As filed with the Securities and Exchange Commission on
April 18, 1997.
Registration No. 33-95354
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF SECURITIES
OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
Kansas City Life Variable Life Separate Account (Exact name of trust)
KANSAS CITY LIFE INSURANCE COMPANY
(Name of depositor)
3520 Broadway
Kansas City, Missouri 64141-6139
(Complete address of depositor's principal
executive offices)
C. John Malacarne
Kansas City Life Insurance Company
3520 Broadway Kansas City, Missouri 64141-6139
(Name and complete address of agent for service)
Approximate date of proposed public offering:
As soon as practicable after the effective date of this Registration
Statement.
Securities Being Offered -- Flexible Premium Variable Joint Survivorship Life
Insurance Contracts Pursuant to Rule 24f-2 of the Investment Company Act of
1940, the Registrant has elected to register an indefinite amount of
the securities being offered.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
KANSAS CITY LIFE VARIABLE LIFE SEPARATE ACCOUNT
KANSAS CITY LIFE INSURANCE COMPANY
Cross Reference to Items Required by Form N-8B-2
N-8B-2 Item Caption in Prospectus
1 Cover Page
2 Cover Page
3 Not applicable
4 Sale of the Contracts
5 Kansas City Life Variable Life Separate Account
6 Kansas City Life Variable Life Variable Account
7 Not applicable
8 Not applicable
9 Legal Matters
10 Summary and Diagram of the Contract; Premium Payments and
Allocations; Addition, Deletion or Substitution of Investments;
Voting Rights
11 The Funds
12 The Funds
13 Charges and Deductions
14 Premium Payments and Allocations
15 Premium Payments and Allocations
16 The Funds
17 Surrender Privilege; Withdrawal of Cash Surrender Value
18 Kansas City Life Variable Life Separate Account
19 Reports to Contract Owners
20 Not Applicable
21 Contract Loans
22 Not applicable
23 Not applicable
24 Not applicable
25 Kansas City Life Insurance Company
26 Not applicable
27 Kansas City Life Insurance Company
28 Kansas City Life Directors and Executive Officers
29 Not applicable
30 Not applicable
31 Not applicable
32 Not applicable
33 Not applicable
34 Not applicable
35 Not applicable
36 Not applicable
37 Not applicable
38 Sale of Contracts
39 Sale of Contracts
40 Sale of Contracts
41 Not applicable
42 Not applicable
43 Not applicable
44 Determining the Contract Value
45 Not applicable
46 Not applicable
47 General Information About Kansas City Life, the Variable Account and
the Funds
48 Not applicable
49 Not applicable
50 The Variable Account
51 Premium Payments and Allocations; Death Benefit and Changes in
Specified Amount; Sale of the Contracts
52 Addition, Deletion or Substitution of Investments
53 Not applicable
54 Not applicable
55 Illustration of Contract Values, Cash Surrender Value, Death
Benefits and Accumulated Premium Payments
56 Illustration of Contract Values, Cash Surrender Value, Death
Benefits and Accumulated Premium Payments
57 Illustration of Contract Values, Cash Surrender Value, Death
Benefits and Accumulated Premium Payments
58 Not applicable
59 Financial Statements
PART I
Information Required in Prospectus
PROSPECTUS
FLEXIBLE PREMIUM VARIABLE SURVIVORSHIP LIFE INSURANCE CONTRACTS
KANSAS CITY LIFE VARIABLE LIFE SEPARATE ACCOUNT OF
Kansas City Life Insurance Company
Home Office: Correspondence to:
3520 Broadway Variable Administration
Kansas City, Missouri 64111-2565 P.O. Box 419364
Telephone (816) 753-7000 Kansas City, Missouri 64141-6364
Telephone (800) 616-3670
This Prospectus describes a flexible premium variable
survivorship life insurance contract (the "Contract") offered by
Kansas City Life Insurance Company ("Kansas City Life," "we,"
"us" or "our"). The Contract is designed to provide insurance
protection on the death of the last surviving of the two Insureds
named in the Contract, and at the same time provide you with the
flexibility to vary the amount and timing of premium payments and
to change the amount of Death Benefits payable under the
Contract. This flexibility allows you to provide for your
changing insurance needs under a single insurance contract.
You also have the opportunity to allocate Net Premium payments
and Contract Value to one or more Subaccounts of the Kansas City
Life Variable Life Separate Account (the "Variable Account") and
to Kansas City Life's general account (the "Fixed Account"),
within limits. This Prospectus generally describes only that
portion of the Contract Value allocated to the Variable Account.
For a brief summary of the Fixed Account, see "Fixed Account,"
page 24. The assets of each Subaccount are invested in a
corresponding portfolio (each, a "Portfolio") of MFS Variable
Insurance Trust ("MFS Trust"), of American Century Variable
Portfolios, Inc. ("American Century Variable Portfolios"), of
Federated Insurance Series, of Dreyfus Variable Investment Fund,
and of Dreyfus Stock Index Fund. (MFS Trust, American Century
Variable Portfolios, Federated Insurance Series, Dreyfus Variable
Investment Fund and Dreyfus Stock Index Fund are each referred
to as a "Fund"). Each Fund is managed by the investment adviser
shown below:
MFSr Variable Insurance TrustSM Manager
MFS Research Series Massachusetts Financial Services Company
MFS Emerging Growth Series
MFS Total Return Series
MFS Bond Series
MFS World Governments Series
MFS Utilities Series
American Century Variable Portfolios
ManagerAmerican Century Investment Management, Inc.
American Century VP Capital Appreciation
American Century VP International
Federated Insurance Series
Manager Federated Advisers
Federated American Leaders Fund II
Federated High Income Bond Fund II
Federated Prime Money Fund II
Dreyfus Variable Investment Fund
Manager: The Dreyfus Corporation
Capital Appreciation Portfolio
Small Cap Portfolio
Dreyfus Stock Index Fund
Manager The Dreyfus Corporation
The accompanying prospectuses for MFS Trust, American Century
Variable Portfolios, Federated Insurance Series, Dreyfus Variable
Investment Fund and Dreyfus Stock Index Fund describe their
respective Portfolios, including the risks of investing in the
Portfolios, and provide other information on MFS Trust, American
Century Variable Portfolios, Federated Insurance Series, Dreyfus
Variable Investment Fund and Dreyfus Stock Index Fund.
You can select from three Coverage Options available under the
Contract which determine the amount of death proceeds payable.
Kansas City Life offers a Guaranteed Minimum Death Benefit Option
which guarantees payment of the Specified Amount (less
Indebtedness and past due charges) upon the death of the last
surviving Insured provided that you meet the premium payment
requirements.
The Contract provides for a Cash Surrender Value that can be
obtained by surrendering the Contract. Because this value is
based on the performance of the Portfolios of the Funds, to the
extent of allocations to the Variable Account, there is no
guaranteed minimum Cash Surrender Value. If the Cash Surrender
Value is insufficient to cover the charges due under the
Contract, the Contract will lapse without value. The Contract
also permits loans and partial surrenders, within limits.
It may not be advantageous to replace existing insurance with
this Contract. Within certain limits, you may return the
Contract.
THIS PROSPECTUS PRESENTS CONCISELY THE INFORMATION YOU SHOULD
KNOW BEFORE DECIDING TO PURCHASE A CONTRACT. IT SHOULD BE
RETAINED FOR FUTURE REFERENCE. PROSPECTUSES FOR MFS VARIABLE
INSURANCE TRUST, AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.,
FEDERATED INSURANCE SERIES, DREYFUS VARIABLE INVESTMENT FUND AND
DREYFUS STOCK INDEX FUND MUST ACCOMPANY THIS PROSPECTUS AND
SHOULD BE READ IN CONJUNCTION WITH THIS PROSPECTUS.
AN INVESTMENT IN THE CONTRACT IS NOT A DEPOSIT OR OBLIGATION OF,
OR GUARANTEED OR ENDORSED BY, ANY BANK, NOR IS THE CONTRACT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THE CONTRACT
INVOLVES CERTAIN RISKS, INCLUDING THE LOSS OF PREMIUM PAYMENTS
(PRINCIPAL).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Date of this Prospectus is ____________, 1997.
PROSPECTUS CONTENTS
Page
DEFINITIONS OF TERMS 5
SUMMARY AND DIAGRAM OF THE CONTRACT 9
GENERAL INFORMATION ABOUT KANSAS CITY LIFE,
THE VARIABLE ACCOUNT AND THE FUNDS 15
KANSAS CITY LIFE INSURANCE COMPANY 15
KANSAS CITY LIFE VARIABLE LIFE SEPARATE ACCOUNT 15
THE FUNDS 15
RESOLVING MATERIAL CONFLICTS 17
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS 18
VOTING RIGHTS 18
PREMIUM PAYMENTS AND ALLOCATIONS 19
APPLYING FOR A CONTRACT 19
FREE LOOK RIGHT TO CANCEL CONTRACT 20
PREMIUMS 20
PREMIUM PAYMENTS TO PREVENT LAPSE 21
PREMIUM ALLOCATIONS AND CREDITING 22
TRANSFER PRIVILEGE 22
DOLLAR COST AVERAGING PLAN 23
PORTFOLIO REBALANCING PLAN 23
FIXED ACCOUNT 23
MINIMUM GUARANTEED AND CURRENT INTEREST RATES 24
CALCULATION OF FIXED ACCOUNT VALUE 24
TRANSFERS FROM FIXED ACCOUNT 24
PAYMENT DEFERRAL 24
CHARGES AND DEDUCTIONS 24
PREMIUM EXPENSE CHARGES 24
MONTHLY DEDUCTION 25
DAILY MORTALITY AND EXPENSE RISK CHARGE 26
TRANSFER PROCESSING FEE 27
PARTIAL SURRENDER FEE 27
FUND EXPENSES 27
BONUS ON CONTRACT VALUE IN THE VARIABLE ACCOUNT 27
REDUCED CHARGES FOR ELIGIBLE GROUPS 27
OTHER TAX CHARGE 27
HOW YOUR CONTRACT VALUES VARY 27
DETERMINING THE CONTRACT VALUE 28
CASH SURRENDER VALUE 28
DEATH BENEFIT 29
AMOUNT OF DEATH BENEFIT PROCEEDS 29
SELECTING AND CHANGING THE BENEFICIARY 29
TOTAL SUM INSURED, SPECIFIED AMOUNT, ADDITIONAL INSURANCE
AMOUNT 29
COVERAGE OPTIONS 29
CORRIDOR DEATH BENEFIT 30
GUARANTEED MINIMUM DEATH BENEFIT OPTION 30
IMPACT OF COMBINATIONS OF SPECIFIED AMOUNT AND ADDITIONAL
INSURANCE AMOUNT 31
CHANGES IN DEATH BENEFIT 31
INVESTMENT PERFORMANCE IMPACT ON DEATH BENEFIT 31
CHANGES IN COVERAGE OPTION 31
INCREASES IN THE ADDITIONAL INSURANCE AMOUNT 32
DECREASES IN TOTAL SUM INSURED 32
CASH BENEFITS 33
CONTRACT LOANS 33
SURRENDERING THE CONTRACT FOR CASH SURRENDER VALUE 34
PARTIAL SURRENDERS 34
PAYMENT OPTIONS 35
SPECIALIZED USES OF THE CONTRACT 35
ILLUSTRATIONS OF CONTRACT VALUES, CASH SURRENDER VALUES, DEATH
BENEFITS AND ACCUMULATED PREMIUM PAYMENTS 36
OTHER CONTRACT BENEFITS AND PROVISIONS 41
LIMITS ON RIGHTS TO CONTEST THE CONTRACT 41
CHANGES IN THE CONTRACT OR BENEFITS 41
WHEN PROCEEDS ARE PAID 41
REPORTS TO CONTRACT OWNERS 42
ASSIGNMENT 42
REINSTATEMENT OF CONTRACT 42
OPTIONAL BENEFITS AND RIDERS 42
TAX CONSIDERATIONS 43
TAX STATUS OF THE CONTRACT 43
TAX TREATMENT OF CONTRACT BENEFITS 44
POSSIBLE CHARGE FOR KANSAS CITY LIFE'S TAXES 46
OTHER INFORMATION ABOUT THE CONTRACTS AND KANSAS CITY LIFE 46
SALE OF THE CONTRACTS 46
TELEPHONE TRANSFER, PREMIUM ALLOCATION AND LOAN PRIVILEGES47
KANSAS CITY LIFE DIRECTORS AND EXECUTIVE OFFICERS 47
STATE REGULATION 49
ADDITIONAL INFORMATION 49
EXPERTS 49
LITIGATION 49
LEGAL MATTERS 49
FINANCIAL STATEMENTS 50
AMOUNT OF DEATH BENEFIT PROCEEDS
SELECTING AND CHANGING THE BENEFICIARY 51
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY
JURISDICTION IN WHICH SUCH OFFERING MAY NOT BE LAWFULLY
MADE. NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS
IN CONNECTION WITH THE OFFERING OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS, THE PROSPECTUSES OF THE FUNDS, OR THE
STATEMENTS OF ADDITIONAL INFORMATION OF THE FUNDS.
