost basis method of accounting. These securities do not have a readily determinable fair value. The Company does not control these entities economically, and therefore does not consolidate these entities in its financial statements.

Policy loans

Policy loans: 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. No valuation allowance is established for these policy loans as the amount of the loan is fully secured by the death benefit of the policy and cash surrender value.

Real estate, held for investment

Real estate, held for investment: Real estate, held for investment is comprised of ten condominiums in Hawaii. Real estate is carried at depreciated cost. Depreciation on residential real estate is computed on a straight-line basis over 50 years.

Cash and cash equivalents

Cash and cash equivalents: The Company considers all liquid investments with original maturities of three months or less when purchased to be cash equivalents. At June 30, 2016 and December 31, 2015, the Company had no cash equivalents. The Company has cash on deposit with financial institutions which at times may exceed the Federal Deposit Insurance Corporation insurance limits. The Company has not suffered any losses in the past and does not believe it is exposed to any significant credit risk in these balances.

Deferred acquisition costs

Deferred acquisition costs: Deferred acquisition costs consist of incremental direct costs, net of amounts ceded to reinsurers, that result directly from and are essential to the contract acquisition transaction and would not have been incurred by the Company had the contract acquisition not occurred. These costs are capitalized, to the extent recoverable, and amortized over the life of the premiums produced. The Company evaluates the types of acquisition costs it capitalizes. The Company capitalizes agent compensation and benefits and other expenses that are directly related to the successful acquisition of contracts. The Company also capitalizes expenses directly related to activities performed by the Company, such as underwriting, policy issuance, and processing fees incurred in connection with successful contract acquisitions.

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. The Company performs a recoverability analysis annually in the fourth quarter of its fiscal year unless events occur which require an immediate review. The Company determined during its December 31, 2015 analysis that all deferred acquisition costs were recoverable.

The following table provides information about deferred acquisition costs for the periods ended June 30, 2016 and December 31, 2015, respectively.

	Six Months Ended			Year Ended
	June 30,			December 31,
	2016			2015
Balance at beginning of period	$	2,765,063		$	2,646,970
Capitalization of commissions, sales and issue expenses		66,951			552,466
Change in DAC due to unrealized investment (gains) losses		(34,360	)		35,301
Gross amortization		(147,727	)		(469,674	)
Balance at end of period	$	2,649,927		$	2,765,063

Value of business acquired

Value of business acquired: Value of business acquired represents the estimated value assigned to purchased companies or insurance in force of the assumed policy obligations at the date of acquisition of a block of policies. American Life purchased Capital Reserve during 2010, resulting in an initial capitalized asset for value of business acquired of $116,326. Additionally, the Company paid an upfront ceding commission of $375,000 to Security National Life (“SNL”) in respect of the purchase of Capital Reserve. An initial asset was established for the value of this business acquired totaling $348,010, representing primarily the ceding commission. The agreement has an automatic renewal provision unless the Company notifies SNL of its intention not to renew, no less than 180 days prior to the expiration of the then current agreement. Each automatic renewal period is for one year. This reinsurance remains in place. The remaining capitalized and SNL asset balances at June 30, 2016, of $43,622 and $130,504, respectively, will be included in the accounting for the anticipated sale of Capital Reserve in the second half of 2016. Midwest acquired Great Plains Financial in 2014 and established an asset for value of business acquired of $1,288,207. Midwest acquired First Wyoming Capital during 2015 and established an asset for value of business acquired of $506,600. These assets are being amortized on a straight-line basis, which approximates the earnings pattern of the related policies, over ten years. The accounting for the First Wyoming acquisition is still preliminary and is expected to be final in the third quarter of 2016. The Company recognized amortization expense of $56,478 and $43,814 for the three months ended June 30, 2016 and 2015, respectively relative to these transactions. The Company recognized amortization expense of $112,957 and $87,627 for the six months ended June 30, 2016 and 2015, respectively related to these transactions.

Additionally, American Life purchased Old Reliance in August 2011, resulting in an initial capitalized asset for value of business acquired of $824,485. This asset is being amortized over the life of the related policies (refer to “revenue recognition and related expenses” discussed later regarding amortization methods). Amortization recognized during the three months ended June 30, 2016 totaled $13,135 and the accretion recognized during the three months ended June 30, 2015 totaled $653. Amortization recognized during the six months ended June 30, 2016 and 2015 totaled $28,166 and $99, respectively.

Recoverability of value of business acquired 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. If this current estimate is less than the existing balance, the difference is charged to expense. Management has determined that no events occurred in the six months ended June 30, 2016 that suggest a review should be undertaken.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets: Goodwill represents the excess of the amounts paid to acquire subsidiaries and other businesses over the fair value of their net assets at the date of acquisition. Goodwill is tested for impairment at least annually in the fourth quarter or more frequently if events or circumstances change that would indicate that a triggering event has occurred. Management has determined that no events occurred in the six months ended June 30, 2016 that suggest a review should be undertaken.

The Company assesses the recoverability of indefinite-lived intangible assets at least annually or whenever events or circumstances suggest that the carrying value of an identifiable indefinite-lived intangible asset may exceed the sum of the future discounted cash flows expected to result from its use and eventual disposition. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. Management has determined that no events occurred in the six months ended June 30, 2016 that suggest a review should be undertaken.

Property and equipment

Property and equipment: Property and equipment are stated at cost net of accumulated depreciation. Annual depreciation is primarily computed using straight-line methods for financial reporting and straight-line and accelerated methods for tax purposes. Furniture and equipment is depreciated over 3 to 7 years and computer software and equipment is generally depreciated over 3 years. Depreciation expense totaled $25,601 and $40,342 for the three months ended June 30, 2016 and 2015, respectively. Depreciation expense totaled $61,091 and 82,834 for the six months ended June 30, 2016 and 2015, respectively. Accumulated depreciation totaled $925,617 and $864,526 as of June 30, 2016 and December 31, 2015, respectively.

