Flexible Premium Variable
Annuity Contract
Nonparticipating
Annuity proceeds payable at maturity date. Death proceeds payable in event of
death of Annuitant prior to maturity date. Flexible premiums payable until
maturity date or prior death of Annuitant.
The contract value of this contract may increase or decrease daily depending on
the investment experience of the sub-accounts. There is no guaranteed minimum
contract value.
Kansas City Life Insurance Company will pay the proceeds of this contract
according to the provisions on this and the following pages, all of which are
part of this contract. This contract is a legal contract between you and Kansas
City Life Insurance Company. READ YOUR CONTRACT CAREFULLY.
Signed for Kansas City Life Insurance Company, a stock company, at its Home
Office, 3520 Broadway, PO Box 219139, Kansas City, MO 64121-9139.
C. John Malacarne R. Philip Bixby
Secretary President
10-Day Right To Examine Contract
Please examine this contract carefully. If you are not satisfied, you may return
the contract to us or to your agent within 10 days of its receipt. If returned,
the contract will be void from the beginning and we will refund the contract
value, plus the $30.00 annual administration fee, if charged, as of the earlier
of the date the returned contract is received by us at our Home Office or the
date the returned contract is received by the Kansas City Life representative
who sold you the contract.
Contract Number
9999999
Annuitant
John Doe
Agency
0001
GUIDE TO POLICY PROVISIONS
Page
Section 1: Contract Data.......................................................3
Section 2: Definitions.........................................................7
Section 3: Proceeds............................................................8
Section 4: Premiums...........................................................10
Section 5: Contract Values....................................................10
Section 6: Other Contract Provisions..........................................12
6.1 Contract
6.2 Authority to Change Contract
6.3 Modifications
6.4 Incontestability
6.5 Age and Sex
6.6 Option to Change Maturity Date
6.7 Contract Termination
6.8 Contract Loans
6.9 Nonparticipating
6.10 Annual Report
6.11 Basis of Computation
Section 7: Control of Contract................................................14
Section 8: Variable Account...................................................14
Section 9: Transfers..........................................................16
Section 10:Payment of Proceeds................................................16
A copy of the original application any additional benefits provided by rider or
endorsement follow page 18.
SECTION 1. CONTRACT DATA CONTRACT NUMBER
9999999
BENEFICIARY ANNUITANT
As stated in the application or in the John A. Doe
last beneficiary designation filed with us
OWNER CONTRACT DATE
As stated in the application or in the last November 01, 2000
ownership designation filed with us
ISSUE AGE MATURITY DATE
35 November 01, 2030
SEX MONTHLY LIFE
Male Income Factor
$5.65 per $1,000 of
Maturity Proceeds
GUARANTEED PAYMENT
PERIOD
120 Months
SECTION 1. CONTRACT DATA (CONTINUED) DATE PREPARED: 11/01/2000
ANNUITANT CONTRACT NUMBER
JOHN A. DOE 9999999
FORM NO BENEFIT DESCRIPTION ANNUAL AMOUNT PREMIUM PAYABLE
J157 Flexible Premium $10,000 To age 65*
Variable Annuity Contract
-Nonparticipating-
TOTAL ANNUAL PREMIUM $10,000
* Premiums are payable according to the flexible premium provision of this
contract.
SECTION 1. CONTRACT DATA (CONTINUED) DATE PREPARED: 11/01/2000
ANNUITANT CONTRACT NUMBER
JOHN A. DOE 9999999
EXPENSE CHARGES
MORTALITY AND EXPENSE RISK CHARGE
1.25% (on an annual basis) of the average daily net assets of the
variable account.
GUARANTEED MINIMUM DEATH BENEFIT MONTHLY EXPENSE CHARGE
Base Guaranteed Minimum Death Benefit - No charge for this
benefit.
Annual Ratchet Guaranteed Minimum Death Benefit Option - 0.20% of
the variable account value on an annual basis.
Enhanced Combination Guaranteed Minimum Death Benefit Option -
0.35% of the variable account value on an annual basis.
ASSET-BASED ADMINISTRATION CHARGE
0.15% (on an annual basis) of the average daily net assets of the
variable account.
ANNUAL ADMINISTRATION FEE
$30.00 at the beginning of each contract year. This fee will be
waived if the contract value is $50,000 or more at the beginning
of the contract year.
SURRENDER CHARGE PERCENTAGES
PREMIUM YEARS
SINCE DEPOSIT PERCENTAGE
1 8%
2 8%
3 7%
4 6%
5 5%
6 4%
7 3%
8 2%
9+ 0%
*Premium year refers to the calendar year following the date we credit a
particular premium to your contract. After nine years following the date we
credit a particular premium, there will be no surrender charge applicable to
that premium payment.
The total surrender charge applicable will be the sum of the surrender charges
applicable to each premium withdrawn or annuitized under a non-life payment
option. To determine the surrender charge, we first assume that your surrender
or non-life payment option election is from amounts (other than earnings) that
can be withdrawn without a surrender charge, then from other amounts (other than
earnings) and then from earnings, each on a "first-in-first-out" (oldest money
first) basis. Once we have calculated the total surrender charge amount we
actually withdraw it from the fixed account and subaccount in the same
proportion that the withdrawal is being made. In calculating the surrender
charge, we do not include earnings, although the actual withdrawal to pay the
surrender charge may come from earnings.
If you surrender the contract, we will deduct the surrender charge from the
contract value in determining the cash surrender value. For a partial surrender,
we will deduct the surrender charge from the amount surrendered or from contract
value remaining after the amount requested is surrendered, according to your
instructions.