DEFINITIONS OF TERMS
Accumulation Unit An accounting unit used to calculate Variable
Account Value. It is a measure of the net
investment results of each of the
Subaccounts.
Additional InsuranceThe amount of insurance coverage
Amount under the Contract which is not part of the
Specified Amount. The Guaranteed Minimum
Death Benefit Option, if elected, does not
guarantee the Additional Insurance Amount.
Age Age means the age of each Insured on their last birthday as
of each contract anniversary.
Allocation Date The date on which the initial Net Premium is
allocated to the Federated Prime Money Fund
II Subaccount. The Allocation Date is the
later of the date when all underwriting and
other requirements have been met and your
application has been approved, or the date
the initial premium is received at the Home
Office.
Beneficiary The Beneficiary is the person you have designated in
the application or in the last beneficiary
designation filed with us to receive any
proceeds payable under the Contract at the
death of the last surviving Insured.
Cash Surrender The Contract Value at the time of surrender
Value less any Contract Indebtedness.
Contract AnniversaryThe same day and month as the Contract Date
each year that the Contract remains in force.
Contract Date The date on which coverage under the Contract takes
effect. Contract Months, Years and
Anniversaries are measured from the Contract
Date. The incontestability and suicide
periods for the Total Sum Insured are
measured from this date.
Contract Value The sum of the Variable Account Value and the Fixed
Account Value (including the Loan Account
Value). Calculation of the Contract Value is
described on page 28.
Contract Year A period of twelve months starting with the Contract
Date and each Contract Anniversary
thereafter.
Corridor Death Death Benefit corridor percentage applied
Benefit to Contract to ensure that the Contract will
not be disqualified as a life insurance
contract under Section 7702 of the Internal
Revenue Code, as amended. The Corridor Death
Benefit is calculated by multiplying the
Contract Value on the date of death of the
last surviving Insured by the applicable
corridor percentage.
Coverage Options The Coverage Option selected determines the
amount of death proceeds payable. Three
coverage options (A, B or L) are available.
These options are described in "Coverage
Options," page 30.
Death Benefit The amount of Proceeds payable upon the
Proceeds last surviving Insured's death. The Death
Benefit is determined according to the
Coverage Option that has been elected. The
Death Benefit will also be affected if the
Corridor Death Benefit is applicable or if
the Guaranteed Minimum Death Benefit Option
is in effect. Any Indebtedness is deducted
from the amount payable.
Excess Premium The portion of total premiums received during any
Contract Year that exceeds the Target
Premium.
Fixed Account An account that is part of our General Account, and
is not part of or dependent on the investment
performance of the Variable Account.
Fixed Account Value The Contract Value in the Fixed Account.
Guaranteed Minimum Death Benefit Option
An optional benefit, available only at
issue of the Contract. If elected, it
guarantees payment of the Specified Amount less
Indebtedness upon the death of the last
surviving Insured, provided that the Guaranteed
Minimum Death Benefit Option Premium requirement is met.
Guaranteed Minimum Death Option Premium
The Guaranteed Minimum Death Benefit Option Premium
is the amount required to guarantee that the
Guaranteed Minimum Death Benefit Option will
remain in effect.
Home Office 3520 Broadway, P.O. Box 419364, Kansas City, Missouri
64141-6364.
Indebtedness The sum of all outstanding Contract loans plus
accrued interest.
Insureds The two persons whose lives are insured under the
Contract.
Lapse Termination of the Contract at the expiration of the Grace
Period while one or both of the Insureds are
still living. See page 22.
Loan Account The Loan Account is part of the Fixed Account, which
is part of the General Account.
Loan Account Value The Contract Value in the Loan Account.
Minimum Premium The minimum premium is the amount required in the
first Contract Year to issue the Contract.
Monthly Anniversary The day of each month as of which we make
Day the Monthly Deduction. It is the same day of
each month as the Contract Date or the last
day of the month for those months not having
such a day.
Monthly Deduction The amount we deduct as of each Monthly
Anniversary Day from the Contract Value to
pay the Deductions from Contract Value as
described on page 25.
Net Investment An index used to measure Subaccount
Factor performance of the current Valuation Period.
Subaccount performance includes gains or
losses in the Subaccounts, dividends paid,
any capital gains or losses, any taxes, and
mortality and expense risk charges. The
calculation of the Net Investment Factor is
described on page 29.
Net Premium A premium payment minus the applicable Premium Expense
Charges. See page 25.
Owner, You The person entitled to exercise all rights and
privileges provided in the Contract.
Planned Premium The amount and frequency of premium
Payments payments you elected to pay in your last
application. This is the amount we will bill
you and is only an indication of your
preferences of future premium payments. You
may change the amount and frequency of
premium payments at any time. The actual
amount and frequency of premium payments will
affect the Contract Value and the amount and
duration of insurance.
Premium Expense The Premium Expense Charges are the
Charges amounts we deduct from each premium payment.
See page 25.
Premium Payment(s) The amount(s) paid by the Owner to purchase the
Contract; either a Planned Premium Payment or
unscheduled premium.
Proceeds The total amount we are obligated to pay under the terms
of the Contract.
Reallocation Date The date as of which Contract Value in the
Federated Prime Money Fund II Subaccount is
allocated to the Subaccounts and to the Fixed
Account based on the Net Premium allocation
percentages specified in the application.
The Reallocation Date is 30 days after the
Allocation Date.
Specified Amount The Total Sum Insured less any Additional
Insurance Amount provided under the Contract.
The actual Death Benefit will depend upon the
Coverage Option in effect.
Subaccounts The division of accounts making up the Variable
Account. The assets of each Subaccount are
invested in a corresponding portfolio of a
designated mutual fund.
Subaccount Value The Contract Value in a Subaccount.
Target Premium The annual Target Premium is specified in the
Contract. This amount is segregated from
Excess Premium for the purpose of calculating
certain charges.
Total Sum Insured The Total Sum Insured equals the sum of the
Specified Amount and any Additional Insurance
Amount provided under the Contract. This
amount does not include any additional
benefits provided by riders.
Unscheduled Premium Any premium other than a Planned Premium
Payment.
Valuation Day Each day on which both the New York Stock Exchange
and Kansas City Life are open for business.
Valuation Period The interval of time commencing at the close of
business one Valuation Day and ending at the
close of business on the next succeeding
Valuation Day.
Variable Account The Kansas City Life Variable Life Separate
Account. This is not part of our General
Account. The Variable Account has
Subaccounts.
Variable Account The total value of a Contract allocated to
Value Subaccounts of the Variable Account.
Written Notice A written notice in a form satisfactory to Kansas
City Life that is signed by the Owner and
received at the Home Office.
SUMMARY AND DIAGRAM OF THE CONTRACT
The following summary of Prospectus information and diagram of
the Contract should be read in conjunction with the detailed
information appearing elsewhere in this Prospectus. Unless
otherwise indicated, the description of the Contract in this
Prospectus assumes that the Contract is in force and there is no
outstanding Contract Indebtedness.
The Contract, for as long as it remains in force, provides
lifetime insurance protection with the Death Benefit paid on the
death of the last surviving Insured of the two Insureds named in
the policy.
The Contract is similar in many ways to fixed-benefit life
insurance. As with fixed-benefit life insurance, the Owner of a
Contract pays premium payments for insurance coverage on the
Insureds. Also like fixed-benefit life insurance, the Contract
provides for accumulation of Net Premiums and a Cash Surrender
Value that is payable if the Contract is surrendered during the
lifetime of one or both of the Insureds. As with fixed-benefit
life insurance, the Cash Surrender Value during the early
Contract Years is likely to be substantially lower than the
premium payments paid.
However, the Contract differs from fixed-benefit life insurance
in several important respects. Unlike fixed-benefit life
insurance, the Death Benefit may and the Contract Value will
increase or decrease to reflect the investment performance of the
Subaccounts to which Contract Value is allocated. Also, there is
no guaranteed minimum Cash Surrender Value. If elected at issue,
the Guaranteed Minimum Death Benefit Option does guarantee the
payment of the Specified Amount upon the death of the last
surviving Insured, regardless of the Contract's investment
performance, provided that the Guaranteed Minimum Death Benefit
Option Premium requirement has been met. See "Guaranteed
Minimum Death Benefit Option," page 31. Otherwise, if the Cash
Surrender Value is insufficient to pay charges due, the Contract
will lapse without value after a grace period. See "Premium
Payments to Prevent Lapse," page 22. If a Contract lapses while
loans are outstanding, adverse tax consequences may result. See
"Tax Considerations," page 44.
The most important features of the Contract, such as charges,
cash surrender benefits, Death Benefits, and calculation of
Contract Values, are summarized in the diagram on the following
pages.
Purpose of the Contract. The Contract is designed to provide
long-term insurance benefits, and may also provide long-term
accumulation of Contract Value. The Contract should be evaluated
in conjunction with other insurance policies that you own, as
well as the need for insurance and the Contract's long-term
investment potential. It may not be advantageous to replace
existing insurance coverage with this Contract. In particular,
replacement should be carefully considered if the decision to
replace existing coverage is based solely on a comparison of
Contract illustrations. See "Illustrations" on page 37 and
"Specialized Uses of the Contract" on
page 36.
Illustrations. Illustrations in this Prospectus or used in
connection with the purchase of a Contract are based on
hypothetical rates of return. These rates are not guaranteed.
They are illustrative only and should not be deemed a
representation of past or future performance. Actual rates of
return may be higher or lower than those reflected in Contract
illustrations, and therefore, actual Contract Values will be
different from those illustrated.
The illustrations show Contract Values based on current charges
and, alternatively, based on guaranteed charges. See
"Illustrations of Contract Values, Cash Surrender Values, Death
Benefits and Accumulated Premium Payments," page 37.
Contract Tax Compliance. Kansas City Life intends for the
Contract to satisfy the definition of a life insurance contract
under Section 7702 of the Internal Revenue Code. Under certain
circumstances, a Contract will be treated as a "modified
endowment contract" under federal tax law. Kansas City Life will
monitor Contracts and will notify you on a timely basis if your
Contract is in jeopardy of violating the definition of life
insurance or becoming a modified endowment contract. For further
discussion of the tax status of a Contract and the tax
consequences of being treated as a life insurance contract or a
modified endowment contract, see "Tax Considerations," page 44.
Free Look Right to Cancel. For a limited time, you have the
right to cancel your Contract and receive a refund. See "Free
Look Right to Cancel Contract," page 20. Net Premiums will be
allocated to the Federated Prime Money Fund II Subaccount until
the Reallocation Date. See "Premium Allocations and Crediting,"
page 22.
Owner Inquiries. If you have any questions, you may write or
call Kansas City Life's Home Office at 3520 Broadway, P.O. Box
419364, Kansas City, Missouri 64141-6364, 1-800-616-3670.
DIAGRAM OF CONTRACT
PREMIUM PAYMENTS
You select a payment plan but are not required to pay premium
payments according to the plan. You can vary the amount and
frequency and can skip planned premium payments. The actual
amount and frequency of premium payments will affect the
Contract Value and the amount and duration of insurance. See
page 21 for rules and limits.
The Contract's minimum initial premium payment and planned
premium payment depend on the Insureds' age, sex, risk class
and Specified Amount selected.
Unplanned premium payments may be made, within limits. See
page 21.
Under certain circumstances, which include taking excessive
Contract loans, extra premium payments may be required to
prevent lapse. See page 22.
DEDUCTIONS FROM PREMIUM PAYMENTS
Sales Charge equal to 50% of premium up to Target Premium and 2%
of Excess Premium in Contract Year 1, 15% of premium up to Target
Premium and 2% of Excess Premium in Contract Years 2-5, 6% of
premium up to Target Premium and 2% of Excess Premium in Contract
Years 6-10, 2% of premium up to Target and Excess Premium in
Contract Years 11-20. Beginning in the 21st Contract Year there
is no charge.
Premium Processing Charge equal to 4.85% of premium for all
Contract Years.
NET PREMIUM PAYMENTS
You direct the allocation of Net Premium payments among
14 Subaccounts of the Variable Account and the Fixed Account.
See page 22 for rules and limits on Net Premium payment
allocations.