Maintenance and repairs are expensed as incurred. Replacements and improvements which extend the useful life of the asset are capitalized. The net book value of assets sold or retired are removed from the accounts, and any resulting gain or loss is reflected in earnings.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized if the carrying amount of an asset may not be recoverable and exceeds estimated future undiscounted cash flows of the asset. A recognized impairment loss reduces the carrying amount of the asset to its fair value. Management has determined that no such events occurred in the six months ended June 30, 2016 that would indicate the carrying amounts may not be recoverable.

Reinsurance

Reinsurance: In the normal course of business, the Company seeks to limit any single exposure to losses on large risks by purchasing reinsurance. The amounts reported in the consolidated balance sheets as reinsurance recoverable include amounts billed to reinsurers on losses paid as well as estimates of amounts expected to be recovered from reinsurers on insurance liabilities that have not yet been paid. Reinsurance recoverable on unpaid losses are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Insurance liabilities are reported gross of reinsurance recoverable. Management believes the recoverables are appropriately established. The Company generally strives to diversify its credit risks related to reinsurance ceded. Reinsurance premiums are generally reflected in income in a manner consistent with the recognition of premiums on the reinsured contracts. Reinsurance does not extinguish the Company’s primary liability under the policies written. Therefore, the Company regularly evaluates the financial condition of its reinsurers including their activities with respect to claim settlement practices and commutations, and establishes allowances for uncollectible reinsurance recoverable as appropriate. There were no allowances as of June 30, 2016 or December 31, 2015.

Benefit reserves

Benefit reserves: The Company establishes liabilities for amounts payable under insurance policies, including traditional life insurance and annuities. Generally, amounts are payable over an extended period of time. Liabilities for future policy benefits of traditional life insurance have been computed by a net level premium method based upon estimates at the time of issue for investment yields, mortality and withdrawals. These estimates include provisions for experience less favorable than initially expected. Mortality assumptions are based on industry experience expressed as a percentage of standard mortality tables.

Policy claims

Policy claims: Policy claims are based on reported claims plus estimated incurred but not reported claims developed from trends of historical data applied to current exposure.

Deposit-type contracts

Deposit-type contracts: Deposit-type contracts consist of amounts on deposit associated with deferred annuity riders, premium deposit funds and supplemental contracts without life contingencies.

Income taxes

Income taxes: The Company is subject to income taxes in the U.S. federal and various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state or local tax examinations by tax authorities for the years before 2010. The provision for income taxes is based on income as reported in the financial statements. The income tax provision is calculated under the asset and liability method. Deferred tax assets are recorded based on the differences between the financial statement and tax basis of assets and liabilities at the enacted tax rates. The principal assets and liabilities giving rise to such differences are investments, insurance reserves, and deferred acquisition costs. A deferred tax asset valuation allowance is established when there is uncertainty that such assets would be realized. The Company has no uncertain tax positions that it believes are more-likely-than not that the benefit will not to be realized. When applicable, the Company recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense. The Company had no accruals for payments of interest and penalties at June 30, 2016 and December 31, 2015.

Revenue recognition and related expenses

Revenue recognition and related expenses: Revenues on traditional life insurance products consist of direct and assumed premiums reported as earned when due.

Amounts received as payment for annuities and/or non-traditional contracts such as interest sensitive whole life contracts, single payment endowment contracts, single payment juvenile contracts and other contracts without life contingencies are recognized as deposits to policyholder account balances and included in future insurance policy benefits. Revenues from these contracts are comprised of fees earned for administrative and contract-holder services and cost of insurance, which are recognized over the period of the contracts, and included in revenue. Deposits are shown as a financing activity in the Consolidated Statements of Cash Flows.

Amounts received under our multi-benefit policy form are allocated to the life insurance portion of the multi-benefit life insurance arrangement and the annuity portion based upon the signed policy.

Liabilities for future policy benefits are provided and acquisition costs are amortized by associating benefits and expenses with earned premiums to recognize related profits over the life of the contracts. Acquisition costs are amortized over the premium paying period using the net level premium method. Traditional life insurance products are treated as long duration contracts, which generally remain in force for the lifetime of the insured.

Comprehensive loss

Comprehensive loss: Comprehensive loss is comprised of net loss and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses from marketable securities classified as available-for-sale, net of applicable taxes.

Common and preferred stock and earnings (loss) per share

Common and preferred stock and earnings (loss) per share: The par value per common share is $0.001 with 100,000,000 shares authorized and 20,000,000 preferred shares authorized. At June 30, 2016 and December 31, 2015, the Company had 22,558,956 and 18,006,301 common shares issued and outstanding, respectively.

At June 30, 2016 and December 31, 2015, the Company had 1,179 warrants outstanding. The warrants are exercisable through December 31, 2016 for 10 shares of voting common stock at an exercise price of $6.50 per share.

The Class A preferred shares are non-cumulative, non-voting and convertible by the holder to voting common shares after May 2015, at a rate of 1.3 common shares for each preferred share (subject to customary anti-dilution adjustments). There is no stated dividend rate on the Class A shares, but the holders of Class A shares will receive a dividend on each outstanding share of Class A preferred stock in an amount equal to the amount of the dividend payable on each share of common stock. The par value per preferred Class A share is $0.001 with 2,000,000 shares authorized. At June 30, 2016 and December 31, 2015, the Company had 74,159 Class A preferred shares issued and outstanding.

The Class B preferred shares are non-cumulative, non-voting and convertible by the holder to voting common shares after May 1, 2017 at a rate of 2.0 common shares for each preferred share. The Company may only affect a conversion through a deemed liquidation or initial public offering. The par value per preferred Class B share is $0.001 with 1,000,000 shares authorized. The stated dividend rate on the Class B preferred shares is 7%. Dividends of $21,560 and $56,057 were paid as of June 30, 2016 and December 31, 2015 respectively. At June 30, 2016, and December 31, 2015, the Company had 102,669 Class B preferred shares issued and outstanding.

Earnings (loss) per share attributable to the Company’s common stockholders were computed based on the weighted average number of shares outstanding during each period. The weighted average number of shares outstanding during the three months ended June 30, 2016 and 2015 were 22,558,956 and 13,212,653 shares, respectively. The weighted average number of shares outstanding during the six months ended June 30, 2016 and 2015 were 20,682,546 and 13,195,416 shares, respectively.