SECTION 1. CONTRACT DATA (CONTINUED) DATE PREPARED: 11/01/2000
ANNUITANT CONTRACT NUMBER
JOHN A. DOE 9999999
Investment Options
[ KCL Fixed Account
Subaccounts that invest in the Kansas City Life Variable Annuity Separate
Account:
MFS Emerging Growth Series
MFS Research Series
MFS Total Return Series
MFS Utilities Series
MFS Global Governments Series
MFS Bond Series
American Century VP Capital Appreciation
American Century VP Income & Growth
American Century VP International
American Century VP Value
Federated American Leaders Fund II
Federated High Income Bond Fund II
Federated International Small Company Fund II
*Federated Prime Money Fund II
Dreyfus Appreciation Portfolio
Dreyfus Small Cap Portfolio
Dreyfus Stock Index Fund
The Dreyfus Socially Responsible Growth Fund, Inc.
J P Morgan U.S. Disciplined Equity Portfolio
J P Morgan Small Company Portfolio
Franklin Real Estate Fund (Class 2)
Franklin Small Cap Fund (Class 2)
Templeton Developing Markets Securities Fund (Class 2)
Templeton International Securities Fund (Class 2)
Calamos Convertible Portfolio
AIM V.I. Dent Demographic Trends Fund
AIM V.I. Telecommunications and Technology Fund
AIM V.I. Value Fund
Seligman Capital Portfolio (Class 2)
Seligman Communications and Information Portfolio (Class 2)
*The Federated Prime Money Fund II subaccount is referred to in this contract as
the money market sub-account.]
Section 2: Definitions
The following key words are used in this contract and are important in
describing it. Please refer back to these definitions as you read this contract.
2.1 Accumulation Unit
An accounting unit used to calculate the variable account value. It is a measure
of the net investment results of each of the sub-accounts.
2.2 Age
The age on the Annuitant's last birthday as of each contract anniversary. This
contract is issued at the age last birthday shown in Section 1, Contract Data.
If the contract date falls on the birthday of the Annuitant, the age will be the
age the Annuitant reaches on the contract date.
2.3 Allocation Date
The date on which the initial net premium is allocated to the money market
sub-account(s). This date is the later of the date when all requirements are met
and your application is approved, or the date we receive the initial premium at
the Home Office.
2.4 Annual Administration Fee
A level charge we deduct from the contract value at the beginning of each
contract year to compensate us for the costs associated with administration of
the contract.
2.5 Annuitant
The person on whose life the annuity benefit for this contract is based.
2.6 Asset-Based Administration Charge
A percentage charge we deduct on a daily basis from the assets of the
sub-accounts to compensate us for the costs associated with administration of
the contract.
2.7 Beneficiary
The person you have designated in the application (or in the last beneficiary
designation filed with us) to receive any proceeds payable under this contract
at the death of the Annuitant or owner.
2.8 Cash Surrender Value
Equals the contract value at the time of surrender less applicable surrender
charges, loan balance and any premium taxes payable.
2.9 Contract Anniversary
The same day and month as the contract date each year that the contract remains
in force.
2.10 Contract Date
The date from which we compute contract months, years and anniversaries.
2.11 Contract Value
The sum of the variable account value and the fixed account value. These values
are described in more detail in Section 5, Contract Values.
2.12 Contract Year
Any period of twelve months starting with the contract date and each contract
anniversary thereafter.
2.13 Fixed Account
An account that is part of our general account. The investment performance of
the variable account has no impact on the fixed account.
2.14 Fixed Account Value
The contract value in the fixed account.
2.15 Guaranteed Minimum Death Benefit
There is a base Guaranteed Minimum Death Benefit provision. In addition, you may
choose one of two Guaranteed Minimum Death Benefit options which provide
different levels of death benefit guarantees. The two options have different
issue requirements and guaranteed minimum death benefit monthly expense charges
associated with them.
2.16 Maturity Date
The date shown in Section 1, Contract Data, when we will apply the contract
value under a life payment option, (unless you have elected to receive the cash
surrender value as a lump sum payment or under a non-life payment option.) For
qualified and non-qualified contracts, the latest maturity date is the later of
the contract anniversary following the Annuitant's 85th birthday or the tenth
anniversary of the contract. However, qualified contracts may be required to
begin distributions at age 70 1/2.
2.17 Mortality and Expense Risk Charge
A charge we deduct from the assets of the sub-accounts to compensate us for the
mortality and expense risks for the contract. We show this charge in Section 1,
Contract Data.
2.18 Net Investment Factor
The ratio of the sub-account performance of the current valuation day to the
immediately prior valuation day. The sub-account performance includes gains or
losses in the sub-accounts, dividends paid, any capital gains or losses, any
taxes, mortality and expense risk charges, and asset-based administration
charges.
2.19 Owner
The person entitled to exercise all rights and privileges provided in the
contract.
2.20 Premium Year
The 12 month period following the date we credit a particular premium to your
contract.
2.21 Proceeds
The total amount we are obligated to pay under the terms of this contract.
2.22 Subaccounts
The division of accounts making up the variable account. The assets of each
sub-account are invested in a corresponding portfolio of a designated mutual
fund. The sub-accounts are shown on page 6 of the contract.
2.23 Valuation Day
Each day on which the New York Stock Exchange is open for business.
2.24 Valuation Period
The interval of time commencing at the close of business on one valuation day
and ending at the close of business on the next valuation day.
2.25 Variable Account
The Kansas City Life Variable Annuity Separate Account. This is not part of our
general account. The variable account has sub-accounts each of which is invested
in a corresponding portfolio of a designated mutual fund.
2.26 Variable Account Value
The total value of a contract allocated to sub-accounts of the variable account.
2.27 We, Our, Us
Kansas City Life Insurance Company.
2.28 Written Notice
A written notice or written request in a form satisfactory to us, which is
signed by the owner and received at the Home Office.
2.29 You, Your
The owner of this contract. The owner may be someone other than the Annuitant.
Section 3: Proceeds
3.1 Types of Proceeds and Method of Payment
There are various types of proceeds available under this contract. These
include:
o Maturity proceeds
o Death proceeds
o Surrender proceeds
o Partial surrender proceeds
o Nursing Home Benefit proceeds
We will pay maturity, death or surrender proceeds either under a payment option
(as describe in Section 10, Payment of Proceeds) or in a lump sum. The amount of
proceeds payable will vary by the type of proceeds and the form of payment
selected. We will only pay partial surrender proceeds as a lump sum or under the
Systematic Partial Surrender Plan described in Section 5.7.
