[Zurich Kemper Life Letterhead]
Via EDGAR
September 13, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: KILICO Variable Separate Account of
Kemper Investors Life Insurance Company
File Nos. 333-88845 and 811-5025
Commissioners:
Enclosed for filing pursuant to the requirements of Rule 497(e) under the
Securities Act of 1933 is a prospectus supplement dated September 13, 2000
to the prospectus dated May 1, 2000.
Please call the undersigned at 847-969-3510 if there are any questions.
Yours truly,
/s/ Karen A. Sprague
Karen A. Sprague
Senior Counsel
Enclosure
KAS/sb
<PAGE>
SUPPLEMENT DATED SEPTEMBER 13, 2000
TO PROSPECTUS DATED MAY 1, 2000 FOR
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FLEXIBLE PREMIUM VARIABLE
LIFE INSURANCE POLICY
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ISSUED BY
KEMPER INVESTORS LIFE INSURANCE COMPANY
THROUGH ITS KILICO VARIABLE SEPARATE ACCOUNT
This Supplement provides additional information to prospective purchasers of
the Zurich Kemper Lifeinvestor(SM) Policy concerning a benefit available to
you under your Policy, as well as additional information about a Policy
expense charge. Please read this Supplement carefully and keep it with your
Prospectus for future reference.
The section entitled "Mortality and Expense Risk Charge" in the table entitled
"Policy Charges and Deductions," appearing on page 6 of the Prospectus, is
hereby modified to read as follows, and the following footnote (1a) is hereby
added:
"Mortality and Expense Risk Charge: Current: .60% of average
daily assets for the
first ten Policy Years;
.40% for Policy Years
eleven through twenty;
and .20% for Policy
Year twenty-one and
thereafter, ceasing when
the Insured reaches age
100
Guaranteed: .60% for the
first ten Policy Years;
and .40% for Policy Year
eleven and thereafter,
ceasing when the Insured
reaches age 100 (1a)"
"(1a) Based on our current estimates of longevity and of the expenses
incurred over the life of the Policy, we do not anticipate imposing
the guaranteed Mortality and Expense Risk Charge. However, we reserve
the right to assess a charge higher than the current charge, but not
to exceed the guaranteed charge, based on changed circumstances."
<PAGE>
The section entitled "Benefits at Maturity," appearing on page 17 of the
Prospectus, is hereby modified by adding the following new paragraphs at the
end of the section:
"The Extended Maturity Option Rider maintains life insurance
benefits beyond age 100. This Rider is added automatically to all
Policies in states that have approved the Rider, at no extra premium.
Under this Rider, you may choose from year to year to extend the
Maturity Date for one year intervals. During the extension period,
premium payments are prohibited due to Internal Revenue Code Section
7702 restrictions. Also, during the extension period, you may not
take partial withdrawals or additional Policy Loans, and the death
benefit is the Cash Value. During the extension period, we will not
charge the cost of insurance charge or the mortality and expense risk
charge. We will, however, continue to charge the monthly
administrative expense charge.
All other riders still active end at age 100. The tax treatment
of the maturity benefit and the Extended Maturity Option Rider is
discussed in "Treatment of Maturity Benefits and Extension of
Maturity Date" under "Federal Tax Matters."
The section entitled "Mortality and Expense Risk Charge," appearing on page
20 of the Prospectus, is hereby modified to read as follows:
"For the mortality and expense risks we assume, we deduct a
daily charge from the Subaccounts. The current annual rate for
this charge is .60% of average daily assets for the first ten
Policy Years, .40% for Policy Years eleven through twenty, and
.20% for Policy Year twenty-one and thereafter. We guarantee an
annual rate of .60% for the first ten Policy Years and .40% for
Policy Year eleven and thereafter. The mortality and expense risk
charge ceases when the Insured reaches age 100.
The mortality and expense risk we assume is that our estimates
of longevity and of the expenses incurred over the life of the
Policy will not be correct. If circumstances change, we may be
required to assess a charge higher than the current charge, but not
more than the guaranteed mortality and expense risk charge."
<PAGE>
The following new sub-section is hereby added at the end of the section
entitled "Considerations Applicable to Both MECs and Non-MECs," appearing on
page 27 of the Prospectus:
"Treatment of Maturity Benefits and Extension of Maturity Date.
If your Policy does not have an Extended Maturity Option Rider, at
the Maturity Date, we pay the Surrender Value to you. Generally,
the excess of the Cash Value (less any applicable administrative
expense charge) over your investment in the Policy will be
includible in your taxable income at that time. If your Policy has
an Extended Maturity Option Rider, we believe the Policy will
continue to qualify as life insurance under the Code. However,
there is some uncertainty regarding this treatment. It is possible,
therefore, that you would be viewed as constructively receiving the
Surrender Value in the year in which the Insured attains age 100
and would realize taxable income at that time, even if the Policy
proceeds were not distributed at that time."
00S6LISuppC.doc