Risks and uncertainties

Risk and uncertainties: Certain risks and uncertainties are inherent in our day-to-day operations and in the process of preparing our consolidated financial statements. The more significant of those risks and uncertainties, as well as the Company’s method for mitigating the risks, can be referenced in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2105 (“2015 Form 10-K”), and should be read in connection with the reading of these interim unaudited consolidated financial statements.

New accounting standards

New accounting standards: In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326). Under the new guidance, this replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to perform credit loss estimates. This update changes the methodology from an incurred loss to an expected credit loss. An allowance for the expected credit loss will be set up and the net income will be impacted. The credit losses will be evaluated in the current period and an adjustment to the allowance can be made. The new standard becomes effective after December 15, 2019. We are currently evaluating the impact of our pending adoption of the new standard on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-07, Investments – Equity Method and Joint Ventures (Topic323). Under the new guidance, when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, requires that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The new standard becomes effective December 15, 2016. Early adoption of this update is permitted and we will adopt this Update should an investment change from the cost method to the equity method due to a change in ownership or degree of influence.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently evaluating the impact of our pending adoption of the new standard on our consolidated financial statements.

In January 2016, the FASB issued ASU 2016-1, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This guidance changes how entities account for equity investments that do not result in consolidation and are not accounted for under the equity method of accounting. Entities will be required to measure these investments at fair value at the end of each reporting period and recognize changes in fair value in net income. A practicability exception will be available for equity investments that do not have readily determinable fair values; however; the exception requires the Company to adjust the carrying amount for impairment and observable price changes in orderly transactions for the identical or a similar investment of the same issuer. This guidance also changes certain disclosure requirements and other aspects of current GAAP. This guidance is effective for fiscal years beginning after December 15, 2017, and is applicable to the Company in fiscal 2018. The Company is currently evaluating the impact of the adoption of ASU 2016-01 on its consolidated financial statements.

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Nature of Operations and Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Schedule of Deferred Policy Acquisition Costs

	Six Months Ended			Year Ended
	June 30,			December 31,
	2016			2015
Balance at beginning of period	$	2,765,063		$	2,646,970
Capitalization of commissions, sales and issue expenses		66,951			552,466
Change in DAC due to unrealized investment (gains) losses		(34,360	)		35,301
Gross amortization		(147,727	)		(469,674	)
Balance at end of period	$	2,649,927		$	2,765,063

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Acquisitions (Tables)

6 Months Ended

Jun. 30, 2016

Business Combinations [Abstract]

Schedule of Pro Forma Information

	Three months ended			Six months ended
	June 30, 2015			June 30, 2015
	(unaudited)			(unaudited)
Premiums	$	1,101,124		$	2,094,691
Investment income		99,727			361,485
Miscellaneous income		5,872			34,750
Total income	$	1,206,723		$	2,490,926
Net loss	$	(1,017,758	)	$	(2,018,728	)

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Investments (Tables)

6 Months Ended

Jun. 30, 2016

Marketable Securities [Abstract]

Schedule of Available for Sale Investments

	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
June 30, 2016:
Fixed maturities:
U.S. government obligations	$	4,206,158	$	74,749	$	109	$	4,280,798
States and political subdivisions -- general obligations		721,784	$	12,883		-		734,667
States and political subdivisions -- special revenue		275,307	$	16,675		-		291,982
Corporate		19,197,429	$	144,454		294,664		19,047,219
Total fixed maturities	$	24,400,678	$	248,761	$	294,773	$	24,354,666
December 31, 2015:
Fixed maturities:
U.S. government obligations	$	3,256,704	$	6,610	$	69,815	$	3,193,499
States and political subdivisions -- general obligations		1,001,993		-		6,942		995,051
States and political subdivisions -- special revenue		275,333		-		1,997		273,336
Corporate		19,745,201		1,468		937,278		18,809,391
Total fixed maturities	$	24,279,231	$	8,078	$	1,016,032	$	23,271,277

Schedule of Amortized Cost, Fair Value, Credit Rating

	Amortized		Estimated
	Cost		Fair Value		Credit Rating
June 30, 2016:
Fixed maturities:
States and political subdivisions -- general obligations
Bellingham Wash	$	111,501	$	116,242	AA+
Longview Washington Refunding		164,760		168,273	NR
Memphis Tenn		110,369		114,872	AA
Maricopa County Arizona School District No. 31		335,154		335,280	AA
States and political subdivisions -- special revenue
Philadelphia PA Auth For Indl Dev City Svc Agreem		149,385		155,741	AA
Riviera Beach FLA Pub Impt Rev		100,407		110,485	AA
Total	$	971,576	$	1,000,893

Schedule of Unrealized Loss of Securities

	June 30, 2016					December 31, 2015
			Gross		Number			Gross		Number
	Estimated		Unrealized		of	Estimated		Unrealized		of
	Fair Value		Loss		Securities	Fair Value		Loss		Securities
Fixed Maturities:
Less than 12 months:
U.S. government obligations	$	8,299	$	109	1	$	2,484,188	$	62,343	14
States and political subdivisions --
general obligations		-		-	-		660,569		5,004	5
States and political subdivisions --
special revenue		-		-	-		248,146		1,618	2
Corporate		3,824,751		44,670	18		15,320,916		796,204	97
Greater than 12 months:
U.S. government obligations		-		-	-		305,055		7,472	3
States and political subdivisions --
general obligations		-		-	-		334,481		1,938	1
States and political subdivisions --
special revenue		-		-	-		25,190		379	1
Corporate		7,633,585		249,994	36		3,166,108		141,074	22
Total fixed maturities	$	11,466,585	$	294,773	55	$	22,544,653	$	1,016,032	145

Schedule of Fixed Maturities

	Amortized		Estimated
	Cost		Fair Value
Due in one year or less	$	-	$	-
Due after one year through five years		2,067,384		2,093,965
Due after five years through ten years		13,563,010		13,513,005
Due after ten years		8,770,284		6,747,696
	$	24,400,678	$	24,354,666

Components of Net Investment Income

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Fixed maturities	$	207,495		$	161,652		$	417,151		$	320,615
Equity securities		-			162			5,250			186
Cash and short-term investments		1			1			5			2
Loss for equity method investments		-			(55,711	)		-			(16,650	)
Other		15,627			15,799			27,282			30,416
		223,123			121,903			449,688			334,569
Less investment expenses		(21,345	)		(21,782	)		(34,782	)		(38,824	)
	$	201,778		$	100,121		$	414,906		$	295,745