We have the right to require that this contract be returned to us when maturity,
surrender or death proceeds are paid.
To the extent permitted by law, proceeds will not be subject to any claims of
your creditors or the beneficiary's creditors.
3.2 Maturity Proceeds
On the maturity date we will pay the maturity proceeds to the Annuitant, if
living.
The maturity proceeds will be equal to:
(1) the cash surrender value as described in Section 5.5 if you choose a
lump sum or payment options 1, 2, or 3: or
(2) the contract value as described in Section 5.1 if you choose payment
options 4 or 5.
If you fail to make another selection of a payment option or lump sum payment,
we will apply the contract value under payment option 4 with an installment
refund option of 120 months. This means that the monthly payments will continue
for a minimum of 120 months and as long thereafter as the Annuitant lives. If
the Annuitant dies before receiving a total of 120 monthly payments, we will
continue to make monthly payments to the beneficiary until a total of 120
payments have been made. The beneficiary may elect in writing to receive the
present value of any remaining guaranteed payments in a single sum.
3.3 Death Proceeds
If the Annuitant dies before the maturity date, the beneficiary will receive a
death benefit. The death benefit will be calculated depending upon which
guaranteed death benefit option is in effect on the contract at the date of
death. There is a Base Guaranteed Minimum Death Benefit, or at issue two
enhanced options may be chosen at an additional charge. The two Guaranteed
Minimum Death Benefit Options are:
o The Annual Ratchet Guaranteed Minimum Death Benefit Option; and
o The Enhanced Combination Guaranteed Minimum Death Benefit Option.
The issue requirements and Guaranteed Minimum Death Benefit Monthly Expense
Charge vary for each Guaranteed Minimum Death Benefit Option. The monthly
expense charge for each option is shown in Section 1, Contract Data.
Under the Base Guaranteed Minimum Death Benefit, we guarantee that the death
benefit will be the greater of:
(1) premiums paid, proportionately adjusted for partial surrenders, less
any loan balance; or
(2) the contract value less any loan balance on the date we receive proof
of the Annuitant's death.
This option is available at issue and at any time thereafter.
Under the Annual Ratchet Guaranteed Minimum Death Benefit Option we guarantee
that the death benefit for the Annuitant's attained age 80 and below will be the
greater of:
(1) the death benefit calculated under the Base Guaranteed Minimum Death
Benefit; or
(2) the highest contract value as of a contract anniversary during any
point the contract has been in effect on or before the Annuitant's
death. Any loan balance will be deducted from such contract value and
the contract value will also be proportionately adjusted for partial
surrenders.
For the Annuitant's attained age 80 and above we guarantee that the
death benefit will equal the greater of:
(a) the contract value at the time of death; or
(b) the value of the Guaranteed Minimum Death Benefit on the contract
anniversary following the Annuitant's 80th birthday, calculated
as described above, proportionately adjusted for partial
surrenders, less any loan balance and plus any premiums paid
since the contract anniversary following the Annuitant's 80th
birthday.
This option is only available at issue of the contract and is only
available to Annuitants with issue ages of 75 or below.
Under the Enhanced Combination Guaranteed Minimum Death Benefit Option we
guarantee that the death benefit for the Annuitant's attained age 80 and below
will be the greater of:
(1) the death benefit calculated under the Base Guaranteed Minimum Death
Benefit; or
(2) premiums paid, accumulated annually at 5% interest until the date of
the Annuitant's death, proportionately adjusted for partial surrenders
and deducting any loan balance. We place a maximum on the amount
accumulated at 5% interest of two times the total premiums paid, less
surrenders and any loan balance; or
(3) the highest contract value as of a contract anniversary during any
point the contract has been in effect on or before the Annuitant's
death. Any loan balance will be deducted from such contract value and
the contract value was also be proportionately adjusted for partial
surrenders.
For the Annuitant's attained age 80 and above we guarantee that the death
benefit will equal the greater of:
(1) the contract value at the time of death; or
(2) the value of the Guaranteed Minimum Death Benefit on the contract
anniversary following the Annuitant's 80th birthday, calculated as
described above, proportionately adjusted for partial surrenders, less
any indebtedness and plus any premiums paid since the contract
anniversary following the Annuitant's 80th birthday.
This option is only available at issue of the contract and is only
available to Annuitants with issue ages of 70 or below.
The proportionate adjustment to the Guaranteed Minimum Death Benefit for partial
surrender is equal to a reduction in the Guaranteed Minimum Death Benefit by an
amount equal to the percentage of the partial surrender, including surrender
charges, as compared to the contract value immediately prior to the partial
surrender.
If you have elected the Annual Ratchet or Enhanced Combination Guaranteed
Minimum Death Benefit Options, you may change the option at any time to the Base
Guaranteed Minimum Death Benefit. The effective date of change will be the
monthly anniversary day on or following the date we receive written notice of
the change.
We will pay interest on single sum death proceeds from the date of the
Annuitant's death until the date of payment. Interest will be at an annual rate
determined by us, but never less than the rate required by the state in which
this contract is delivered.
3.4 Surrender Proceeds
We will pay proceeds of a full surrender as either a lump sum or under a payment
option as described in Section 10, Payment of Proceeds. Unless you specify
otherwise, we will pay full surrender proceeds as a lump sum. Surrender proceeds
will be equal to:
(1) the cash surrender value as described in Section 5.5 if you choose a
lump sum or payment options 1, 2 or 3: or
(2) the contract value as described in Section 5.1 if you choose payment
options 4 or 5.
The amount of proceeds payable under the Partial Surrender Provision is defined
in Section 5.6. We will only pay out partial surrender proceeds as a lump sum or
under the Systematic Partial Surrender Plan described in Section 5.7.
3.5 Nursing Home Benefit Proceeds
If we receive satisfactory proof that the Owner is admitted to a licensed
nursing home, up to the full contract value may be paid out equally over at
least a three year period with no surrender charges. The Owner must be confined
to a licensed nursing home for a least 90 days before the surrender charges will
be waived.
