SUPPLEMENT DATED MARCH 1, 1997 TO
PROSPECTUS DATED MAY 1, 1996 FOR
PERIODIC PAYMENT VARIABLE ANNUITY CONTRACTS
KEMPER ADVANTAGE III
ISSUED BY
KEMPER INVESTORS LIFE INSURANCE COMPANY
Effective March 1, 1997, Kemper Investors Life Insurance Company ("KILICO") has
revised or endorsed the Contracts that are issued as Individual Retirement
Annuities (IRAs), Simplified Employee Pensions (SEPs) or Non-Qualified Plan
Contracts (Non-Qualified). Contracts issued as IRAs, SEPs or Non-Qualified are
being changed to provide for: 1) waiver of the Records Maintenance Charge for
Contracts with a Contract Value equaling or exceeding $50,000; 2) revision of
the death benefit payable upon the death of the Owner or Annuitant (subject to
state approval); and 3) modification of the Dollar Cost Averaging feature to
permit dollar cost averaging out of the General Account. These changes are
described below with references to those parts of the Prospectus that are
modified by this Supplement.
Records Maintenance Charge
The following sentence is added to the first paragraph under "1. Records
Maintenance Charge" appearing on page 18 of the Prospectus:
"For Contracts issued on or after March 1, 1997 as Individual Retirement
Annuities, Simplified Employee Pensions or Non-Qualified Plan Contracts,
the Records Maintenance Charge will be waived for Contracts with a Contract
Value equaling or exceeding $50,000 on the date of assessment."
Death Benefit
The following paragraph is added at the end of section "6. Death Benefit"
appearing on page 17 of the Prospectus:
"For Contracts issued on or after March 1, 1997 as Individual Retirement
Annuities, Simplified Employee Pensions or Non-Qualified Plan Contracts,
subject to state approval, the death benefit will be determined as follows.
If death occurs prior to the deceased's attainment of age 90, the death
benefit will be the greater of (a) the total amount of Purchase Payments
less Debt and less the aggregate amount of all previous partial
withdrawals, (b) the Contract Value as of the day written proof of death
is received by KILICO, less Debt or (c) the Greatest Anniversary Value
immediately preceding the date of death, less Debt. For purposes of this
paragraph, the Greatest Anniversary Value is equal to the highest
<PAGE>
Anniversary Value determined from the following. An Anniversary Value
is calculated for each contract anniversary prior to the deceased's
attainment of age 81. The Anniversary Value is equal to the Contract Value
on a contract anniversary, increased by the dollar amount of any Purchase
Payments made since that anniversary and reduced by any withdrawals since
that anniversary. If death occurs on or after the deceased's attainment
of age 90, the death benefit will be the Contract Value as of the day
written proof of death is received by KILICO, less Debt."
Dollar Cost Averaging
The following is added after the first sentence of the first paragraph under
"Dollar Cost Averaging" appearing on page 27 of the Prospectus:
"A Contract Owner may predesignate a portion of the Contract Value under
the Contract attributable to the General Account to be automatically
transferred on a monthly or quarterly basis for a specified duration of at
least one year to one or more of the Subaccounts during the Accumulation
Period."