Each Subaccount invests in a corresponding portfolio of a mutual
fund:
Mutual Fund Portfolio
MFSr Variable Insurance TrustSM
Manager: Massachusetts Financial Services Company
MFS Research Series
MFS Emerging Growth Series
MFS Total Return Series
MFS Bond Series
MFS World Governments Series
MFS Utilities Series
American Century Variable Portfolios
American Century VP Capital Appreciation
American Century VP International
Federated Insurance Series
Manager: Federated Advisers
Federated High Income Bond Fund
Federated American Leaders Fund II
Federated Prime Money Fund II
Dreyfus Variable Investment Fund
Manager: The Dreyfus Corporation
Capital Appreciation Portfolio
Small Cap Portfolio
Dreyfus Stock Index Fund
Manager: The Dreyfus Corporation
Dreyfus Stock Index Fund
Interest is credited on amounts allocated to the Fixed Account at a minimum
guaranteed rate of 4%. See page 24 for rules and limits on transfers
from the Fixed Account allocations.
DEDUCTION FROM CONTRACT VALUE
Monthly Administrative Expense Charge of $7.50 per month plus $.02 per $1,000
of Total Sum Insured per month for all Contract Years.
Monthly Issue Expense Charge of $12.50 per month for the first five Contract
Years.
Guaranteed Minimum Death Benefit Option Charge beginning in the 11th Contract
Year-Current: $.01 per $1,000 of Specified Amount per month; Guaranteed: $.03
per $1,000 of specified Amount per month.
Cost of insurance charges deducted each month for all Contract Years. See page
26.
Fee applicable upon a partial surrender of the Contract Value equal to the
lesser of:
(a) 2% of the amount surrendered; or (b) $25.
Charges for any additional benefit or riders. See page 25.
DEDUCTIONS FROM ASSETS
Daily charge at an annual rate of .625% on a current basis and .9000% on a
guaranteed basis from the Subaccounts for mortality and expense risks. See
page 27. This charge is not deducted from the Fixed Account Value.
Investment advisory fees and operating expenses are deducted from the assets
of each Portfolio. See page 27.
<TABLE>
ANNUAL FUND EXPENSES
<CAPTION>
MFS MFS MFS
MFS Emerging Total MFS World MFS
Research Growth Return Bond Governments Utilities
Series Series Series Series Series Series
<S> <C> <C> <C> <C> <C> <C>
MFSr Variable InsuranceSM
Trust Annual Expenses
(as a percentage of average
net assets)
Management Fees (Investment
Advisory Fees) 0.75% 0.75% 0.75% 0.60% 0.75% 0.75%
Other Expenses (after any
expense reimbursement)3 0.25%1 0.25%1 0.25%1 0.40%1 0.25%2 0.25%2
Total Fund Annual Expenses 1.00%1 1.00%1 1.00%1 1.00%1 1.00%2 1.00%2
</TABLE>
TCI TCI
International Growth
TCI Portfolios, Inc.
Annual Expenses
(as a percentage of
average net assets)
Management Fees (Investment
Advisory Fees) 1.50% 1.00%
Other Expenses 0.00% 0.00%
Total Fund Annual Expenses4 1.50% 1.00%
Federated
Federated High Federated
American Income Prime
Leaders Bond Money
Fund II Fund II Fund II
Federated Insurance Series
Annual Expenses
(as a percentage of
average net assets)
Management Fees (Investment
Advisory Fees) 0.53% 0.00% 0.00%
Other Expenses (after any
expenses reimbursement) 0.32% 0.80% 0.80%
Total Fund Annual Expenses5 0.85% 0.80% 0.80%
Dreyfus Dreyfus
Cap App Small Cap
Portfolio Portfolio
Dreyfus Variable Investment
Fund Annual Expenses
(as a percentage of
average net assets)
Management Fees (Investment
Advisory Fees) 0.75% 0.75%
Other Expenses (after any
expense reimbursement) 0.09% 0.04%
Total Fund Annual Expenses 0.84% 0.79%
Dreyfus
Stock Index
Fund
Dreyfus Stock Index Fund
(as a percentage of
average net assets)
Management Fees (Investment
Advisory Fees) 0.245%
Other Expenses (after any
expense reimbursement) 0.055%
Total Fund Annual Expenses 0.300%
Premium taxes, currently ranging up to 3.5%, may be applicable, depending
on various states' laws.
The above tables are intended to assist you in understanding the fund expenses
that you will bear, directly or indirectly. The tables reflect expenses of the
Funds. The Annual Expenses are expenses for the most recent fiscal year, except
as noted below. For a more complete description of the various expenses the
Prospectuses for the underlying Funds that accompany this Prospectus.
1 The investment advisor to MFS Variable Insurance Trust has agreed to bear,
subject to reimbursement, expenses for the Research Series, Emerging Growth
Series, Total Return Series, Bond Series, and Utilities Series such that each
Series'aggregate operating expenses shall not exceed, on an annualized basis,
1.00% of the average daily net assets of the Series from November 2, 1994
through December 31, 1996, 1.25% of the average daily net assets of the
Series from January 1, 1997 through December 31, 1998 and 1.50% of the
average daily net assets of the series from January 1, 1999 through
December 21, 2004; provided, however, that this obligation may be
terminated or revised at any time. Absent this expense arrangement,
"Other Expenses" for the Research Series, Emerging Growth Series, Total
Return Series, Bond Series, and Utilities Series would be 3.15%, 2.16%,
2.02%, 43.25%, and 2.33%, respectively, and Total Fund Annual Expenses
would be 3.90%, 2.91%, 2.77%, 43.85%, and 3.08%, respectively, for these
series.
2 The investment adviser to MFS Variable Insurance Trust has agreed to bear,
subject to reimbursement, until December 31, 2004, expenses of the World
Governments Series such that the Series' aggregate expenses do not exceed
1.00% on an annualized basis of its average daily net assets. Absent this
expense arrangement, "Other Expenses" and "Total Fund Annual Expenses"
would be 1.24% and 1.99%, respectively.
3 Each Series has an expense offset arrangement which reduces the Series'
custodian fee based upon the amount of cash maintained by the Series with
its custodian and dividend disbursing agent, and may enter into other such
arrangements and directed brokerage arrangements (which would also have the
effect of reducing the Series' expenses). Any such fee reductions are not
reflected under "Other Expenses."
4 The investment adviser to TCI Portfolios, Inc. pays all the expenses of the
Fund except brokerage, taxes, interest, fees and expenses of the non-
interested person directors (including counsel fees) and extraordinary
expenses. For its services, the adviser is paid a fee of 1.50% and 1.00% of
the average net assets of the International and Growth Portfolio,
respectively.
5 The Total Annual Expenses for the Federated American Leaders Fund II,
Federated High Income Bond Fund II and the Federated Prime Money Fund II are
0.85%, 0.80%, and 0.80%, respectivley, of the average daily net assets. The
adviser to Federated Insurance Series has agreed to waive all or a portion
of its fee so that the Total Fund Annual Expenses would not exceed 0.85%,
0.80%, and 0.80% respectively, of average net assets of those Portfolios.
The adviser can terminate this voluntary waiver at any time at its sole
discretion. Without this waiver, the Management Fees would be 0.75%, 0.60%
and 0.50% of the average net assets of Federated American Leaders Fund II,
Federated High Income Bond Fund II and the Federated Prime Money Fund II,
respectively, and the Total Fund Annual Expenses for these Portfolios would
be 1.07%, 1.39%, and 1.37%, respectively, of average net assets.
CONTRACT VALUE
Contract Value is equal to Net Premiums,
as adjusted each Valuation Day to
reflect Subaccount investment experience,
interest credited on Fixed Account Value,
charges deducted and other Contract
transactions (such as transfers and partial
surrenders). See page 28.
Varies from day to day. There is no
minimum guaranteed Contract Value. The
Contract may lapse if the Contract Value is
insufficient to cover a Monthly Deduction
due. See page 28.
Can be transferred among the Subaccounts
and Fixed Account. A transfer fee of $25.00
will apply if more than 6 transfers are
made in a Contract Year. See page 23 for
rules and limits.
Is the starting point for calculating
certain values under a Contract, such as the
Cash Surrender Value and the Death Benefit
used to determine Death Benefit proceeds.
A "bonus" may be credited to the Contract Value on each
Monthly Anniversary Day beginning on the first Monthly
Anniversary following the Contract Date. The monthly
bonus applies to Contracts with a Total Sum Insured of
$5,000,000 or above and equals an annual rate of .125%
of the of the Variable Account. This bonus is not guaranteed.
CASH BENEFITS DEATH BENEFITS
Loans may be taken for amounts Income tax free to
up to Cash Surrender Value less Beneficiary.
loan interest to the next
Contract Anniversary, at an Available as lump sum or
annual effective interest rate under a variety of payment
of 6.0%. Currently, a preferred options.
loan is available beginning in
the 11th Contract Year. See For all Contracts, a minimum
page 34 for rules and limits. Total Sum Insured of $200,000
which may be made up of a
Partial surrenders generally combination of Specified
can be made provided there is Amount and Additional
sufficient remaining Cash Insurance Amount. The
Surrender Value. A partial Specified Amount must be at
surrenderfee of the lesser of 2% least $100,000. We may allow
of the amount surrendered or $25 these minimum limits to be
will apply. See page 35 for reduced. See page 30.
limits. Partial surrenders may
be subject to adverse tax Three Coverage Options
consequences. available:
Coverage Option A provides a
The Contract may be surrendered Death Benefit at least equal
in full at any time for its Cash to the Total Sum Insured on
Surrender Value. See page 35. the date of death of the last
Surrenders may be subject to surviving Insured. Coverage
adverse tax consequences. Option B provides a Death
Benefit at least equal to the
Payment options are available. Total Sum Insured on the date
See page 36. of death of the last surviving
Insured, plus the Contract
Value on the date of death.
Coverage Option L provides a
Death Benefit that is at least
equal to the sum of: (a) the
Total Sum Insured on the date
of death of the last surviving
Insured; and (b) an amount
calculated on the last
Contract Anniversary equal to
the Contract Value multiplied
by the applicable Coverage
Option L Death Benefit
percentage less the Total Sum
Insured. The Death Benefit
under all three of these
Coverage Options will be the
greater of the amount
described above and the
Corridor Death Benefit
Percentage amount which
ensures that the Contract will
not be disqualified as a life
insurance contract. See page
30.
Guaranteed Minimum Death
Benefit Option available
(restrictions may apply) if
Guaranteed Minimum Death
Benefit Premium requirement is
met. See page 31.
Flexibility to change the
Coverage Option or decrease
the Specified Amount. See
page 32 for rules and limits.
Supplemental and/or rider
benefits may be available.
See page 45.
Any Indebtedness is deducted
from the amount payable.
GENERAL INFORMATION ABOUT KANSAS CITY LIFE, THE VARIABLE ACCOUNT
AND THE FUNDS
Kansas City Life Insurance Company
The Contracts are issued by Kansas City Life Insurance Company,
which is a stock life insurance company organized under the laws
of the State of Missouri in 1895. Kansas City Life is currently
licensed to transact life insurance business in 47 states and the
District of Columbia.
Kansas City Life is subject to regulation by the Department of
Insurance of the State of Missouri as well as by the insurance
departments of all other states and jurisdictions in which it
does business. We submit annual statements on our operations and
finances to insurance officials in such states and jurisdictions.
The forms for the Contract described in this Prospectus are filed
with and (where required) approved by insurance officials in each
state and jurisdiction in which Contracts are sold.
Kansas City Life Variable Life Separate Account
Kansas City Life Variable Life Separate Account was established
as a separate investment account under Missouri law on April 24,
1995. It is used to support the Contracts and may be used to
support other variable life insurance contracts, and for other
purposes permitted by law. The Variable Account is registered
with the Securities and Exchange Commission ("SEC") as a unit
investment trust under the Investment Company Act of 1940 (the
"1940 Act") and is a "separate account" within the meaning of the
federal securities laws. Kansas City Life has established other
separate investment accounts that may also be registered with the
SEC.
The Variable Account is divided into Subaccounts. The
Subaccounts available under the Contracts invest in shares of
Portfolios of the Funds. The Variable Account may include other
Subaccounts that are not available under the Contracts and are
not otherwise discussed in this Prospectus. The assets in the
Variable Account are owned by Kansas City Life.
Income, gains and losses, realized or unrealized, of a Subaccount
are credited to or charged against the Subaccount without regard
to any other income, gains or losses of Kansas City Life.
Applicable insurance law provides that assets equal to the
reserves and other contract liabilities of the Variable Account
are not chargeable with liabilities arising out of any other
business of Kansas City Life. Kansas City Life is obligated to
pay all benefits provided under the Contracts.