3.6 Proceeds Applied Under Payment Options
If you elect to receive proceeds under a payment option as described in Section
10, we may require proof that the Annuitant is living.
If you choose to receive a life income (payment options 4 or 5), this life
income will be purchased using the applicable monthly life income factor shown
in Section 10. If the pay out rates in use by us at the time proceeds become
payable are more favorable than those shown in Section 10, we will provide a
life income using the more favorable rates.
Once a monthly life income (payment options 4 or 5 as described in Section 10)
becomes payable, you may not make any election regarding payment of the proceeds
other than the right to change the beneficiary or contingent payee.
Section 4: Premiums
4.1 Flexible Premium Provision
You must pay your first premium when the contract is delivered. Subsequent
premiums may be paid at any time while the contract is in force prior to the
maturity date. These premiums may vary in amount at your option except that we
have the right to require that the premium payment be at least $50.
All premiums after the first are payable at the Home Office or to a
representative authorized to receive premiums. We will furnish a receipt upon
request.
We require that the initial premium under this contract be at least $10,000.
Additional premiums may be paid. We have the right to limit the number and
amount of additional premium payments.
4.2 Nonpayment of Premiums
If premiums for this contract cease, we will continue the contract subject to
Section 6.7, Contract Termination. The monthly income payable on the maturity
date will be as described in Section 3.2, Maturity Proceeds.
Section 5: Contract Values
5.1 Contract Value
On the contract date the contract value equals:
(1) the initial premium paid; less
(2) the annual administration fee shown in Section 1, Contract Data.
On any day after the contract date the contract value is equal to the fixed
account value plus the variable account value. We will deduct the annual
administration fee shown in Section 1, Contract Data, (if applicable), from the
contract value at the beginning of each contract year.
5.2 Fixed Account Value
On the contract date the fixed account value equals:
(1) the portion of the premium allocated to the fixed account; less
(2) the portion of the annual administration fee allocated to the fixed
account.
On each valuation day the fixed account value will be equal to:
A + B + C - D - E - F
"A" is the fixed account value on the preceding valuation date plus interest
from the preceding valuation day to the date of calculation.
"B" is the portion of the premiums allocated to the fixed account and received
since the preceding valuation day, plus interest from the date we receive such
premiums to the date of calculation.
"C" is the amount of any transfers from the sub-accounts to the fixed account,
plus interest on such transferred amounts from the effective dates of such
transfers to the date of calculation.
"D" is the amount of any transfers from the fixed account, to the sub-accounts
since the preceding valuation day, plus interest on such transferred amount from
the effective dates of such transfers to the date of calculation.
"E" is the amount of any partial surrenders and any applicable surrender charge
from the fixed account since the preceding valuation period, plus interest on
these surrendered amounts from the effective date of the partial surrenders to
the date of calculation.
"F" is the portion of the annual administration fee shown in Section 1, Contract
Data.
5.3 Interest Rate for Fixed Account Value
The value in the fixed account is guaranteed to accumulate at a minimum
effective annual interest rate of 3%. We may credit a rate in excess of 3% while
the contract is in force and before the maturity proceeds have been paid.
We may charge the interest rate credited to new deposits at any time. We will
not charge the interest rate credited to funds in the fixed account more often
than once each year.
5.4 Variable Account Value
The variable account value is the sum of the values of the sub-accounts under
this contract.
On the contract date the value of each sub-account equals:
(1) the portion of the initial premium allocated to the sub-account; less
(2) the portion of the annual administration fee, mortality and expense
risk charges and asset-based administration charge allocated to the
sub-accounts.
5.5 Cash Surrender
You may surrender this contract for its cash surrender value at any time before
the earlier of:
(1) your death;
(2) the Annuitant's death; or
(3) the maturity date.
When you surrender the contract you will receive 10% of the contract value
without a surrender charge, provided you have not exercised the partial
surrender provision or have not participated in the systematic partial surrender
plan during the current contract year.
The cash surrender value of this contract is:
(1) the contract value of this contract at the time of surrender; less
(2) any applicable surrender charge (shown in Section 1, Contract Data);
less
(3) any loan balance; less
(4) any premium taxes payable.
To surrender the contract you must submit a written request to us. We have the
right to require that the contract be returned to us as well. We will determine
the cash surrender value on the date we receive these requirements.
We will pay the cash surrender value in a lump sum unless you request payment
under a payment option.
Certain federal income tax consequences may apply to a cash surrender of the
contract. You should consult your tax advisor before requesting a surrender.
5.6 Partial Surrender
You may make a partial surrender at any time before the earlier of:
(1) the death of the Annuitant;
(2) the death of the Owner; or
(3) the maturity date.
You may make a partial surrender of up to 10% of the contract value each
contract year without incurring a surrender charge. Any surrender in excess of
10% during a contract year will be subject to the surrender charge.
We will surrender the amount requested from the contract value on the day we
receive written notice for the surrender. We will deduct any applicable
surrender charge from the remaining contract value. If the remaining contract
value is less than the surrender charge, we will reduce the amount surrendered.
You may specify the specific amount to be surrendered from certain sub-accounts
or the fixed account.
The minimum distribution requested must be for at least $100. We will pay
partial surrender proceeds in a lump sum.
We will pay you the amount requested and cancel units equal to the amount
surrendered from the sub-accounts and/or the fixed account according to your
instructions. In the event that the amount to be surrendered exceeds the
sub-account(s) value and/or the fixed account value, we will process the
surrender for the amount available and contact you for further instructions.
We limit the option to elect a 10% free partial surrender to one per contract
year, even if the amount surrendered during that year is less than 10% of the
contract value. If you are participating in the systematic partial surrender
plan, that is considered the one free partial surrender for the contract year.
Certain federal income tax consequences may apply to partial surrenders from the
contract. You should consult your tax advisor before requesting any partial
surrenders.