Schedule of Mortgage Loan Activity

	Six months ended		Year ended
	June 30, 2016		December 31, 2015
Balance at beginning of period	$	-	$	349,386
Proceeds from settlement on mortgage loans on real estate, held for investment		-		(349,386	)
Balance at end of period	$	-	$	-

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Fair Values of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2016

Investments, All Other Investments [Abstract]

Schedule of Financial Instruments at Fair Value Measured on a Recurring Basis

			Significant
	Quoted		Other		Significant
	In Active		Observable		Unobservable		Estimated
	Markets		Inputs		Inputs		Fair
	(Level 1)		(Level 2)		(Level 3)		Value
June 30, 2016
Fixed maturities:
U.S. government obligations	$	-	$	4,280,798	$	-	$	4,280,798
States and political subdivisions — general obligations		-		734,667		-		734,667
States and political subdivisions — special revenue		-		291,982		-		291,982
Corporate		-		19,047,219		-		19,047,219
Total fixed maturities	$	-	$	24,354,666	$	-	$	24,354,666
December 31, 2015
Fixed maturities:
U.S. government obligations	$	-	$	3,193,499	$	-	$	3,193,499
States and political subdivisions — general obligations		-		995,051		-		995,051
States and political subdivisions — special revenue		-		273,336		-		273,336
Corporate		-		18,809,391		-		18,809,391
	$	-	$	23,271,277	$	-	$	23,271,277

Schedule of Financial Assets and Liabilities at Fair Value

	June 30, 2016
			Fair Value Measurements at Date Using
			Quoted Prices in
			Active Markets
			for Identical		Significant Other		Significant
			Assets and		Observable		Unobservable
	Carrying		Liabilities		Inputs		Inputs		Fair
	Amount		(Level 1)		(Level 2)		(Level 3)		Value
Assets:
Policy loans	$	393,492	$	-	$	-	$	393,492	$	393,492
Cash and cash equivalents		3,214,086		3,214,086		-		-		3,214,086
Liabilities:
Policyholder deposits
(Deposit-type contracts)		15,165,556		-		-		15,165,556		15,165,556
Surplus notes and accrued interest payable		795,599		-		-		791,798		791,798
	December 31, 2015
			Fair Value Measurements at Date Using
			Quoted Prices in
			Active Markets
			for Identical Assets and		Significant Other		Significant
					Observable		Unobservable
	Carrying		Liabilities		Inputs		Inputs		Fair
	Amount		(Level 1)		(Level 2)		(Level 3)		Value
Assets:
Policy loans	$	420,775	$	-	$	-	$	420,775	$	420,775
Cash and cash equivalents		1,192,336		1,192,336		-		-		1,192,336
Liabilities:
Policyholder deposits
(Deposit-type contracts)		13,897,421		-		-		13,897,421		13,897,421
Surplus notes and accrued interest payable		779,405		-		-		768,022		768,022

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Income Tax Matters (Tables)

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Schedule of Deferred Tax Assets and Liabilities

	June 30, 2016			December 31, 2015
Deferred tax assets:
Loss carry forwards	$	9,563,021		$	8,962,587
Capitalized costs		628,768			667,264
Unrealized losses on investments		10,367			356,495
Benefit reserves		1,022,824			1,071,997
Total deferred tax assets		11,224,980			11,058,343
Less valuation allowance		(9,471,333	)		(9,287,024	)
Total deferred tax assets, net of valuation allowance		1,753,647			1,771,319
Deferred tax liabilities:
Policy acquisition costs		634,200			593,654
Due premiums		234,432			234,468
Value of business acquired		645,315			693,297
Intangible assets		238,000			238,000
Property and equipment		1,700			11,900
Total deferred tax liabilities		1,753,647			1,771,319
Net deferred tax assets	$	-		$	-

Schedule of Effective Tax Rate Reconciliation

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Computed expected income tax benefit	$	(312,825	)	$	(279,849	)	$	(574,258	)	$	(545,090	)
Increase (reduction) in income taxes resulting from:
Meals, entertainment and political contributions		9,598			12,862			18,755			16,534
Dividends received deduction		-			(38	)		-			(44	)
Other		56,760			193,054			25,066			259,220
		66,358			205,878			43,821			275,710
Tax benefit before valuation allowance		(246,467	)		(73,971	)		(530,437	)		(269,380	)
Change in valuation allowance		246,467			73,971			530,437			269,380
Net income tax expense	$	-		$	-		$	-		$	-

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Reinsurance (Tables)

6 Months Ended

Jun. 30, 2016

Reinsurance Disclosures [Abstract]

Summary of Significant Reinsurance Amounts

	June 30, 2016		December 31, 2015
Balance sheets:
Benefit and claim reserves assumed	$	2,695,539	$	2,763,779
Benefit and claim reserves ceded		11,859,279		12,212,656

	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015
Statements of comprehensive income:
Premiums assumed	$	5,466	$	6,417	$	12,231	$	13,668
Premiums ceded		84,117		75,748		150,274		157,370
Benefits assumed		25,135		47,370		30,158		51,959
Benefits ceded		216,531		273,537		571,656		532,493
Commissions assumed		9		6		17		10
Commissions ceded		650		900		1,288		1,854

Schedule of Significant Reinsurance Balances

						Recoverable on				Total Amount
		Recoverable		Recoverable		Benefit		Ceded		Recoverable
	AM Best	on Paid		on Unpaid		Reserves/Deposit-		Due		from
Reinsurer	Rating	Losses		Losses		type Contracts		Premiums		Reinsurer
Optimum Re Insurance Company	A-	$	-	$	30,450	$	189,504	$	-	$	219,954
Sagicor Life Insurance Company	A-		-		281,272		11,597,158		239,105		11,639,325
		$	-	$	311,722	$	11,786,662	$	239,105	$	11,859,279

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Deposit-Type Contracts (Tables)

6 Months Ended

Jun. 30, 2016

Deposit Type Contracts [Abstract]