The Funds
MFSr Trust, American Century Variable Portfolios, Federated
Insurance Series, Dreyfus Variable Investment Fund and Dreyfus
Stock Index Fund are each registered with the SEC as a
diversified open-end management investment company under the 1940
Act, although the SEC does not supervise their management or
investment practices and policies. Each of the Funds is a series
fund-type mutual fund made up of the Portfolios and other series
that are not available under the Contracts. The investment
objectives of each of the Portfolios is described below.
MFSr Variable Insurance TrustSM
(Manager: Massachusetts Financial Services Company)
MFSr Research SeriesSM. The Research Series' investment
objective is to provide long-term growth of capital and future
income. The Series' assets are allocated to selected economic
sectors and then to industry groups within those sectors.
MFSr Emerging Growth SeriesSM. The Emerging Growth Series seeks
to provide long-term growth of capital. Dividend and interest
income from portfolio securities, if any, is incidental to the
Series' investment objective of long-term growth of capital. The
Series' policy is to invest primarily (i.e., at least 80% of its
assets under normal circumstances) in common stocks of companies
that MFS believes are early in their life cycle but which have
the potential to become major enterprises (emerging growth
companies).
MFSr Total Return SeriesSM. The Total Return Series' primary
investment objective is to obtain above-average income (compared
to a portfolio entirely invested in equity securities) consistent
with the prudent employment of capital, and its secondary
objective is to provide a reasonable opportunity for growth of
capital and income, since many securities offering a better than
average yield may also possess growth potential.
MFSr Bond SeriesSM. The Bond Series' primary investment
objective is to provide as high a level of current income as is
believed to be consistent with prudent investment risk. The
Series' secondary objective is to protect shareholders' capital.
Up to 20% of the Series' total assets may be invested in lower-
rated or non-rated debt securities commonly known as "junk
bonds." The risks of investing in junk bonds are described in
the prospectus for the MFSr Variable Insurance TrustSM, which
should be read carefully before investing.
MFSr World Governments SeriesSM. The World Governments Series'
investment objective is to seek not only preservation, but also
growth of capital, together with moderate current income. The
Series seeks to achieve its investment objective through a
professionally managed, internationally diversified portfolio
consisting primarily of debt securities and to a lesser extent
equity securities.
MFSr Utilities SeriesSM. The Utilities Series' investment
objective is to seek capital growth and current income (income
above that available from a portfolio invested entirely in equity
securities). The Series will seek to achieve its objective by
investing, under normal circumstances, at least 65% (but up to
100% at the discretion of the Series' adviser) of its assets in
equity and debt securities of both domestic and foreign companies
in the utilities industry.
American Century Variable Portfolios, Inc. (formerly TCI
Portfolios, Inc.)
(Manager: American Century Investment Management, Inc. (formerly
Investors Research Corporation))
American Century VP Capital Appreciation Portfolio (formerly
TCI Growth Portfolio). The investment objective of American
Century VP Capital Appreciation is capital growth. The Portfolio
will seek to achieve its investment objective by investing
primarily in common stocks that are considered by the investment
adviser to have better-than-average prospects for appreciation.
American Century VP International Portfolio (formerly TCI
International Portfolio). The investment objective of American
Century VP International Portfolio is capital growth. The
Portfolio will seek to achieve its investment objective by
investing primarily in securities of foreign companies that meet
certain fundamental and technical standards of selection and that
have, in the opinion of the investment manager, potential for
appreciation.
Federated Insurance Series
(Manager: Federated Advisers)
Federated American Leaders Fund II . The primary investment
objective of the Federated American Leaders Fund II is to achieve
long-term growth of capital. The Fund's secondary objective is
to provide income. The Fund pursues its investment objectives by
investing, under normal circumstances, at least 65% of its total
assets in common stock of "blue-chip" companies, which are
generally top-quality, established growth companies.
Federated High Income Bond Fund II . The investment objective
of the Federated High Income Bond Fund II is to seek high current
income. The Fund endeavors to achieve its objective by investing
primarily in lower-rated corporate debt obligations commonly
referred to as "junk bonds." The risks of investing in junk
bonds is described in the prospectus for Federated Insurance
Series, which should be read carefully before investing.
Federated Prime Money Fund II . The investment objective of
the Federated Prime Money Fund II is to provide current income
consistent with stability of principal and liquidity. The Fund
pursues its investment objective by investing exclusively in a
portfolio of money market instruments maturing in 397 days or
less.
Dreyfus Variable Investment Fund
(Manager: The Dreyfus Corporation)
Capital Appreciation Portfolio. The primary investment
objective of the Capital Appreciation Portfolio is to provide
long-term capital growth consistent with the preservation of
capital. Current income is a secondary investment objective.
This series invests primarily in the common stocks of domestic
and foreign issuers.
Small Cap Portfolio. The investment objective of the Small Cap
Portfolio is to maximize capital appreciation. This series
invests primarily in common stocks of domestic and foreign
issuers. This series will be particularly alert to companies
that it considers to be emerging smaller-sized companies which
are believed to be characterized by new or innovative products,
services or processes which should enhance prospects for growth
in future earnings.
Dreyfus Stock Index Fund
(Manager: The Dreyfus Corporation)
The primary investment objective of the Stock Index Fund is to
provide investment results that correspond to the price and yield
performance of publicly traded common stocks in the aggregate, as
represented by the Standard & Poor's 500 Composite Stock Price
Index. In anticipation of taking a market position, the Fund is
permitted to purchase and sell stock index futures. The Fund is
neither sponsored by nor affiliated with Standard & Poor's.
THERE IS NO ASSURANCE THAT THE STATED OBJECTIVES AND POLICIES OF
ANY OF THE FUNDS WILL BE ACHIEVED.
More detailed information concerning the investment objectives,
policies, and restrictions pertaining to the Funds and Portfolios
and their expenses, investment advisory services and charges and
the risks involved with investing in the Portfolios and other
aspects of their operations can be found in the current
prospectus for each Fund or Portfolio that accompanies this
Prospectus and the current Statement of Additional Information
for each Fund or Portfolio. The prospectuses for the Funds or
Portfolios should be read carefully before any decision is made
concerning the allocation of Net Premium payments or transfers
among the Subaccounts.
Kansas City Life has entered into agreements with either the
investment adviser or distributor for each of the Funds pursuant
to which the adviser or distributor will pay Kansas City Life a
fee based upon an annual percentage of the average aggregate net
amount invested by Kansas City Life on behalf of the Variable
Account and other separate accounts of Kansas City Life. These
agreements reflect administrative services provided by Kansas
City Life.
Kansas City Life cannot guarantee that each Fund or Portfolio
will always be available for the Contracts, but in the unlikely
event that a Fund or Portfolio is not available, Kansas City Life
will take reasonable steps to secure the availability of a
comparable fund. Shares of each Portfolio are purchased and
redeemed at net asset value, without a sales charge.
Resolving Material Conflicts
The Funds presently serve as the investment medium for the
Contracts. In addition, the Funds are available to registered
separate accounts of insurance companies, other than Kansas City
Life, offering variable annuity and variable life insurance
contracts.
We do not currently foresee any disadvantages to you resulting
from the Funds selling shares to fund products other than the
Contracts. However, there is a possibility that a material
conflict of interest may arise between Owners whose Contract
Values are allocated to the Variable Account and the owners of
variable life insurance policies and variable annuity contracts
issued by other companies whose values are allocated to one or
more other separate accounts investing in any one of the Funds.
Shares of some of the Funds may also be sold to certain qualified
pension and retirement plans qualifying under Section 401 of the
Code. As a result, there is a possibility that a material
conflict may arise between the interests of Owners or owners of
other contracts (including contracts issued by other companies),
and such retirement plans or participants in such retirement
plans. In the event of a material conflict, we will take any
necessary steps, including removing the Variable Account from
that Fund, to resolve the matter. The Board of Directors of each
Fund will monitor events in order to identify any material
conflicts that may arise and determine what action, if any,
should be taken in response to those events or conflicts. See
the accompanying prospectuses for the Funds and Portfolios for
more information.
Addition, Deletion or Substitution of Investments
We reserve the right, subject to applicable law, to make
additions to, deletions from, or substitutions for the shares
that are held in the Variable Account or that the Variable
Account may purchase. If the shares of a Portfolio of a Fund are
no longer available for investment or if, in our judgment,
further investment in any Portfolio should become inappropriate
in view of the purposes of the Variable Account, we may redeem
the shares, if any, of that Portfolio and substitute shares of
another registered open-end management investment company. We
will not substitute any shares attributable to a Contract's
interest in a Subaccount of the Variable Account without notice
and prior approval of the SEC and state insurance authorities, to
the extent required by the 1940 Act or other applicable law.
We also reserve the right to establish additional Subaccounts of
the Variable Account, each of which would invest in shares
corresponding to a Portfolio of a Fund or in shares of another
investment company having a specified investment objective.
Subject to applicable law and any required SEC approval, we may,
in our sole discretion, establish new Subaccounts or eliminate
one or more Subaccounts if marketing needs, tax considerations or
investment conditions warrant. Any new Subaccounts may be made
available to existing Contract Owners on a basis to be determined
by Kansas City Life.
If any of these substitutions or changes are made, we may, by
appropriate endorsement, change the Contract to reflect the
substitution or change. If we deem it to be in the best
interests of Contract Owners (subject to any approvals that may
be required under applicable law), the Variable Account may be
operated as a management investment company under the 1940 Act,
it may be deregistered under that Act if registration is no
longer required, or it may be combined with other Kansas City
Life separate accounts.
Voting Rights
Kansas City Life is the legal owner of shares held by the
Subaccounts and as such has the right to vote on all matters
submitted to shareholders of the Funds. However, as required by
law, Kansas City Life will vote shares held in the Subaccounts at
regular and special meetings of shareholders of the Funds in
accordance with instructions received from Owners with Contract
Value in the Subaccounts. Should the applicable federal
securities laws, regulations or interpretations thereof change,
Kansas City Life may be permitted to vote shares of the Funds in
its own right, and if so, Kansas City Life may elect to do so.
To obtain voting instructions from Owners, before a meeting
Owners will be sent voting instruction material, a voting
instruction form and any other related material. The number of
votes that are available to an Owner will be calculated
separately for each Subaccount of the Variable Account, and may
include fractional shares. The number of votes attributable to a
Subaccount will be determined by applying an Owner's percentage
interest, if any, in a particular Subaccount to the total number
of votes attributable to that Subaccount. The number of votes
for which an Owner may give instructions will be determined as of
the date coincident with the date established by the Fund for
determining shareholders eligible to vote at the relevant meeting
of the Fund. Shares held by a Subaccount for which no timely
instructions are received will be voted by Kansas City Life in
the same proportion as those shares for which voting instructions
are received.
Kansas City Life may, if required by state insurance officials,
disregard Owner voting instructions if such instructions would
require shares to be voted so as to cause a change in
sub-classification or investment objectives of one or more of the
Portfolios, or to approve or disapprove an investment advisory
agreement. In addition, Kansas City Life may under certain
circumstances disregard voting instructions that would require
changes in the investment advisory contract or investment adviser
of one or more of the Portfolios, provided that Kansas City Life
reasonably disapproves of such changes in accordance with
applicable federal regulations. If Kansas City Life ever
disregards voting instructions, Owners will be advised of that
action and of the reasons for such action in the next semiannual
report. Finally, Kansas City Life reserves the right to modify
the manner in which the weight to be given to pass-through voting
instructions is calculated when such a change is necessary to
comply with current federal regulations or the current
interpretation thereof.
PREMIUM PAYMENTS AND ALLOCATIONS
Applying for a Contract
To purchase a Contract, you must complete an application and
submit it through an authorized Kansas City Life agent. If you
are eligible for temporary insurance coverage, a temporary
insurance agreement ("TIA") should also accompany the
application. The TIA provides temporary insurance coverage prior
to the date when all underwriting and other requirements have
been met and your application has been approved, with certain
limitations, as long as an initial premium payment accompanies
the TIA. In accordance with Kansas City Life's underwriting
rules, temporary life insurance coverage may not exceed $250,000.
The TIA may not be in effect for more than 60 days. At the end
of the 60 days, the TIA coverage terminates and the initial
premium will be returned to the applicant.