5.7 Systematic Partial Surrender
The systematic partial surrender plan enables you to pre-authorize a periodic
exercise of the partial surrender right. If you enter into this plan, you may
instruct us to surrender a requested dollar amount from the contract on a
monthly, quarterly, semi-annual or annual basis.
The minimum distribution requested must be for at least $100. The maximum amount
which can be surrendered under the plan without a surrender charge is 10% of the
contract value as of the time the systematic plan is elected. In subsequent
years the amount which can be surrendered under the plan without a surrender
charge is 10% of the contract value at the beginning of each contract year.
We will notify you if the total amount to be surrendered in a subsequent
contract year will exceed 10% of the contract value as of the beginning of such
contract year. Unless you instruct us to reduce the surrender amount for that
year so that it does not exceed the 10% limit, we will continue to process
surrenders for the designated amount. Once the amount of the surrender exceeds
the 10% limit, we will deduct the applicable surrender charge from the remaining
payments made during that contract year.
Any other surrender in a year when the systematic partial surrender plan has
been utilized will be subject to the surrender charge.
We will pay you the amount requested and cancel units equal to the amount
surrendered from the sub-accounts and/or the fixed account according to your
instructions. In the event that the amount to be surrendered exceeds the
sub-account(s) value and/or the fixed account value, we will process the
surrender for the amount available and contact you for further instructions.
The option to elect the 10% free systematic partial surrender plan is limited to
one per contract year, even if the amount surrendered during that year is less
than 10% of the contract value.
Systematic partial surrenders may be discontinued by you at any time upon
written request to us at our Home Office.
Certain federal income tax consequences may apply to systematic partial
surrenders from the contract. Therefore, you should consult with your tax
advisor before requesting any systematic partial surrenders.
5.9 Time Period for Payment
We will normally pay out any partial surrender, cash surrender value or death
benefit within seven days of receiving your written request or receipt and
filing of due proof of death. However, we have the right to suspend or delay the
date of any surrender, partial surrender or death benefit payment from the
sub-accounts for any period during which:
(1) the New York Stock Exchange is closed, other than customary weekend
and holiday closings, or trading on the New York Stock Exchange is
restricted as determined by the Securities and Exchange Commission; or
(2) the Securities and Exchange Commission permits by an order the
postponement for the protection of contract owners; or
(3) The Securities and Exchange Commission determines that an emergency
exists that would make the disposal of securities held in the variable
account or the determination of the value of the variable account's
net assets not reasonably practicable.
For any surrender, partial surrender or transfer from the fixed account, we have
the right to postpone making a payment to you up to six months from the date of
written notice. If payment is not made within 30 days after receipt of
documentation necessary to complete the transaction, (or such shorter period
required by a particular jurisdiction), we will add interest to the amount paid
from the date we receive documentation at 3% (or such higher rate required for a
particular state).
Section 6: Other Contract Provisions
6.1 Contract
This contract and application are the entire contract. This contract is issued
in consideration of the application and payment of the premiums. We will attach
a copy of the application when we issue the contract. In the absence of fraud,
all statements made in the application either by you or by the Annuitant will be
considered representations and not warranties. We may use statements to contest
a claim or the validity of this contract only if they are contained in the
application.
6.2 Authority to Change Contract
No change or waiver of any provisions of this contract will be valid unless made
in writing by us and signed by our President, Vice President, Secretary or
Assistant Secretary. No agent or other person has authority to change or waive
any provision of your contract.
6.3 Modifications
Upon notice to you, we may modify the contract, but only if such modification is
necessary to:
(1) make the contract or the variable account comply with any law or
regulation issued by a governmental agency to which we are subject; or
(2) assure continued qualification of the contract under the Internal
Revenue Code or other federal or state laws relating to retirement
annuities or variable annuity contracts; or
(3) reflect a change in the operation of the variable account; or
(4) provide additional variable account and/or fixed accumulation options.
We have the right to modify the contract as necessary to attempt to prevent the
contract owner from being considered the owner of the assets of the variable
account.
In the event of any such modification, we will issue an appropriate endorsement
to the contract, if required.
6.4 Incontestability
After this contract has been in force during the Annuitant's lifetime for two
years from the contract date, we cannot contest this contract except for the
nonpayment of premiums.
6.5 Age and Sex
This contract is issued at the Annuitant's age shown in Section 1, Contract
Data. If the contract date falls on the birthday of the Annuitant, the age will
be the age the Annuitant reaches on the contract date.
If the Annuitant's age or sex has been incorrectly stated, the benefits under
this contract will be those the proceeds applied would have purchased for the
correct age and sex.
If the incorrect statement is not discovered until after payments have begun:
(1) any overpayment by us will be deducted from the next succeeding
payment or payments as they fall due; or
(2) any underpayment by us will be paid in one sum to the Annuitant.
In either case, interest will be payable at the rate of 3% per year compounded
annually.
6.6 Option to Change Maturity Date
You may elect a new maturity date at any time by making a written notice to us
subject to the following limitations:
(1) we must receive your written notice at least 30 days before the
current maturity date;
(2) the requested maturity date must be a date that is at least 30 days
after we receive your written notice;
(3) the requested maturity date cannot exceed the later of the contract
anniversary following the Annuitant's 85th birthday, or the tenth
anniversary of the contract; and
(4) the requested maturity date must be no later than any earlier maturity
date required by law.
We may require that the contract be submitted for endorsement to show the
change.
If you elect a new maturity date, the monthly life income factor will be as
shown in Table B of Section 10, Payment of Proceeds.
6.7 Contract Termination
We have the right to terminate this contract and pay the cash surrender value if
all of the following occur simultaneously:
(1) no premiums have been paid for at least two years;
(2) the contract value is less than $2,000; and
(3) the total premiums paid, less any partial surrenders, is less than
$2,000.
We will mail notice to you of our intention to terminate the contract at least
six months in advance. We have the right to terminate on the date specified in
the notice, unless:
(1) we receive an additional premium payment before the termination date
specified in the notice; or
(2) the contract value has increased to the amount specified above.
This additional premium payment must be for at least the minimum premium amount
we will accept.