Schedule of Contracts

	Six Months Ended			Year Ended
	June 30, 2016			December 31, 2015
Beginning balance	$	13,897,421		$	10,722,227
First Wyoming Life beginning balance		-			799,990
Change in deposit-type contracts assumed from SNL		-			(1,200	)
Deposits received		1,339,406			2,387,104
Investment earnings		352,989			533,646
Withdrawals		(421,203	)		(533,762	)
Contract Charges		(3,057	)		(10,584	)
Ending Balance	$	15,165,556		$	13,897,421

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Payments

2016	$	92,292
2017		149,481
2018		136,557
2019		141,412
2020		146,477
Later years		483,333
Total	$	1,149,552

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Statutory Net Income and Surplus (Tables)

6 Months Ended

Jun. 30, 2016

Statutory Net Income and Surplus [Abstract]

Statutory Accounting Practices Disclosure

	Statutory Capital and Surplus as of
	June 30, 2016			December 31, 2015
American Life	$	1,938,747		$	2,526,392
Capital Reserve		1,381,445			1,464,044
Great Plains Life		1,582,416			1,663,368
First Wyoming Life		2,625,322			2,715,494
	Statutory Net Income (Loss) for the six months ended June 30,
	2016			2015
American Life	$	(397,388	)	$	(697,981	)
Capital Reserve		(80,322	)		(25,490	)
Great Plains Life		(71,036	)		(261,506	)
First Wyoming Life		(223,940	)		(165,211	)

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Surplus Notes (Tables)

6 Months Ended

Jun. 30, 2016

Surplus Notes [Abstract]

Summary of Surplus Notes

Creditor	Issue Date	Maturity Date	Face Amount		Interest Rate
David G. Elmore	September 1, 2006	September 1, 2016	$	250,000	7%
David G. Elmore	August 4, 2011	August 1, 2016		300,000	5%

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Nature of Operations and Summary of Significant Accounting Policies (Schedule of Deferred Acquisition Costs) (Details) - USD ($)	6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Accounting Policies [Abstract]
Balance at beginning of period	$ 2,765,063	$ 2,646,970	$ 2,646,970
Capitalization of commissions, sales and issue expenses	66,951		552,466
Change in DAC due to unrealized investment (gains) losses	(34,360)		35,301
Gross amortization	(147,727)	$ (253,850)	(469,674)
Balance at the end of period	$ 2,649,927		$ 2,765,063

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Nature of Operations and Summary of Significant Accounting Policies (Narrative) (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016 USD ($) $ / shares shares	Jun. 30, 2015 USD ($) shares	Jun. 30, 2016 USD ($) $ / shares shares	Jun. 30, 2015 USD ($) shares	Dec. 31, 2015 USD ($) $ / shares shares	Dec. 31, 2010 USD ($)	Aug. 31, 2011 USD ($)
Insurance Ceding Commission Paid | $						$ 375,000
Business Acquisition, Asset Representing Ceding Commission | $						348,010
Preferred stock, shares authorized (in shares) | shares	20,000,000		20,000,000		20,000,000
Common Stock, Par or Stated Value Per Share | $ / shares	$ 0.001		$ 0.001		$ 0.001
Common stock, shares authorized | shares	100,000,000		100,000,000		100,000,000
Common stock, shares issued (in shares) | shares	22,558,956		22,558,956		18,006,301
Common stock, shares outstanding (in shares) | shares	22,558,956		22,558,956		18,006,301
Warrants outstanding | shares	1,179		1,179		1,179
Number of shares of voting common stock issuable upon exercise of warrant | shares	10		10
Exercise price of warrants (in dollars per share) | $ / shares	$ 6.50		$ 6.50
Weighted Average Number of Shares Outstanding, Basic (in shares) | shares	22,558,956	13,212,653	20,682,546	13,195,416
Depreciation | $	$ 256,010	$ 403,420	$ 610,910	$ 828,340
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | $	9,256,170		9,256,170		$ 864,526
Value of business acquired | $	1,897,986		1,897,986		$ 2,039,110	1,288,207
Remaining capitalized asset balance | $	$ 43,622		43,622
Preferred stock dividend | $			$ 21,560	34,497
Capital Reserve Life Insurance Company [Member]
Cost Of Acquired Entity In Addition To Statutory Capital and Surplus | $						$ 116,326
Series B Preferred Stock [Member]
Conversion Ratio			2.0
Preferred Stock, Shares Issued (in shares) | shares	102,669		102,669		102,669
Stated dividend rate			7.00%
Preferred stock, par value (in dollars per share) | $ / shares	$ 0.001		$ 0.001		$ 0.001
Preferred stock, shares authorized (in shares) | shares	1,000,000		1,000,000		1,000,000
Preferred stock, shares outstanding (in shares) | shares	102,669		102,669		102,669
Preferred stock dividend | $			$ 21,560		$ 56,057
Series A Preferred Stock [Member]
Conversion Ratio			1.3
Preferred Stock, Shares Issued (in shares) | shares	74,159		74,159		74,159
Preferred stock, par value (in dollars per share) | $ / shares	$ 0.001		$ 0.001		$ 0.001
Preferred stock, shares authorized (in shares) | shares	2,000,000		2,000,000		2,000,000
Preferred stock, shares outstanding (in shares) | shares	74,159		74,159		74,159
Computer Software, Intangible Asset [Member]
Property, Plant and Equipment, Useful Life			3 years
Furniture and Fixtures [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life			3 years
Furniture and Fixtures [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life			7 years
Residential Real Estate [Member]
Property, Plant and Equipment, Useful Life			50 years
First Wyoming Life Insurance Company [Member]
Finite-Lived Intangible Assets, Remaining Amortization Period			10 years
Value of business acquired | $	$ 506,600		$ 506,600
Amortization/Accretion of Other Deferred Charges | $	564,780	438,140	1,129,570	876,270
Old Reliance [Member]
Value of business acquired | $							$ 824,485
Amortization/Accretion of Other Deferred Charges | $	$ 131,350	$ 6,530	$ 281,660	$ 990