With the TIA, you must pay an initial premium payment at the time
of application that is at least equal to two months of minimum
initial premium (one month of minimum initial premium is required
for Contracts when premium payments will be made under a pre-
authorized payment arrangement). See "Premiums," page 218. In
general, policies that are submitted with the required premium
payment will have a Contract Date which will be the date of the
TIA. However, if the Contract Date is calculated to be the 29th,
30th or 31st of the month then the date will be set to the 1st of
the next following month. For Contracts where premium is not
accepted at the time of application or Contracts where values are
applied to the new Contract from another contract, the Contract
Date will be the approval date plus up to two days, unless the
approval is the 27th, 28th or 29th of the month in which case the
Contract Date would be the first of the next month. There are
several exceptions to these rules, based on the type of billing,
whether the contract involves a conversion and/or whether the
specified amount exceeds $250,000.
Pre-Authorized Check Payment Plan (PAC) or Combined Billing (CB)-
- -Premium With Application
If PAC or CB is requested and the initial premium is taken with
the application, the Contract Date will be the later of the TIA
date or the first of the month of approval. Combined Billing is
a billing where more than one Kansas City Life contract is billed
together.
Combined Billing (CB)--No Premium With Application
If CB is requested and the initial premium is not taken with the
application, the Contract Date will be the earlier of the 1st of
the month after the Contract is approved or the date the initial
premium is received. However, if approval occurs on the 1st,
2nd, 3rd, 4th or 5th of the month the Contract Date will be the
first of the same month that the Contract is approved. In
addition, if the Contract Date is calculated to be the 29th, 30th
or 31st of the month then the date will be set to the 1st of the
following month.
Government Allotment (GA) and Federal Allotment (FA)
If GA or FA is requested on the application and an initial
premium is taken with the application, the Contract Date will be
the 1st of the month of approval. If GA or FA is requested and
no initial premium is received the Contract Date will be the
first of the month for which a full monthly allotment is
received.
Conversions
If a Kansas City Life term insurance product is converted to a
new Contract, the Contract Date will be the date that the
previous contract was paid to. If there is more than one term
policy being converted, the Contract Date will be determined by
the contract with the earliest date that premiums were paid to.
Total Sum Insured Exceeds $250,000
If the Total Sum Insured requested exceeds $250,000 and an
initial premium is taken with the application, the Contract Date
will be the later of the TIA date or the 1st of the month of
approval.
The Contract Date is determined by these guidelines except, as
provided for under state insurance law, the Owner may be
permitted to backdate the Contract to preserve insurance age. In
no case may the Contract Date be more than six months prior to
the date the application was completed. Monthly Deductions will
be charged from the Contract Date.
If coverage under an existing Kansas City Life insurance contract
is being replaced, that contract will be terminated and values
will be transferred on the date when all underwriting and other
requirements have been met and your application has been
approved. Kansas City Life will deduct Contract charges as of
the Contract Date.
Kansas City Life requires satisfactory evidence of both Insureds'
insurability, which may include a medical examination of the
proposed Insureds. The available issue ages are 20 through 85.
Age is determined on each Insured's age last birthday on the
Contract Date. The minimum Total Sum Insured is $200,000.
Acceptance of an application depends on Kansas City Life's
underwriting rules, and Kansas City Life reserves the right to
reject an application.
As the Owner of the Contract, you may exercise all rights
provided under the Contract. The Insureds are the Owner, unless
a different Owner is named in the application. The Owner may by
Written Notice name a contingent Owner or a new Owner while at
least one of the Insureds is living. Unless a contingent Owner
has been named, on the death of the last surviving Owner,
ownership of the Contract passes to the estate of the last
surviving Owner, who will become the Owner if the Owner dies.
The Owner may also be changed prior to the last surviving
Insured's death by Written Notice satisfactory to us. A change
in Owner may have tax consequences. See "Tax Considerations,"
page 44.
Free Look Right to Cancel Contract
You may cancel your Contract for a refund during your "free-look"
period. This period expires 10 days after you receive your
Contract. If you decide to cancel the Contract, you must return
it by mail or other delivery method to the Home Office or to the
authorized Kansas City Life agent who sold it. Immediately after
mailing or delivery, the Contract will be deemed void from the
beginning. Within seven calendar days after Kansas City Life
receives the returned Contract, Kansas City Life will refund
premiums paid.
Premiums
The minimum initial premium payment required depends on a number
of factors, such as the Age, sex and risk class of the proposed
Insureds, the Specified Amount, and the Planned Periodic Premium
payments you propose to make. See "Planned Periodic Premiums,"
below. Consult your Kansas City Life agent for information about
the initial premium required for the coverage you desire.
Premium payments can be made at any time while the Contract is in
force. Kansas City Life has the right to limit the number and
amount of any premiums.
If premiums are paid that cause the Death Benefit of the Contract
to increase under Section 7702 of the Internal Revenue Code, as
amended, Kansas City Life has the option to refund the amount of
premium that causes this increase. See "Tax Considerations,"
page 44.
Your Contract may become a modified endowment contract if
premiums paid exceed the "7-Pay Test" as set forth in the
Internal Revenue Code. Kansas City Life will monitor Contracts
and will attempt to notify you on a timely basis if, based on
Kansas City Life's interpretation of the relevant tax rules, your
Contract is in jeopardy of becoming a modified endowment
contract. See "Tax Considerations," page 44.
Also, Kansas City Life reserves the right to require satisfactory
evidence of insurability prior to accepting unscheduled premiums.
See "Net Premium Allocations and Crediting," page 22.
Premium payments must be made by check payable to Kansas City
Life Insurance Company or by any other method that Kansas City
Life deems acceptable. A loan repayment must be clearly marked
as such or it will be credited as a premium. See "Loan
Repayment," page 34.
Planned Periodic Premiums. When applying for a Contract, you
select a plan for paying level premium payments monthly,
quarterly, semi-annually or annually. If you elect, Kansas City
Life will also arrange for payment of Planned Periodic Premiums
on a monthly or quarterly basis under a pre-authorized payment
arrangement. You are not required to pay premium payments in
accordance with these plans; rather, you can pay more or less
than planned or skip a Planned Periodic Premium entirely. (See,
however, "Premium Payments to Prevent Lapse," page 19, and
"Guaranteed Minimum Death Benefit Option," below.) Each premium
after the initial premium must be at least $25. Subject to the
limits described above, you can change the amount and frequency
of Planned Periodic Premiums at any time. However, Kansas City
Life reserves the right to limit the amount of a premium payment
or the total premium payments paid, as discussed above.
Guaranteed Minimum Death Benefit Option Premium- The Guaranteed
Minimum Death Benefit Option Premium is the amount which
guarantees that the Guaranteed Minimum Death Benefit Option will
remain in effect. See "Guaranteed Minimum Death Benefit
Option," page 31. The Guaranteed Minimum Death Benefit Option
Premium requirement has been met if the cumulative paid premiums
equals or exceeds the cumulative Guaranteed Minimum Death Benefit
Option Premiums plus Indebtedness on each monthly anniversary
day.
The cumulative paid premium is an amount equal to the sum of all
premiums paid less the sum of all partial surrenders, accumulated
at an annual effective interest rate of 4% to the date the
Guaranteed Minimum Death Benefit Option Premium requirement is
tested. The cumulative Guaranteed Minimum Death Benefit Option
Premium equals the sum of the Guaranteed Minimum Death Benefit
Option Premiums due on the Contract, accumulated at an annual
effective interest rate of 4% from the date of issue up to the
date the Guaranteed Minimum Death Benefit Option Premium
requirement is tested.
Premium Payments to Prevent Lapse
For a Contract which has the Guaranteed Minimum Death Benefit
Option, the Specified Amount is guaranteed to remain in force as
long as the Guaranteed Minimum Death Benefit Option Premium
requirement is met on each Monthly Anniversary Day. (See
Guaranteed Minimum Death Benefit Option, page 31.) Failure to
meet the Guaranteed Minimum Death Benefit Option Premium
requirement will cause the Guaranteed Minimum Death Benefit
Option to terminate, but will not necessarily cause the Contract
to lapse.
If the Guaranteed Minimum Death Benefit Option has not been
elected or has been removed, a grace period starts if the Cash
Surrender Value on a Monthly Anniversary Day will not cover the
Monthly Deduction. A premium sufficient to provide a Cash
Surrender Value equal to three Monthly Deductions must be paid
during the grace period to keep the Contract in force.
The grace period is a 61-day period to make a premium payment
sufficient to prevent lapse. We will send notice of the amount
required to be paid during the grace period to your last known
address and the address of any assignee of record. The grace
period will begin when the notice is sent. Your Contract will
remain in force during the grace period. If the last surviving
Insured should die during the grace period, the Death Benefit
proceeds will still be payable to the Beneficiary, although the
amount paid will reflect a reduction for the Monthly Deductions
due on or before the date of the last surviving Insured's death
(and for any Indebtedness). See "Amount of Death Benefit
Proceeds," page 30. If the grace period premium payment has not
been paid before the grace period ends, your Contract will lapse.
It will have no value and no benefits will be payable. See
"Reinstatement," page 45.
A grace period also may begin if Indebtedness becomes excessive.
See "Effect of Contract Loan," page 35.
Premium Allocations and Crediting
In the Contract application, you specify the percentage of a Net
Premium to be allocated to each Subaccount and to the Fixed
Account. The sum of your allocations must equal 100%, and Kansas
City Life reserves the right to limit the number of Subaccounts
to which premiums may be allocated. You can change the
allocation percentages at any time, subject to these rules, by
sending Written Notice to the Home Office. Changes in your
allocation may also be made by telephone if an Authorization for
Telephone Requests has been properly completed, signed and filed
with us. See "Telephone Transfers, Premium Allocation and Loan
Privileges," page 48. The change will apply to the premium
payments received with or after receipt of your notice.
On the Allocation Date, the initial Net Premium will be allocated
to the Federated Prime Money Fund II Subaccount. If any
additional premiums are received before the Reallocation Date,
the corresponding Net Premiums also will be allocated to the
Federated Prime Money Fund II Subaccount. On the Reallocation
Date the Contract Value in the Federated Prime Money Fund II
Subaccount will be allocated to the Subaccounts and to the Fixed
Account as requested. See "Determining the Contract Value," page
28.
Premiums received on or after the Reallocation Date will be
credited to the Contract and the Net Premiums will be invested as
requested on the Valuation Period they are received at our Home
Office, except if additional underwriting is required. Premium
payments requiring additional underwriting will not be credited
to the Contract until underwriting has been completed and the
premium payment has been accepted. If the additional premium
payment is rejected, Kansas City Life will return the premium
payment immediately, without any adjustment for investment
experience.
Transfer Privilege
After the Reallocation Date, you may transfer all or part of an
amount in the Subaccount(s) to another Subaccount(s) or to the
Fixed Account, or transfer a part of the amount in the Fixed
Account to the Subaccount(s), subject to the following
restrictions. The minimum transfer amount is the lesser of $250
or the entire amount in that Subaccount or the Fixed Account. A
transfer request that would reduce the amount in a Subaccount or
the Fixed Account below $250 will be treated as a transfer
request for the entire amount in that Subaccount or the Fixed
Account.
We will make the transfer on the Valuation Day that we receive
Written Notice requesting such transfer. There is no limit on
the number of transfers that can be made between Subaccounts or
to the Fixed Account. However, only one transfer may be made
from the Fixed Account each Contract Year. See "Transfers from
Fixed Account," page 25, for restrictions. The first six
transfers during each Contract Year are free. Any unused free
transfers do not carry over to the next Contract Year. We will
assess a $25 Transfer Processing Fee for the seventh and each
subsequent transfer during a Contract Year. For the purpose of
assessing the fee, each Written Notice (or telephone request
described below) is considered to be one transfer, regardless of
the number of Subaccounts or the Fixed Account affected by the
transfer. The processing fee will be deducted from the amount
being transferred or from the remaining Contract Value, according
to your instructions.
Dollar Cost Averaging Plan
The Dollar Cost Averaging Plan, if elected, enables you to
transfer systematically and automatically, on a monthly basis for
a period of 3 to 36 months, specified dollar amounts from the
Federated Prime Money Fund II Subaccount to other Subaccounts.
By allocating on a regularly scheduled basis, as opposed to
allocating the total amount at one particular time, you may be
less susceptible to the impact of market fluctuations. However,
we make no guarantee that the Dollar Cost Averaging Plan will
result in a gain.
At least $250 must be transferred from the Federated Prime Money
Fund II Subaccount each month. The required amounts may be
allocated to the Federated Prime Money Fund II Subaccount through
initial or subsequent premium payments or by transferring amounts
into the Federated Prime Money Fund II Subaccount from the other
Subaccounts or from the Fixed Account (which may be subject to
certain restrictions).