6.8 Contract Loans
If your contract has been purchased as a tax sheltered annuity as described in
Section 403(b) of the Internal Revenue Code, as amended, that is not part of a
plan that is subject to the Employee Retirement Income Security Act of 1974, you
will have the option of taking a contract loan at any time after the first
contract year. If your contract has been purchased in this tax sheltered market,
an endorsement attached to this contract will detail the loan requirements.
6.9 Nonparticipating
This contract will not participate in any of our profits, losses or surplus
earnings.
6.10 Annual Report
At least annually we will send you a report showing the following:
(1) the contract value;
(2) the cash surrender value; and
(3) any other information required by law or regulation.
Upon receiving your written notice, we will send you a report at any other time
during the year for a reasonable charge as determined by us.
6.11 Basis of Computation
Our calculation of guaranteed fixed account values are based on an interest rate
of 3% per year. The reserves and guaranteed fixed account values will at no time
be less than the minimum required by law of the state in which this contract is
delivered.
Section 7: Control of Contract
7.1 Ownership
The Annuitant is the owner unless otherwise provided in the application. As
owner, you may exercise every right provided by your contract. These rights and
privileges end at the Annuitant's death.
The consent of the beneficiary is required to exercise these rights if you have
not reserved the right to change the beneficiary.
7.2 Change of Ownership
You may change the ownership of this contract by giving written notice to us.
The change will be effective on the date your written notice was signed but will
have no effect on any payment made or other action taken by us before we receive
it. We may require that the contract be submitted for endorsement to show the
change.
Certain federal income tax consequences may apply to a change of ownership on
non-qualified contracts. You should consult with your tax advisor before
requesting any change of ownership on a non-qualified contract.
7.3 Assignment
An assignment is a transfer of some or all of your rights under this contract.
No assignment will be binding on us unless made in writing and filed at our Home
Office. We assume no responsibility for the validity or effect of any
assignment.
Certain federal income tax consequences may apply to an assignment. You should
consult with your tax advisor before requesting any assignment.
7.4 Beneficiary
The beneficiary is shown on the application or in the last beneficiary
designation filed with us. Death proceeds will be paid to the beneficiary except
as provided in this Section.
If any beneficiary dies before the Annuitant, that beneficiary's interest will
pass to any other beneficiaries according to their respective interest.
If all beneficiaries die before the Annuitant, we will pay the death proceeds to
you, if living, otherwise to your estate or legal successors.
Unless you have waived the right to do so, you may change the beneficiary by
filing a written notice in a form satisfactory to us. In order to be effective,
the written notice for change of beneficiary must be signed while your contract
is in force and the Annuitant is living. The change will be effective on the
date your written notice was signed but will have no effect on any payment made
or other action taken by us before we receive it.
The interest of any beneficiary will be subject to:
(1) any assignment of this contract which is binding on us; and
(2) any optional settlement agreement in effect at the Annuitant's death.
7.5 Simultaneous Death of Beneficiary and Annuitant
We will pay death proceeds as though the beneficiary died before the Annuitant
if:
(1) the beneficiary dies at the same time as or within 15 days of the
Annuitant's death; and
(2) we have not paid the proceeds to the beneficiary within this 15-day
period.
Section 8: Variable Account
8.1 General Description
The name of the variable account is the Kansas City Life Variable Annuity
Separate Account. The income, gains and losses, (whether or not realized), from
assets allocated to the variable account are credited or charged against the
variable account without regard to our other income, gains or losses. The
portion of the assets of the variable account equal to the reserves and other
contract liabilities with respect to the variable account will not be chargeable
with liabilities arising out of any other business we may contract.
The assets of the variable account are segregated by investment options, thus
establishing a series of sub-accounts within the variable account.
When permitted by law, we have the right to:
(1) create new variable accounts;
(2) combine variable accounts;
(3) remove, combine or add sub-accounts and make the new sub-accounts
available to you at our discretion;
(4) substitute shares of another portfolio of the funds or shares of
another investment company for those of the funds;
(5) add new portfolios to the funds;
(6) de-register the variable account under the Investment Company Act of
1940 if registration is no longer required;
(7) make any changes required by the Investment Company Act of 1940; and
(8) operate the variable account as a managed investment company under the
Investment Company Act of 1940 or any other form permitted by law.
If a change is made, we will send you a revised prospectus and any notice
required by law. If required, we would first seek the approval of the Securities
and Exchange Commission, and when required, the appropriate state regulatory
authorities before making a change in the investment options.
8.2 Sub-Accounts
The sub-accounts are separate investment accounts. They are named in Section 1,
Contract Data. The assets of each subaccount are invested in a corresponding
portfolio of a designated mutual fund.
Sub-account values will fluctuate in accordance with the investment experience
of the applicable portfolio of the fund held within the sub-account.
The sub-account value is equal to the number of accumulation units credited to
the sub-account times the appropriate accumulation unit value.
The number of accumulation units to be purchased or redeemed in a transaction is
found by dividing:
(1) the dollar amount of the transaction; by
(2) the sub-account's unit value for the valuation period for that
transaction. The number of units in any sub-account will be increased
at the end of the valuation period by:
(a) any premiums allocated to the sub-account during the current
valuation period;
(b) any transfers to the sub-account from another sub-account or from
the fixed account during the current valuation period; and
(c) the amount of any variable account bonus that may be credited on
a monthly anniversary.
The number of units in any sub-account will be decreased at the end of the
valuation period by:
(1) any amounts transferred from the sub-account to another sub-account or
the fixed account;
(2) amounts surrendered during the current valuation period; or
(3) the cost of the monthly guaranteed minimum death benefit expense
charge, if any, that is deducted on the monthly anniversary day.
The number of units in any sub-account will also be reduced at the beginning of
each contract year by a pro-rata share of the $30 annual administration fee. The
annual administration fee will reduce the sub-account units in proportion to
each sub-account's value to the entire contract value.