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Acquisitions (Narrative) (Details)	3 Months Ended	6 Months Ended
	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) shares	Jun. 30, 2015 USD ($)	Oct. 27, 2015
Business Acquisition [Line Items]
Equity in the net (loss) income of unconsolidated subsidiaries			$ (16,650)
Northstar Financial Corporation [Member]
Business Acquisition [Line Items]
Conversion Ratio		1.27
Shares converted | shares		4,553,000
Equity in the net (loss) income of unconsolidated subsidiaries	$ (55,711)		(16,650)
Elimination of TPA fees	38,620		64,594
Amortization of Other Deferred Charges	$ 12,665		$ 25,330
First Wyoming Life Insurance Company [Member]
Business Acquisition [Line Items]
Ownership percentage acquired				100.00%

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Acquisitions (Schedule of Pro Forma Information) (Details) - First Wyoming Life Insurance Company [Member] - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2015
Business Acquisition [Line Items]
Premiums	$ 1,101,124	$ 2,094,691
Investment income	99,727	361,485
Miscellaneous income	5,872	34,750
Total income	1,206,723	2,490,926
Net loss	$ (1,017,758)	$ (2,018,728)

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Assets and Liabilities Held for Sale (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Discontinued Operations and Disposal Groups [Abstract]
Assets of discontinued operations	$ 16,345,892	$ 16,870,241
Liabilities of discontinued operations	$ 14,988,764	$ 15,508,998

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Investments (Schedule of Available for Sale Investments) (Details) - Fixed Maturities [Member] - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Amortized Cost	$ 24,400,678	$ 24,279,231
Gross Unrealized Gains	248,761	8,078
Gross Unrealized Losses	294,773	1,016,032
Estimated Fair Value	24,354,666	23,271,277
States and Political Subdivisions General Obligations [Member]
Amortized Cost	721,784	1,001,993
Gross Unrealized Gains	12,883
Gross Unrealized Losses		6,942
Estimated Fair Value	734,667	995,051
States and Political Subdivisions Special Revenue [Member]
Amortized Cost	275,307	275,333
Gross Unrealized Gains	16,675
Gross Unrealized Losses		1,997
Estimated Fair Value	291,982	273,336
Corporate Debt Securities [Member]
Amortized Cost	19,197,429	19,745,201
Gross Unrealized Gains	144,454	1,468
Gross Unrealized Losses	294,664	937,278
Estimated Fair Value	19,047,219	18,809,391
Us Treasury and Government [Member]
Amortized Cost	4,206,158	3,256,704
Gross Unrealized Gains	74,749	6,610
Gross Unrealized Losses	109	69,815
Estimated Fair Value	$ 4,280,798	$ 3,193,499

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Investments (Schedule of Amortized Cost, Fair Value, Credit Rating) (Details) - USD ($)

6 Months Ended

Jun. 30, 2016

Dec. 31, 2015

Amortized Cost

$ 24,400,678

$ 24,279,231

Us States and Political Subdivisions Debt Securities [Member]

Amortized Cost

971,576

Estimated Fair Value

1,000,893

Longview Washington Refunding Taxable [Member] | States and Political Subdivisions General Obligations [Member] | Us States and Political Subdivisions Debt Securities [Member]

Amortized Cost

164,760

Estimated Fair Value

$ 168,273

Credit Rating

NR

Memphis Tennessee [Member] | States and Political Subdivisions General Obligations [Member] | Us States and Political Subdivisions Debt Securities [Member]

Amortized Cost

$ 110,369

Estimated Fair Value

$ 114,872

Credit Rating

AA

Maricopa County Arizona School District no Thirty One [Member] | States and Political Subdivisions General Obligations [Member] | Us States and Political Subdivisions Debt Securities [Member]

Amortized Cost

$ 335,154

Estimated Fair Value

$ 335,280

Credit Rating

AA

Philadelphia PA Authority for Industrial [Member] | States and Political Subdivisions Special Revenue [Member] | Us States and Political Subdivisions Debt Securities [Member]

Amortized Cost

$ 149,385

Estimated Fair Value

$ 155,741

Credit Rating

AA

Bellingham Washington [Member] | States and Political Subdivisions General Obligations [Member] | Us States and Political Subdivisions Debt Securities [Member]

Amortized Cost

$ 111,501

Estimated Fair Value

$ 116,242

Credit Rating

AA+

Riviera Beach Florida [Member] | States and Political Subdivisions Special Revenue [Member] | Us States and Political Subdivisions Debt Securities [Member]

Amortized Cost

$ 100,407

Estimated Fair Value

$ 110,485

Credit Rating

AA

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Investments (Schedule of Unrealized Loss of Securities) (Details) - Fixed Maturities [Member]	6 Months Ended	12 Months Ended
	Jun. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)
Estimated Fair Value, Total	$ 11,446,585	$ 22,544,653
Gross Unrealized Loss, Total	$ 294,773	$ 1,016,032
Number of Securities, Total	55	145
Us Treasury and Government [Member]
Estimated Fair Value, Less than 12 months	$ 8,299	$ 2,484,188
Gross Unrealized Loss, Less than 12 months	$ 109	$ 62,343
Number of Securities, Less than 12 months	1	14
Estimated Fair value, Greater than 12 months		$ 305,055
Gross Unrealized Loss, Greater than 12 months		$ 7,472
Number of Securities, Greater than 12 months		3
States and Political Subdivisions General Obligations [Member]
Estimated Fair Value, Less than 12 months		$ 660,569
Gross Unrealized Loss, Less than 12 months		$ 5,004
Number of Securities, Less than 12 months		5
Estimated Fair value, Greater than 12 months		$ 334,481
Gross Unrealized Loss, Greater than 12 months		$ 1,938
Number of Securities, Greater than 12 months		1
States and Political Subdivisions Special Revenue [Member]
Estimated Fair Value, Less than 12 months		$ 248,146
Gross Unrealized Loss, Less than 12 months		$ 1,618
Number of Securities, Less than 12 months		2
Estimated Fair value, Greater than 12 months		$ 25,190
Gross Unrealized Loss, Greater than 12 months		$ 379
Number of Securities, Greater than 12 months		1
Corporate Debt Securities [Member]
Estimated Fair Value, Less than 12 months	3,824,751	$ 15,320,916
Gross Unrealized Loss, Less than 12 months	$ 44,670	$ 796,204
Number of Securities, Less than 12 months	18	97
Estimated Fair value, Greater than 12 months	$ 7,633,585	$ 3,166,108
Gross Unrealized Loss, Greater than 12 months	$ 249,994	$ 141,074
Number of Securities, Greater than 12 months	36	22