You may elect this plan at the time of application by completing
the authorization on the application or at any time after the
Contract is issued by properly completing the election form and
returning it to us. The election form allows you to specify the
number of months for the Dollar Cost Averaging Plan to be in
effect. Dollar Cost Averaging transfers will commence on the
next Monthly Anniversary Day on or next following the
Reallocation Date or the date of your request. Dollar Cost
Averaging will terminate at the completion of the designated
number of months, or when the value of the Federated Prime Money
Fund II Subaccount is completely depleted, or the day we receive
Written Notice instructing us to cancel the Dollar Cost Averaging
Plan.
Transfers made from the Federated Prime Money Fund II Subaccount
for the Dollar Cost Averaging Plan will not count toward the six
transfers permitted each Contract Year without imposing the
Transfer Processing Fee.
Portfolio Rebalancing Plan
You may elect to have the accumulated balance of each Subaccount
redistributed to equal a specified percentage of the Variable
Account Value. This will be done on a quarterly basis at three-
month intervals from the Monthly Anniversary Day on which the
Portfolio Rebalancing Plan commences. If elected, this plan
automatically adjusts your Portfolio mix to be consistent with
the allocation most recently requested. The redistribution will
not count toward the six transfers permitted each Contract Year
without imposing the Transfer Processing Fee. If the Dollar Cost
Averaging Plan has been elected and has not been completed, the
Portfolio Rebalancing Plan will commence on the Monthly
Anniversary Day following the termination of the Dollar Cost
Averaging Plan.
You may elect this plan at the time of application by completing
the authorization on the application or at any time after the
Contract is issued by properly completing the election form and
returning it to us. Portfolio rebalancing will terminate when
you request any transfer or the day we receive Written Notice
instructing us to cancel the Portfolio Rebalancing Plan. If the
Contract Value is negative at the time portfolio rebalancing is
scheduled, the re-distribution will not be completed.
FIXED ACCOUNT
Because of exemptive and exclusionary provisions, interests in
the Fixed Account have not been registered under the Securities
Act of 1933 nor has the Fixed Account been registered as an
investment company under the Investment Company Act of 1940.
Accordingly, neither the Fixed Account nor any interests therein
are subject to the provisions of these Acts and, as a result, the
staff of the Securities and Exchange Commission has not reviewed
the disclosure in this Prospectus relating to the Fixed Account.
The disclosure regarding the Fixed Account may, however, be
subject to certain generally applicable provisions of the Federal
securities laws relating to the accuracy and completeness of
statements made in prospectuses.
You may allocate some or all of the Net Premiums and transfer
some or all of the Variable Account Value to the Fixed Account,
which is part of our General Account and pays interest at
declared rates guaranteed for each calendar year (subject to a
minimum interest rate we guarantee to be 4%). Our General
Account supports our insurance and annuity obligations.
The portion of the Contract Value allocated to the Fixed Account
will be credited with rates of interest, as described below.
Since the Fixed Account is part of our General Account, we assume
the risk of investment gain or loss on this amount. All assets
in the General Account are subject to our general liabilities
from business operations.
Minimum Guaranteed and Current Interest Rates
Fixed Account Value is guaranteed to accumulate at a minimum
effective annual interest rate of 4%. We intend to credit Fixed
Account Value with current rates in excess of the minimum
guarantee but we are not obligated to do so. These current
interest rates are influenced by, but do not necessarily
correspond to, prevailing general market interest rates. Since
we, in our sole discretion, anticipate changing the current
interest rate from time to time, different allocations to and
from the Fixed Account Value will be credited with different
interest rates, based upon the date amounts are allocated into
the Fixed Account. While we may change the interest rate
credited to allocations from Net Premiums or transfers at any
time, the interest rate credited to amounts allocated to the
Fixed Account and accrued interest thereon will not change more
often than once per year. Any interest credited on the amounts
in the Fixed Account in excess of the minimum guaranteed rate of
4% per year will be determined in our sole discretion. You
assume the risk that interest credited may not exceed the
guaranteed rate.
Amounts deducted from the Fixed Account for the Monthly
Deduction, surrenders, transfers to the Subaccounts, or charges
are currently, for the purpose of crediting interest, accounted
for on a last-in, first-out ("LIFO") method. We reserve the
right to change the method of crediting from time to time,
provided that such changes do not have the effect of reducing the
guaranteed rate of interest below 4% per annum or shorten the
period for which the interest rate applies to less than a year
(except for the year in which such amount is received or
transferred).
Calculation of Fixed Account Value
Fixed Account Value at any time is equal to amounts allocated or
transferred to it, plus interest credited to it, minus amounts
deducted, transferred, or surrendered from it.
Transfers from Fixed Account
One transfer each Contract Year is allowed from the Fixed Account
to any or all of the Subaccounts. The amount transferred from
the Fixed Account may not exceed 25% of the unloaned Fixed
Account Value on the date of transfer, unless the balance after
the transfer is less than $250, in which case we will transfer
the entire amount.
Payment Deferral
We reserve the right to defer payment of any surrender, partial
surrender, or transfer from the Fixed Account for up to six
months from the date of receipt of the Written Notice for the
partial or full surrender or transfer.
CHARGES AND DEDUCTIONS
Premium Expense Charges
Sales Charge. Sales Charge equal to 50% of premium up to Target
Premium and 2% of Excess Premium in Contract Year 1, 15% of
premium up to Target Premium and 2% of Excess Premium in Contract
Years 2-5, 6% of premium up to Target Premium and 2% of Excess
Premium in Contract Years 6-10, 2% of premium up to Target and
Excess Premium in Contract Years 11-20. Beginning in the 21st
Contract Year there is no charge. This charge reimburses Kansas
City Life for various sales and administrative expenses
associated with issuing the Contract.
Premium Processing Charge.. Deducted from each premium payment
and equals 8.85% of premium. This charge reimburses Kansas City
Life for the Federal DAC tax, state and local premium taxes and
for administrative expenses associated with processing premium
payments.
Monthly Deduction
On the Allocation Date, Kansas City Life will deduct Monthly
Deductions for the Contract Date and each Monthly Anniversary
that have occurred prior to the Allocation Date. See "Applying
for Contract," page 16. Subsequent Monthly Deductions will be
made as of each Monthly Anniversary Day thereafter. Your
Contract Date is the date used to determine your Monthly
Anniversary Day. The Monthly Deduction consists of (1) monthly
expense charges, (2) cost of insurance charges, and (3) any
optional benefit charges, as described below. The Monthly
Deduction is deducted from the Variable Accounts and Fixed
Account pro rata on the basis of the portion of Contract Value in
each account on the Monthly Anniversary Day.
Monthly Expense Charge. The Monthly Expense Charge is made up
of two parts:
(1)a charge of $12.50 per month for the first five Contract
Years.
(2)an administrative monthly expense charge of $7.50 plus $.02
per $1,000 of Total Sum Insured per month for all
Contract Years
The Monthly Expense Charge reimburses Kansas City Life for
expenses incurred in the administration of the Contracts and the
Variable Account. Such expenses include but are not limited to:
underwriting and issuing the Contract, confirmations, annual
reports and account statements, maintenance of Contract records,
maintenance of Variable Account records, administrative personnel
costs, mailing costs, data processing costs, legal fees,
accounting fees, filing fees, the costs of other services
necessary for Contract Owner servicing and all accounting,
valuation, regulatory and updating requirements.
Should these guaranteed charges prove to be insufficient, the
Company will not increase the charges above such guaranteed
levels and will incur the loss.
Cost of Insurance Charge. This charge compensates Kansas City
Life for the expense of providing insurance coverage. The charge
depends on a number of variables and therefore will vary from
Contract to Contract and from Monthly Anniversary Day to Monthly
Anniversary Day. For any Contract, the cost of insurance on a
Monthly Anniversary Day is calculated by multiplying the current
cost of insurance rate for the Insureds by the net amount at risk
for that Monthly Anniversary Day.
The net amount at risk on a Monthly Anniversary Day is the
difference between the Death Benefit (see "Coverage Options,"
page 30), discounted with one month of interest and the Contract
Value, as calculated on that Monthly Anniversary Day before the
cost of insurance charge is taken. The interest rate used to
discount the Death Benefit is the monthly equivalent of 4% per
year.
The cost of insurance rate for a Contract on a Monthly
Anniversary Day is based on the Insureds' Age, sex, number of
completed Contract Years, Total Sum Insured and risk class, and
therefore varies from time to time. Kansas City Life currently
places Insureds in the following classes, based on underwriting:
Standard Tobacco User, Standard Nontobacco User, Preferred
Nontobacco User and Preferred Tobacco User. The Insureds may be
placed in a substandard risk class, which involves a higher
mortality risk than the Standard Tobacco User or Standard
Nontobacco User classes.
Kansas City Life places the Insureds in a risk class when the
Contract is given underwriting approval, based on Kansas City
Life's underwriting of the application. When an increase in
Additional Insurance Amount is requested, Kansas City Life
conducts underwriting before approving the increase (except as
noted below) to determine the risk class that will apply to the
increase.
Kansas City Life guarantees that the cost of insurance rates used
to calculate the monthly cost of insurance charge will not exceed
the maximum cost of insurance rates set forth in the Contract.
The guaranteed rates for standard and preferred risk classes are
based on the 1980 Commissioners' Standard Ordinary Mortality
Tables, Male or Female, Smoker or Nonsmoker Mortality Rates
("1980 CSO Tables"). The guaranteed rates for substandard
classes are based on multiples of or additives to the 1980 CSO
Tables.
Kansas City Life's current cost of insurance rates may be less
than the guaranteed rates that are set forth in the Contract.
Current cost of insurance rates will be determined based on
Kansas City Life's expectations as to future mortality
experience. These rates may change from time to time.
Cost of insurance rates (whether guaranteed or current) for one
or both Insureds in a nontobacco user standard class are lower
than rates for one or both Insureds of the same age and sex in a
tobacco user standard class. Cost of insurance rates (whether
guaranteed or current) for one or both Insureds in a nontobacco
user or tobacco user standard risk class are lower than rates for
one or both Insureds of the same age, sex and tobacco user class
in a substandard risk class.
Guaranteed Minimum Death Benefit Option Charge. Includes any
applicable charges for the Guaranteed Minimum Death Benefit
Option. There is no charge for this option in the first ten
Contract Years. Beginning in Contract Year 11, the charge will
be $.01 per $1,000 on a current basis and $.03 per $1,000 on a
guaranteed basis. This charge will be based on the Specified
Amount and will be deducted monthly.
Cost of Additional Benefits Provided by Riders. The cost of
additional benefits provided by riders is part of the Monthly
Deduction and is charged to the Contract Value on the Monthly
Anniversary Day.
Legal Considerations Relating to Sex-Distinct Premium Payments
and Benefits. Cost of insurance rates for Contracts generally
distinguish between males and females. Thus, premium payments
and benefits under Contracts covering males and females of the
same age will generally differ. (In some states, the cost of
insurance rates do not vary by sex.)
Kansas City Life does, however, also offer Contracts that do not
distinguish between males and females if required by state law.
Employers and employee organizations considering purchase of a
Contract should consult with their legal advisors to determine
whether purchase of a Contract based on sex-distinct cost of
insurance rates is consistent with Title VII of the Civil Rights
Act of 1964 or other applicable law. Kansas City Life will offer
to such prospective purchasers Contracts with cost of insurance
rates that do not distinguish between males and females.
Daily Mortality and Expense Risk Charge
Kansas City Life deducts a daily charge from assets in the
Subaccounts attributable to the Contracts. This charge does not
apply to Fixed Account assets attributable to the Contracts. The
current charge is at an annual rate of .625% of net assets, and
the guaranteed charge is at an annual rate of .900%.
The mortality risk Kansas City Life assumes is that the Insureds
under the Contracts may die sooner than anticipated and therefore
Kansas City Life will pay an aggregate amount of death benefits
greater than anticipated. The expense risk Kansas City Life
assumes is that expenses incurred in issuing and administering
the Contracts and the Variable Account will exceed the amounts
realized from the administrative charges assessed against the
Contracts.
Transfer Processing Fee
The first six transfers during each Contract Year are free. We
will assess a $25 Transfer Processing Fee for each additional
transfer during such Contract Year. For the purpose of assessing
the fee, we will consider each written or telephone request
seeking a transfer to be one transfer, regardless of the number
of accounts affected by the transfer. We will deduct the
Transfer Processing Fee from the amount being transferred or from
the remaining Contract Value, according to your instructions. We
do not expect a profit from this fee.
Partial Surrender Fee
Kansas City Life will deduct an administrative charge upon a
partial surrender. This charge is the lesser of 2% of the amount
surrendered or $25. This charge will be deducted from the
Contract Value in addition to the amount requested to be
surrendered and will be considered to be part of the partial
surrender amount. Kansas City Life does not anticipate making a
profit on this charge.