The value of an accumulation unit for each of the sub-accounts was arbitrarily
set at $10 when the first investments were bought. The value for any later
valuation period is equal to:
A x B
"A" is equal to the sub-account's accumulation unit value for the end of the
immediately preceding valuation day.
"B" is equal to the net investment factor for the most current valuation day.
The net investment factor equals:
X/Y - Z
"X" equals the sum of:
(1) the net asset value per accumulation unit held in the sub-account at
the end of the current valuation day; plus
(2) the per accumulation unit amount of any dividend, or capital gain
distribution on shares held in the sub-account during the current
valuation day; less
(3) the per accumulation unit amount of any capital loss distribution on
shares held in the sub-account during the current valuation day; less
(4) the per accumulation unit amount of any taxes or any amount set aside
during the valuation day as a reserve for taxes.
"Y" equals the net asset value per accumulation unit held in the sub-account as
of the end of the immediately preceding valuation day.
"Z" equals the charges deducted from the sub-account on each valuation period
for the asset-based administration charge and the mortality and expense risk
charge.
The value of the sub-account may increase, decrease or remain the same.
8.3 Allocations
This contract provides investment options for the amount in the contract value.
We allocate amounts placed in the contract value to the sub-accounts of the
variable account and to the fixed account at your direction. The initial premium
allocation percentages are indicated in the application for this contract.
These percentages will also apply to subsequent premium allocations until you
change them. Such allocation percentages may be changed by written notice.
Allocation percentages must be zero or a whole number not greater than 100. The
sum of the premium allocation percentages must equal 100.
We have the right to limit the number of sub-account allocations in effect at
any one time.
8.4 Deductions Made From Sub-Accounts
We deduct the mortality and expense risk charge and the asset-based
administration charge from each of the sub-accounts on each valuation day. These
charges are shown in Section 1, Contract Data.
Section 9: Transfers
9.1 Transfer Fees
Six transfers per year may be made from sub-accounts and the fixed account free
of charge. Any unused free transfers do not carry over to the next contract
year. We will charge a $25 transfer fee on any additional transfers during a
contract year. For the purpose of assessing a fee, we consider each written
request or telephone request to be one transfer. We will deduct the processing
fee from the amount being transferred, or from the remaining contract value,
according to your instructions.
9.2 Transfers From Sub-Accounts
After the 10-day right to examine period and prior to the maturity date, you may
transfer all or a part of an amount from the value in any sub-account of the
variable account to one or more of the sub-accounts of the variable account or
to the fixed account. The minimum amount that you may transfer is the lesser of:
(1) $250; or
(2) the total value in that sub-account on that date.
We will treat any transfer that would reduce the amount in a sub-account below
$250 as a transfer request for the entire amount in that sub-account.
A transfer fee may apply as described in Section 9.1, Transfer Fees.
An excessive number of transfers, including short-term "market timing"
transfers, may adversely affect the performance of the underlying fund in which
a sub-account invests. If, in our sole opinion, a pattern of excessive transfers
develops, we have the right not to process a transfer request. We also have the
right not to process a transfer request when the sale or purchase of shares of a
fund is not reasonably practicable due to actions taken or limitations imposed
by the fund.
We may suspend or modify this transfer privilege at any time.
9.3 Transfers From The Fixed Account
At your request you may also transfer an amount from the unloaned value in the
fixed account to one or more sub-accounts of the variable account. We must
receive the request in writing or other form acceptable to us. You may make only
one transfer from the fixed account each contract year.
We will not transfer more than 25% of the unloaned fixed account value, unless
the balance after the transfer is less than $250, in which case the entire
amount will be transferred.
A transfer fee may apply as described in Section 9.1, Transfer Fees.
We may suspend or modify this transfer privilege at any time.
Section 10: Payment of Proceeds
10.1 Payment Options
You may apply death benefit, maturity or full surrender proceeds of $2,000 or
more to any of the following options:
Option 1. Interest Payments
We will make guaranteed interest payments to the payee annually or monthly
as elected. We will pay interest on the proceeds at the guaranteed rate of
3.0% per year and this may be increased by additional interest paid
annually. The proceeds and any unpaid interest may be withdrawn in full at
any time.
Option 2. Installments of a Specified Amount
We will make annual or monthly payments until the proceeds plus interest
are fully paid. We will pay interest on the proceeds at the guaranteed rate
of 3.0% per year and this may be increased by additional interest. The
present value of any unpaid installments may be withdrawn at any time.
Option 3. Installments For a Specified Period
Payment of the proceeds may be made in equal annual or monthly payments for
a specified number of years. We will pay interest on the proceeds at the
guaranteed rate of 3.0% per year and this may be increased by additional
interest. The present value of any unpaid installments may be withdrawn at
any time. The amount of each payment is shown in Table A.
Option 4. Life Income
We will pay an income during the payee's lifetime. A minimum guaranteed
payment period may be chosen. We will continue payments under the
Installment Refund option until the total income payments paid equal the
proceeds applied. The amount of each payment is shown in Table B.
Option 5. Joint and Survivor Income
We will pay an income during the lifetime of two persons and will continue
to pay the same income as long as either person is living. The minimum
guaranteed payment period will be ten years. The amount of each payment is
shown in Table C.
If the payout rates in use by us at the time proceeds become payable are more
favorable than those shown in options 4 and 5, we will provide a life income
using the more favorable rates.
10.2 Payee
The payee is the person receiving proceeds under a payment option. The payee can
be you, the Annuitant or a beneficiary. We will require satisfactory proof of
the payee's age under options 4 and 5.
The contingent payee is the person named to receive proceeds if the payee is not
alive.
10.3 Minimum Payments
The payment under any payment option must be at least $50. We may make payments
less frequently so that each payment is at least $50.
10.4 Choice of Options
You may choose an option by written notice during the Annuitant's lifetime. If
an option for payment of proceeds is not in effect at the Annuitant's death, the
beneficiary may make a choice.
10.5 Availability of Options
We have the right to restrict these options if you designate an executor,
administrator, trustee, corporation, partnership or association as the payee.
10.6 Operative Date
The first payment will be payable on the payment mode following the date
proceeds become payable.