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Investments (Schedule of Fixed Maturities) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Marketable Securities [Abstract]
Amortized Cost, Due in one year or less
Amortized Cost, Due after one year through five years	2,067,384
Amortized Cost, Due after five years through ten years	13,563,010
Amortized Cost, Due after ten years	8,770,284
Available-for-sale Securities, Debt Maturities, Amortized Cost	24,400,678	$ 24,279,231
Estimated Fair Value, Due in one year or less
Estimated Fair Value, Due after one year through five years	2,093,965
Estimated Fair Value, Due after five years through ten years	13,513,005
Estimated Fair Value, Due after ten years	6,747,696
Available-for-sale Securities, Debt Securities, Estimated Fair Value	$ 24,354,666	$ 23,271,277

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Investments (Components of Net Investment Income) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Net investment income	$ 223,123	$ 121,903	$ 449,688	$ 334,569
Less investment expenses	(21,345)	(21,782)	(34,782)	(38,824)
Total	201,778	100,121	414,906	295,745
Other Long Term Investment [Member]
Net investment income	15,627	15,799	27,282	30,416
Cash and Cash Equivalents [Member]
Net investment income	1	1	5	2
Equity Securities [Member]
Net investment income		162	5,250	186
Fixed Maturities [Member]
Net investment income	207,495	161,652	417,151	320,615
Equity Method Investments [Member]
Net investment income		$ (55,711)		$ (16,650)

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Investments (Schedule of Mortgage Loan Activity) (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Marketable Securities [Abstract]
Balance at beginning of period		$ 349,386
Proceeds from settlement on mortgage loans on real estate, held for investment		(349,386)
Balance at end of period

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Investments (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Marketable Securities [Abstract]
Separate Account Assets	$ 7,701,787		$ 7,701,787		$ 6,186,865
Assets On Deposits Fair Value	7,759,577		7,759,577		$ 6,000,376
Proceeds From Sale Of Available-For-Sale Securities	3,897,138	$ 2,840,976	7,516,601	$ 7,166,021
Available-for-sale Securities, Gross Realized Gains	45,897	14,613	69,653	118,401
Available-for-sale Securities, Gross Realized Losses	$ 35,026	$ 89,156	$ 55,897	$ 114,696

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Fair Values of Financial Instruments (Schedule of Financial Instruments at Fair Value Measured on a Recurring Basis) (Details) - Fixed Maturities [Member] - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, available for sale, equity securities	$ 24,354,666	$ 23,271,277
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, available for sale, equity securities
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, available for sale, equity securities	24,354,666	23,271,277
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, available for sale, equity securities
Us Treasury and Government [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, available for sale, equity securities	4,280,798	3,193,499
Us Treasury and Government [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, available for sale, equity securities
Us Treasury and Government [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, available for sale, equity securities	4,280,798	3,193,499
Us Treasury and Government [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, available for sale, equity securities
States and Political Subdivisions General Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, available for sale, equity securities	734,667	995,051
States and Political Subdivisions General Obligations [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, available for sale, equity securities
States and Political Subdivisions General Obligations [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, available for sale, equity securities	734,667	995,051
States and Political Subdivisions General Obligations [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, available for sale, equity securities
States and Political Subdivisions Special Revenue [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, available for sale, equity securities	291,982	273,336
States and Political Subdivisions Special Revenue [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, available for sale, equity securities
States and Political Subdivisions Special Revenue [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, available for sale, equity securities	291,982	273,336
States and Political Subdivisions Special Revenue [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, available for sale, equity securities
Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, available for sale, equity securities	19,047,219	18,809,391
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, available for sale, equity securities
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, available for sale, equity securities	19,047,219	18,809,391
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments, available for sale, equity securities

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Fair Values of Financial Instruments (Schedule of Financial Assets and Liabilities at Fair Value) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015	Dec. 31, 2014
Assets:
Cash and cash equivalents	$ 3,214,086	$ 1,192,336	$ 1,760,294	$ 2,310,047
Liabilities:
Surplus Notes and Accrued Interest Payable	550,000	550,000
Estimate Of Fair Value, Fair Value Disclosure [Member]
Assets:
Policy loans	393,492	420,775
Cash and cash equivalents	3,214,086	1,192,336
Liabilities:
Policyholder deposits (Deposit-type contracts)	15,165,556	13,897,421
Surplus Notes and Accrued Interest Payable	791,798	768,022
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Assets:
Policy loans	393,492	420,775
Cash and cash equivalents	3,214,086	1,192,336
Liabilities:
Policyholder deposits (Deposit-type contracts)	15,165,556	13,897,421
Surplus Notes and Accrued Interest Payable	795,599	779,405
Fair Value, Inputs, Level 1 [Member]
Assets:
Policy loans
Cash and cash equivalents	3,214,086	1,192,336
Liabilities:
Policyholder deposits (Deposit-type contracts)
Surplus Notes and Accrued Interest Payable
Fair Value, Inputs, Level 2 [Member]
Assets:
Policy loans
Cash and cash equivalents
Liabilities:
Policyholder deposits (Deposit-type contracts)
Surplus Notes and Accrued Interest Payable
Fair Value, Inputs, Level 3 [Member]
Assets:
Policy loans	393,492	420,775
Cash and cash equivalents
Liabilities:
Policyholder deposits (Deposit-type contracts)	15,165,556	13,897,421
Surplus Notes and Accrued Interest Payable	$ 791,798	$ 768,022

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Fair Values of Financial Instruments (Narrative) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Investments, All Other Investments [Abstract]
Accrued interest	$ 237,502	$ 229,405