Fund Expenses
The value of the net assets of each Subaccount reflects the
investment advisory fees and other expenses incurred by the
corresponding Portfolio in which the Subaccount invests. See the
prospectuses for the Funds or Portfolios.
Bonus on Contract Value in the Variable Account
A bonus may be credited to the Contract on each Monthly
Anniversary Day beginning on the first Monthly Anniversary Day
following the Contract Date. The monthly bonus applies to
Contracts with a Total Sum Insured of $5,000,000 and above and
equals an annual rate of .125% of the Contract Value in each
Subaccount of the Variable Account. The bonus is not guaranteed
and will be paid at Kansas City Life's sole discretion.
Reduced Charges for Eligible Groups
The charges otherwise applicable may be reduced with respect to
Contracts issued to a class of associated individuals or to a
trustee, employer or similar entity where Kansas City Life
anticipates that the sales to the members of the class will
result in lower than normal sales or administrative expenses.
These reductions will be made in accordance with our rules in
effect at the time of the application for a Contract. The
factors we will consider in determining the eligibility of a
particular group for reduced charges and the level of the
reduction are as follows: the nature of the association and its
organizational framework, the method by which sales will be made
to the members of the class, the facility with which premiums
will be collected from the associated individuals and the
association's capabilities with respect to administrative tasks,
the anticipated persistency of the Contract, the size of the
class of associated individuals and the number of years it has
been in existence and any other such circumstances which justify
a reduction in sales or administrative expenses. Any reduction
will be reasonable and will apply uniformly to all prospective
Contract purchases in the class and will not be unfairly
discriminatory to the interests of any Contract holder.
Other Tax Charge
Kansas City Life does not currently assess a charge for any taxes
other than state and local premium taxes and Federal DAC taxes
incurred as a result of the operations of the Subaccounts of the
Variable Account. We reserve the right, however, to assess a
charge for such taxes against the Subaccounts if we determine
that such taxes will be incurred.
HOW YOUR CONTRACT VALUES VARY
There is no minimum guaranteed Contract Value or Cash Surrender
Value. These values will vary with the investment experience of
the Subaccounts and/or the crediting of interest in the Fixed
Account, and will depend on the allocation of Contract Value. If
the Cash Surrender Value on a Monthly Anniversary Day is less
than the amount of the Monthly Deduction to be deducted on that
date (see "Premium Payments To Prevent Lapse," page 22) and the
Guaranteed Minimum Death Benefit Option is not then in effect,
the Contract will be in default and a grace period will begin.
See "Guaranteed Minimum Death Benefit Option," page 31.
Determining the Contract Value
On the Allocation Date, the Contract Value is equal to the
initial Net Premium less the Monthly Deductions deducted from the
Contract Date. On each Valuation Day thereafter, the Contract
Value is the aggregate of the Subaccount Values and the Fixed
Account Value (including the Loan Account Value). The Contract
Value will vary to reflect the performance of the Subaccounts to
which amounts have been allocated, interest credited on amounts
allocated to the Fixed Account, interest credited on amounts in
the Loan Account, charges, transfers, partial surrenders, loans
and loan repayments.
Subaccount Values. When you allocate an amount to a
Subaccount, either by Net Premium payment allocation or transfer,
your Contract is credited with accumulation units in that
Subaccount. The number of accumulation units is determined by
dividing the amount allocated to the Subaccount by the
Subaccount's accumulation unit value for the Valuation Day when
the allocation is effected.
The number of Subaccount accumulation units credited to your
Contract will increase when Net Premium payments are allocated to
the Subaccount and when amounts are transferred to the
Subaccount. The number of Subaccount accumulation units credited
to a Contract will decrease when the allocated portion of the
Monthly Deduction is taken from the Subaccount, a loan is made,
an amount is transferred from the Subaccount, or a partial
surrender, including the Partial Surrender Fee, is taken from the
Subaccount.
Accumulation Unit Values. A Subaccount's accumulation unit
value varies to reflect the investment experience of the
underlying Portfolio, and may increase or decrease from one
Valuation Day to the next. The accumulation unit value for each
Subaccount was arbitrarily set at $10 when the Subaccount was
established. For each Valuation Period after the date of
establishment, the accumulation unit value is determined by
multiplying the value of an accumulation unit for a Subaccount
for the prior valuation period by the net investment factor for
the Subaccount for the current valuation period.
Net Investment Factor. The net investment factor is an index
used to measure the investment performance of a Subaccount from
one Valuation Day to the next. It is based on the change in net
asset value of the Fund shares held by the Subaccount, and
reflects any gains or losses in the Subaccounts, dividends paid,
any capital gains or losses, any taxes, and the daily mortality
and expense risk charge.
Fixed Account Value. On any Valuation Day, the Fixed Account
Value of a Contract is the total of all Net Premium payments
allocated to the Fixed Account, plus any amounts transferred to
the Fixed Account (including amounts transferred in connection
with Contract loans), plus interest credited on such Net Premium
payments and amounts transferred, less the amount of any
transfers from the Fixed Account, less the amount of any partial
surrenders, including the Partial Surrender Fee, taken from the
Fixed Account, and less the pro-rata portion of the Monthly
Deduction deducted from the Fixed Account.
Loan Account Value. On any Valuation Day, if there have been
any Contract loans, the Loan Account Value is equal to amounts
transferred to the Loan Account from the Subaccounts and from the
unloaned value in the Fixed Account as collateral for Contract
loans and for due and unpaid loan interest, less amounts
transferred from the Loan Account to the Subaccounts and the
unloaned value in the Fixed Account as Indebtedness is repaid.
Cash Surrender Value
The Cash Surrender Value on a Valuation Day is the Contract Value
reduced by any Indebtedness. Cash Surrender Value is used to
determine whether a partial surrender may be taken, whether
Contract loans may be taken, and whether a grace period starts.
See "Premium Payments to Prevent Lapse," page 22. It is also the
amount that is available upon full surrender of the Contract.
See "Surrendering the Contract for Cash Surrender Value," page
35.
DEATH BENEFIT
As long as the Contract remains in force, Kansas City Life will
pay the Death Benefit proceeds upon receipt at the Home Office of
proof of the last surviving Insured's death that Kansas City Life
deems satisfactory. Kansas City Life will also require proof of
the death of the Insured who died first and may require return of
the Contract. The Death Benefit proceeds will be paid in a lump
sum generally within seven calendar days of receipt of
satisfactory proof (see "When Proceeds Are Paid," page 42) or, if
elected, under a payment option (see "Payment Options," page 36).
The Death Benefit proceeds will be paid to the Beneficiary. See
"Selecting and Changing the Beneficiary," page 30.
Amount of Death Benefit Proceeds
The Death Benefit proceeds are equal to the sum of the Death
Benefit under the Coverage Option selected calculated on the date
of the last surviving Insured's death, plus any optional benefits
or riders, plus any premiums received after the date of death,
minus any Indebtedness on that date and, if the date of death
occurred during a grace period, minus any past due Monthly
Deductions. Death Benefit proceeds are impacted by the Total Sum
Insured in effect and the Coverage Option elected. The Death
Benefit proceeds of the last surviving Insured will be the
greater of the amount determined by the Coverage Option elected
or the Corridor Death Benefit. A minimum Death Benefit may be
protected under the Guaranteed Death Benefit Option. See
"Coverage Options," page 30, "Corridor Death Benefit," page 31
and "Guaranteed Minimum Death Benefit Option," page 31. Under
certain circumstances, the amount of the Death Benefit may be
further adjusted. See "Limits on Rights to Contest the Contract"
and "Misstatement of Age or Sex," page 42.
If part or all of the Death Benefit is paid in one sum, Kansas
City Life will pay interest on this sum as required by applicable
state law from the date of receipt of due proof of the Insured's
death to the date of payment.
Selecting and Changing the Beneficiary
You select the Beneficiary in your application. You may later
change the Beneficiary in accordance with the terms of the
Contract. The Primary Beneficiary, or, if the Primary
Beneficiary is not living, the Contingent Beneficiary, is the
person entitled to receive the Death Benefit proceeds under the
Contract. If both Insureds die and there is no surviving
Beneficiary, the Owner will be the Beneficiary. If a Beneficiary
is designated as irrevocable, then the Beneficiary's consent must
be obtained to change the Beneficiary.
Total Sum Insured, Specified Amount, Additional Insurance Amount
The Total Sum Insured, Specified Amount and the Additional
Insurance Amount are set at the time the Contract is issued and
the Specified Amount plus the Additional Insurance Amount equals
the Total Sum Insured. The minimum Total Sum Insured is
$200,000. Within the Total Sum Insured minimum, there is also
the requirement that the minimum Specified Amount is $100,000
while the minimum Additional Insurance Amount is $10,000. The
maximum amount of Additional Insurance Amount coverage is four
times the Specified Amount at issue.
You may decrease the Total Sum Insured from time to time, as
discussed below. You may increase the Additional Insurance
Amount as described below. The Guaranteed Minimum Death Benefit
Option only applies to the Specified Amount and not the
Additional Insurance Amount. If the Contract Value is
insufficient to pay monthly deductions, the Additional Insurance
Amount may lapse. See "Guaranteed Minimum Death Benefit Option,"
page 31.
Coverage Options
When you apply for the Contract you may choose one of three
Coverage Options, which will be used to determine the Death
Benefit. You may also change the Coverage Option, as described
below. The Death Benefit will be the greater of the amount
determined by the Coverage Option elected or the Corridor Death
Benefit. See "Corridor Death Benefit," page 31. Death Benefits
will be increased by any premiums received after the date of
death of the last surviving Insured and will be decreased by any
unpaid Indebtedness.
Under Option A, the Death Benefit is equal to the Total Sum
Insured on the date of death of the last surviving Insured.
Under Option B, the Death Benefit is equal to the Total Sum
Insured on the date of death of the last surviving Insured, plus
the Contract Value on the date of such death. Under Coverage
Option L, the Death Benefit will be the sum of: (1) the Total
Sum Insured on the date of death of the last surviving Insured;
and (2) the Contract Value on the Contract Anniversary preceding
the death of the last surviving Insured multiplied by the
applicable Option L Death Benefit Percentage less the Total Sum
Insured on that Contract Anniversary.
Corridor Death Benefit
The purpose of the Corridor Death Benefit is to ensure that your
Contract will not be disqualified as a life insurance contract
under Section 7702 of the Internal Revenue Code, as amended. The
Corridor Death Benefit is calculated by multiplying the Contract
Value on the date of death of the last surviving Insured by the
appropriate corridor percentage. The corridor percentages vary
by Issue Age, sex, risk class, Specified Amount, Additional
Insurance Amount, and applicable riders and benefits.
Guaranteed Minimum Death Benefit Option
An optional Guaranteed Minimum Death Benefit Option is available
only at issue. This option is not available if Coverage Option B
is elected or if the Joint First to Die Rider is issued with the
Contract. If this option has been elected, it guarantees payment
of the Specified Amount (less Indebtedness and any past due
charges) upon the death of the last surviving Insured, regardless
of the Contract's investment performance, provided that the
Guaranteed Minimum Death Benefit Option Premium requirement is
met. See "Guaranteed Minimum Death Benefit Option Premium," page
21. The Guaranteed Minimum Death Benefit Option does not
guarantee any Additional Insurance Amount.
If the Guaranteed Minimum Death Benefit Option Premium
requirement is not met, the Guaranteed Minimum Death Benefit
Option is in default. A 61-day notice period begins on the day
we mail the notice that the Guaranteed Minimum Death Benefit
Option is in default and the premium required to maintain the
Guaranteed Minimum Death Benefit Option. The default premium will
be the amount by which the cumulative Guaranteed Minimum Death
Benefit Option premium is greater than the cumulative paid
premium. The Guaranteed Minimum Death Benefit Option will
terminate if sufficient premium is not paid by the end of the
notice period.
If the policy contains any Additional Insurance Amount coverage
or any optional benefit riders, then in addition to testing the
Guaranteed Minimum Death Benefit Option Premium requirement as
outlined above, the Contract Value will be tested to ensure that
the policy is funded at a sufficient level to support the
Additional Insurance Amount or other optional benefit riders. On
each Monthly Anniversary Day the Cash Surrender Value will be
tested to determine if it is sufficient to cover the Monthly
Deduction. If not, a 61-day notice period begins on the day we
mail notice of the default premium amount. The default premium
will be equal to the payment which would be sufficient to provide
a Cash Surrender Value equal to three monthly deductions. The
Additional Insurance Amount coverage and other optional benefit
riders will be removed from the contract if payment at least
equal to the default premium is not received by the end of the
notice period.