10.7 Death of Payee
At the death of the payee, any payments remaining will be paid according to the
terms of the option chosen for payment of proceeds, unless the contingent payee
elects in writing to receive the present value of any remaining guaranteed
payments in a single sum.
If a contingent payee has not been named or does not survive the payee, the
following amounts will be paid in one sum to the estate of the payee:
(1) any amount left on deposit under option 1; and
(2) the present value of any remaining guaranteed payments under options 2
through 5.
If you have not named a contingent payee, or if every contingent payee named by
you dies before the payee, you may, by written notice, name a new contingent
payee. The new contingent payee will receive any amount that would otherwise
have been payable to the payee's estate.
10.8 Claims of Creditors
To the extent permitted by law, proceeds will not be subject to any claims of a
payee's creditors.
<TABLE>
<CAPTION>
TABLE A - INSTALLMENT OPTION*
for Each $1,000 of Proceeds Applied
------------- ---------- ----------- ---------- ----------- ---------- ---------- ----------- ----------
Term of Term of Term of
Years Annual Monthly Years Annual Monthly Years Annual Monthly
------------- ---------- ----------- ---------- ----------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $1000.00 $84.47 11 $104.93 $8.86 21 $62.98 $5.32
2 507.39 42.86 12 97.54 8.24 22 60.92 5.15
3 343.23 28.99 13 91.29 7.71 23 59.04 4.99
4 261.19 22.06 14 85.95 7.26 24 57.33 4.84
5 211.99 17.91 15 81.33 6.87 25 55.76 4.71
6 179.22 15.14 16 77.29 6.53 26 54.31 4.59
7 155.83 13.16 17 73.74 6.23 27 52.97 4.47
8 138.31 11.68 18 70.59 5.96 28 51.74 4.37
9 124.69 10.53 19 67.78 5.73 29 50.60 4.27
10 113.82 9.61 20 65.26 5.51 30 49.53 4.18
------------- ---------- ----------- ---------- ----------- ---------- ---------- ----------- ----------
</TABLE>
<TABLE>
<CAPTION>
TABLE B - LIFE INCOME OPTIONS*
Monthly Income for Each $1,000 of Proceeds Applied
------------- --------------------------------------------- --------------------------------------------
MALE FEMALE
Minimum Guaranteed Payment Period Minimum Guaranteed Payment Period
Age
---------- ----------- ---------- ----------- ---------- ---------- ----------- ----------
Install- Install-
120 240 ment 120 240 ment
None Months Months Refund None Months Months Refund
------------- ---------- ----------- ---------- ----------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50 $4.23 $4.19 $4.06 $4.05 $3.89 $3.87 $3.81 $3.80
51 4.31 4.26 4.11 4.11 3.95 3.93 3.86 3.84
52 4.38 4.33 4.17 4.17 4.01 3.98 3.91 3.89
53 4.46 4.40 4.22 4.23 4.07 4.04 3.96 3.95
54 4.55 4.48 4.28 4.29 4.13 4.11 4.01 4.00
55 4.63 4.56 4.33 4.36 4.20 4.17 4.07 4.06
56 4.73 4.65 4.39 4.43 4.28 4.24 4.12 4.12
57 4.83 4.74 4.45 4.51 4.36 4.32 4.18 4.18
58 4.94 4.83 4.51 4.59 4.44 4.40 4.24 4.25
59 5.05 4.93 4.57 4.67 4.53 4.48 4.30 4.32
60 5.17 5.04 4.63 4.75 4.63 4.57 4.37 4.39
61 5.30 5.15 4.69 4.85 4.73 4.66 4.43 4.47
62 5.44 5.27 4.75 4.94 4.84 4.76 4.50 4.55
63 5.60 5.39 4.81 5.04 4.95 4.86 4.56 4.64
64 5.76 5.52 4.86 5.15 5.08 4.97 4.63 4.73
65 5.93 5.65 4.92 5.26 5.21 5.09 4.69 4.83
66 6.12 5.79 4.97 5.37 5.35 5.21 4.76 4.93
67 6.32 5.94 5.02 5.50 5.50 5.34 4.82 5.04
68 6.53 6.09 5.06 5.62 5.66 5.47 4.88 5.15
69 6.76 6.24 5.11 5.76 5.84 5.61 4.94 5.27
70 7.00 6.40 5.14 5.90 6.02 5.76 5.00 5.39
71 7.26 6.56 5.18 6.04 6.23 5.92 5.05 5.53
72 7.53 6.72 5.21 6.20 6.45 6.08 5.10 5.67
73 7.83 6.88 5.24 6.36 6.70 6.25 5.14 5.81
74 8.15 7.05 5.26 6.53 6.96 6.43 5.18 5.97
75 8.49 7.22 5.28 6.70 7.24 6.61 5.22 6.14
------------- ---------- ----------- ---------- ----------- ---------- ---------- ----------- ----------
</TABLE>
<TABLE>
<CAPTION>
TABLE C - JOINT AND SURVIVOR OPTION*
Monthly Income - Ten Year Guaranteed Payment Period
for Each $1,000 of Proceeds Applied
--------------------- ----------------------------------------------------------------------------------
Male Female Age
Age 50 55 60 65 70 75
--------------------- ------------- ------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
50 $3.31 $3.37 $3.43 $3.49 $3.53 $3.56
55 3.47 3.55 3.63 3.70 3.76
60 3.68 3.80 3.91 4.00
65 3.97 4.15 4.31
70 4.41 4.68
75 5.08
--------------------- ------------- ------------- ------------- ------------- ------------- ------------
</TABLE>
*Amounts not shown for available options will be furnished on request.
Flexible Premium Variable
Annuity Contract
Nonparticipating
Annuity proceeds payable at maturity date. Death proceeds payable in event of
death of Annuitant prior to maturity date. Flexible premiums payable until
maturity date or prior death of Annuitant.
If you have any questions concerning this contract or if anyone suggests that
you change or replace this contract, please contact your Kansas City Life agent
or the Home Office of the Company.