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Income Tax Matters (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Deferred tax assets:
Loss carryforwards	$ 9,563,021	$ 8,962,587
Capitalized costs	628,768	667,264
Unrealized losses on investments	10,367	356,495
Benefit reserves	1,022,824	1,071,997
Total deferred tax assets	11,224,980	11,058,343
Less valuation allowance	(9,471,333)	(9,287,024)
Total deferred tax assets, net of valuation allowance	1,753,647	1,771,319
Deferred tax liabilities:
Policy acquisition costs	634,200	593,654
Due premiums	234,432	234,468
Value of business acquired	645,315	693,297
Intangible assets	238,000	238,000
Property and equipment	1,700	11,900
Total deferred tax liabilities	1,753,647	1,771,319
Net deferred tax assets

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Income Tax Matters (Schedule of Effective Tax Rate Reconciliation) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Computed expected income tax benefit	$ (312,825)	$ (279,849)	$ (574,258)	$ (545,090)
Increase (reduction) in income taxes resulting from:
Meals, entertainment and political contributions	9,598	12,862	18,755	16,534
Dividends received deduction		(38)		(44)
Other	56,760	193,054	25,066	259,220
Total deductions	66,358	205,878	43,821	275,710
Tax benefit before valuation allowance	(246,467)	(73,971)	(530,437)	(269,380)
Change in valuation allowance	246,467	73,971	530,437	269,380
Net income tax expense

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Income Tax Matters (Narrative) (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Deferred Tax Assets, Valuation Allowance	$ 9,471,333	$ 9,287,024
Minimum [Member]
Operating Loss Carryforwards, Expiration Dates	Dec. 31, 2024
Maximum [Member]
Operating Loss Carryforwards, Expiration Dates	Dec. 31, 2035

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Reinsurance (Summary of Significant Reinsurance Amounts) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Balance sheets:
Benefit and claim reserves assumed	$ 2,695,539		$ 2,695,539		$ 2,763,779
Benefit and claim reserves ceded	11,859,279		11,859,279		$ 12,212,656
Statements of comprehensive income:
Premiums assumed	5,466	$ 6,417	12,231	$ 13,668
Premiums ceded	84,117	75,748	150,274	157,370
Benefits assumed	25,135	47,370	30,158	51,959
Benefits ceded	216,531	273,537	571,656	532,493
Commissions assumed	9	6	17	10
Commissions ceded	$ 650	$ 900	$ 1,288	$ 1,854

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Reinsurance (Schedule of Significant Reinsurance Balances) (Details) - USD ($)

6 Months Ended

Jun. 30, 2016

Dec. 31, 2015

Recoverable on Paid Losses

Recoverable on Unpaid Losses

311,722

Recoverable on Benefit Reserves/Deposit-type Contracts

11,786,662

Ceded Due Premiums

239,105

Total Amount Recoverable from Reinsurer

$ 11,859,279

$ 12,212,656

Sagicor Life Insurance Company [Member]

AM Best Rating

A-

Recoverable on Paid Losses

Recoverable on Unpaid Losses

281,272

Recoverable on Benefit Reserves/Deposit-type Contracts

11,597,158

Ceded Due Premiums

239,105

Total Amount Recoverable from Reinsurer

$ 11,639,325

Optimum Reinsurance Company [Member]

AM Best Rating

A-

Recoverable on Paid Losses

Recoverable on Unpaid Losses

30,450

Recoverable on Benefit Reserves/Deposit-type Contracts

189,504

Ceded Due Premiums

Total Amount Recoverable from Reinsurer

$ 219,954

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Reinsurance (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2000	Dec. 31, 1999	Jun. 30, 2016	Dec. 31, 2015
Amounts recoverable from reinsurers			$ 11,859,279	$ 12,212,656
Sagicor Life Insurance Company [Member]
Percentage Of Co Insurance Agreement	25.00%	75.00%
Premiums, Percentage Assumed to Net		75.00%
Amounts recoverable from reinsurers			$ 1,163,932,500	$ 11,873,254

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Deposit-Type Contracts (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Beginning balance	$ 13,897,421	$ 10,722,227
Change in deposit-type contracts assumed from Security National		(1,200)
Deposits received	1,339,406	2,387,104
Investment earnings	352,989	533,646
Withdrawals	(421,203)	(533,762)
Contract Charges	(3,057)	(10,584)
Ending balance	15,165,556	13,897,421
First Wyoming Life Insurance Company [Member]
Beginning balance		799,990
Change in deposit-type contracts assumed from Security National
Ending balance

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Commitments and Contingencies (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Commitments and Contingencies Disclosure [Abstract]
Operating Leases, Rent Expense	$ 99,833	$ 55,377	$ 173,043	$ 111,752
2016	92,292		92,292
2017	149,481		149,481
2018	136,557		136,557
2019	141,412		141,412
2020	146,477		146,477
Later years	483,333		483,333
Total	$ 1,149,552		$ 1,149,552

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Statutory Net Income and Surplus (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
American Life and Security Corporation [Member]
Statutory capital and surplus	$ 1,938,747		$ 2,526,392
Statutory net loss	(397,388)	$ (697,981)
Capital Reserve Life Insurance Company [Member]
Statutory capital and surplus	1,381,445		1,464,044
Statutory net loss	(80,322)	(25,490)
Great Plains Financial Corporation [Member]
Statutory capital and surplus	1,582,416		1,663,368
Statutory net loss	(71,036)	$ (261,506)
First Wyoming Life Insurance Company [Member]
Statutory capital and surplus	$ 2,625,322		$ 2,715,494

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Surplus Notes (Summary of Surplus Notes) (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Face Amount	$ 550,000	$ 550,000
David Elmore [Member] | Surplus Notes Two [Member]
Issue Date	Aug. 04, 2011
Maturity Date	Aug. 01, 2016
Face Amount	$ 300,000
Interest Rate	5.00%
David Elmore [Member] | Surplus Notes One [Member]
Issue Date	Sep. 01, 2006
Maturity Date	Sep. 01, 2016
Face Amount	$ 250,000
Interest Rate	7.00%

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Surplus Notes (Narrative) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Interest Payable	$ 237,502	$ 229,405
Surplus Notes [Member]
Interest Payable	$ 245,599

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Related Party Transactions (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Related Party Transaction [Line Items]
Amount of transaction	$ 13,500	$ 40,608
TPA [Member]
Related Party Transaction [Line Items]
Amount of transaction			$ 28,000	$ 95,594