There is no charge for this option during the first 10 Contract
Years. Beginning in Contract Year 11 a monthly charge per $1,000
of Specified Amount at issue will apply. The Guaranteed Minimum
Death Benefit Option is not available for Coverage Option B
Contracts, for Contracts on which the Additional Insurance Amount
exceeds or is scheduled to exceed the Specified Amount or for
Contracts which include the Joint First to Die Rider. The
Guaranteed Minimum Death Benefit Option will terminate upon your
request, if the Coverage Option is changed to B or if the amount
of the Additional Insurance Amount is increased to more than the
Specified Amount.
You may apply to have the Guaranteed Minimum Death Benefit Option
reactivated within two years of termination of such option.
Reactivation requires: (1) written notice to restore the option,
(2) evidence of insurability of the Insureds satisfactory to us,
unless reactivation is requested within one year after the
beginning of the notice period; and (3) payment of the amount by
which the cumulative Guaranteed Minimum Death Benefit Option
Premium plus Indebtedness exceeds the cumulative paid premiums on
the date of reactivation. On the Monthly Anniversary Day on
which the reactivation takes effect, we will deduct from the
Contract Value any unpaid Guaranteed Minimum Death Benefit Option
Charges. We reserve the right to deny reactivation of the
Guaranteed Minimum Death Benefit Option more than once during the
life of the Contract.
Impact of Combinations of Specified Amount and Additional
Insurance Amount
You should consider various factors in determining whether to
elect coverage in the form of the Specified Amount or in the form
of an Additional Insurance Amount. The Specified Amount cannot
be increased after issue, while the Additional Insurance Amount
may be increased after issue, subject to application and evidence
of insurability. The Additional Insurance Amount does not affect
the target premium under a Contract. Accordingly, the amount of
sales charge paid and the amount of compensation paid to the
agent may be less if coverage is included as Additional Insurance
Amount, rather than as Specified Amount. The Guaranteed Minimum
Death Benefit Option covers only the Specified Amount and does
not cover the Additional Insurance Amount. If the Contract Value
is insufficient to pay the monthly expenses (including charges
for the Additional Insurance Amount) the Additional Insurance
Amount and rider coverage will terminate, even though the
Specified Amount stays in effect under the Guaranteed Minimum
Death Benefit Option.
Generally, you will incur a lower Contract Year charges and have
more flexible coverage with respect to the Additional Insurance
Amount than with the Specified Amount. On the other hand, if you
wish to take advantage of the Guaranteed Minimum Death Benefit
Option, the proportion of the Total Sum Insured that is
guaranteed can be increased by taking out more coverage as
Specified Amount at the time of issue. The Guaranteed Minimum
Death Benefit does not apply at all if the Additional Insurance
Amount exceeds or is scheduled to exceed the Specified Amount at
any time. In such case, it could be to your advantage to either
increase the amount of coverage applied for at issue as Specified
Amount in order that the Guaranteed Minimum Death Benefit Option
will be available, or, if such guarantee is not of value to you,
to maximize the proportion of the Additional Insurance Amount.
CHANGES IN DEATH BENEFIT
Investment Performance Impact on Death Benefit
If investment performance is favorable, the amount of the Death
Benefit may increase. However, under Option A, the Death Benefit
ordinarily will not change for several years to reflect any
favorable investment performance and may not change at all. To
see how and when investment performance may begin to affect the
Death Benefit, see the illustrations beginning on page 39. Under
Option B, the Death Benefit will vary directly with the
investment performance of the Contract Value. Under Option L,
the Death Benefit will result in a Death Benefit pattern that can
be level for several years and then can increase at a particular
time of your choosing.
Changes in Coverage Option
You may change the Coverage Option on your Contract subject to
the following rules. We reserve the right to require that no
change in Coverage Option occur during the first Contract Year
and that no more than one increase be made in any 12-month
period. Coverage Option L is only available at issue. After any
change, the Total Sum Insured must be at least $200,000 and the
Specified Amount must be at least $100,000. The effective date
of change will be the Monthly Anniversary Day following the date
we approve your application for change.
If the Coverage Option is B or L, it may be changed to A. The
Total Sum Insured will not change. If the Coverage Option is A
or L, it may be changed to B subject to evidence of insurability
satisfactory to us. The new Total Sum Insured will be the
greater of the Total Sum Insured less the Contract Value as of
the date of change or $25,000. If the Coverage Option is changed
to B, the Guaranteed Minimum Death Benefit Option, if in effect,
will terminate.
We reserve the right to decline any Coverage Option change that
we determine would cause the Contract to not qualify as life
insurance under applicable tax laws.
Increases in the Additional Insurance Amount
Increases to the Additional Insurance Amount may be made either
through scheduled annual increases requested at issue or after
issue and through increases requested at any other time of your
choosing. The maximum Additional Insurance Amount coverage is
four times the Specified Amount at issue. This coverage may
increase to a maximum of eight times the Specified Amount after
issue under scheduled annual increases.
Scheduled increases to the Additional Insurance Amount, subject
to our approval, may be based on a flat amount annual increase
or a percentage annual increase. Available percentage increases
range from 0-25% of the Additional Insurance Amount. The
percentage increase will be based on the specified percentage of
the Additional Insurance Amount at the time the scheduled
increase occurs. Available amounts for a flat amount increase
range from 0-25% of the Additional Insurance Amount at issue.
The Guaranteed Minimum Death Benefit Option will not be available
if the Additional Insurance Amount is, or is scheduled to, exceed
the Specified Amount.
You may request increases to the Additional Insurance Amount
other than the annual, scheduled increases available at issue.
We reserve the right to require that no increases in Additional
Insurance Amount occur during the first Contract Year and that no
more than one increase be made in any 12-month period.
Any requested, unscheduled increase in the Additional Insurance
Amount must be at least $10,000 and an application must be
submitted. Kansas City Life reserves the right to require
satisfactory evidence of insurability. In addition, the
Insureds' attained Age must be less than the current maximum
issue Age for the Contracts, as determined by Kansas City Life
from time to time. A change in Planned Periodic Premiums may be
advisable.
The increase in the Additional Insurance Amount will become
effective on the Monthly Anniversary Day on or next following the
date the request for the increase is received and approved. If
the Additional Insurance Amount is increased to be greater than
the Specified Amount, the Guaranteed Minimum Death Benefit
Option, if applicable, will terminate. In addition, if the
Contract Value is at any time insufficient to pay monthly
deductions for the Contract, the Additional Insurance Amount and
riders will terminate in order to preserve the Guaranteed Minimum
Death Benefit Option. See "Guaranteed Minimum Death Benefit
Option," page 31.
Decreases in Total Sum Insured
You may request a decrease in the Total Sum Insured. When a
decrease in Total Sum Insured is made, we will first reduce any
amount of Additional Insurance Amount remaining and only then
reduce the Specified Amount, starting with the latest increase
and continuing in the reverse order in which the increases were
made. If the Specified Amount is decreased, the Guaranteed
Minimum Death Benefit Option coverage amount will be decrease by
the same amount. Under certain circumstances, a partial
surrender will result in a decrease in the Total Sum Insured.
See "Partial Surrenders," page 35.
We reserve the right to require that no decreases occur during
the first Contract Year and that no more than one decrease be
made in any 12-month period.
We reserve the right to require that the Total Sum Insured after
any decrease be at least $200,000 and the Specified Amount must
be $100,000. You must provide written notice to the Home Office
of your intention to decrease your Specified Amount. The
effective date of the decrease will be the Monthly Anniversary
Day following the date we approve your request for decrease.
Decreasing the Total Sum Insured may have the effect of
decreasing monthly Cost of Insurance Charges. However, a
decrease will not decrease the Target Premium or Guaranteed
Minimum Death Benefit Option Premium.
CASH BENEFITS
Contract Loans
Prior to the death of the last surviving Insured, you may borrow
against your Contract at any time by submitting a written request
to the Home Office, provided that the Cash Surrender Value of the
Contract is greater than zero. The maximum loan amount is equal
to the Contract's Cash Surrender Value on the effective date of
the loan less loan interest to the next Contract Anniversary.
Outstanding loans reduce the amount available for new loans.
Contract loans will be processed as of the date your written
request is received and approved. Loan proceeds generally will
be sent to you within seven calendar days. See "When Proceeds
Are Paid," page 42.
Interest. Kansas City Life will charge interest on any
Indebtedness at an annual rate of 6.0%. Interest is due and
payable at the end of each Contract Year while a loan is
outstanding. If interest is not paid when due, the amount of the
interest is added to the loan and becomes part of the
Indebtedness.
Loan Collateral. When a Contract loan is made, an amount
sufficient to secure the loan is transferred out of the
Subaccounts and the unloaned value in the Fixed Account and into
the Contract's Loan Account. Thus, a loan will have no immediate
effect on the Contract Value, but the Cash Surrender Value will
be reduced immediately by the amount transferred to the Loan
Account. The Owner can specify the Variable Accounts and/or
Fixed Account from which collateral will be transferred. If no
allocation is specified, collateral will be transferred from each
Subaccount and from the unloaned value in the Fixed Account in
the same proportion that the Contract Value in each Subaccount
and the unloaned value in the Fixed Account bears to the total
Contract Value in those accounts on the date that the loan is
made. An amount of Cash Surrender Value equal to any due and
unpaid loan interest will also be transferred to the Loan Account
on each Contract Anniversary. Due and unpaid interest will be
transferred from each Subaccount and the unloaned value in the
Fixed Account in the same proportion that each Subaccount Value
and the unloaned value in the Fixed Account Value bears to the
total unloaned Contract Value.
The Loan Account will be credited with interest at an effective
annual rate of not less than 4.0%. Thus, the maximum net cost of
a loan is 2.0% per year (the net cost of a loan is the difference
between the rate of interest charged on Indebtedness and the
amount credited to the Loan Account). Interest earned on the
Loan Account will be added to the Fixed Account.
Preferred Loan Provision. Beginning in the eleventh Contract
Year, a preferred loan may be made. The maximum amount available
for a preferred loan is the Contract Value less premiums paid and
may not exceed the maximum loan amount. The amount in the Loan
Account securing the preferred loan will be credited with
interest at an effective annual rate of 6.0%. Thus, the net cost
of the preferred loan is 0.0% per year. The preferred loan
provision is not guaranteed.
Loan Repayment. You may repay all or part of your Indebtedness
at any time while at least one Insured is living and the Contract
is in force. Each loan repayment must be at least $50.00. Loan
repayments must be sent to the Home Office and will be credited
as of the date received. A loan repayment must be clearly marked
as "loan repayment" or it will be credited as a premium. (Loan
repayments, unlike unscheduled premium payments, are not subject
to Premium Expense Charges.) When a loan repayment is made,
Contract Value in the Loan Account in an amount equal to the
repayment is transferred from the Loan Account to the Subaccounts
and the unloaned value in the Fixed Account. Thus, a loan
repayment will have no immediate effect on the Contract Value,
but the Cash Surrender Value will be increased immediately by the
amount transferred from the Loan Account. Unless specified
otherwise by the Owner, loan repayment amounts will be
transferred to the Subaccounts and the unloaned value in the
Fixed Account according to the premium allocation instructions in
effect at that time.
Effect of Contract Loan. A loan, whether or not repaid, will
have a permanent effect on the Death Benefit and Contract Values
because the investment results of the Subaccounts of the Variable
Account and current interest rates credited on Contract Value in
the Fixed Account will apply only to the non-loaned portion of
the Contract Value. The longer the loan is outstanding, the
greater the effect is likely to be. Depending on the investment
results of the Subaccounts or credited interest rates for the
unloaned value in the Fixed Account while the loan is
outstanding, the effect could be favorable or unfavorable.
Contract loans may increase the potential for lapse if investment
results of the Subaccounts are less than anticipated. Also,
loans could, particularly if not repaid, make it more likely than
otherwise for a Contract to terminate. See "Tax Considerations,"
page 44, for a discussion of the tax treatment of policy loans,
and the adverse tax consequences if a Contract lapses with loans
outstanding. In particular, if your Contract is a "modified
endowment contract," loans may be currently taxable and subject
to a 10% penalty tax. In addition, interest paid on Contract
Loans generally is not tax deductible.
If the Death Benefit becomes payable while a loan is outstanding,
the Indebtedness will be deducted in calculating the Death
Benefit proceeds. See "Amount of Death Benefit Proceeds," page
30.
If the Loan Account Value exceeds the Contract Value on any
Valuation Day, the Contract will be in default. You, and any
assignee of record, will be sent notice of the default. You will
have a 61-day grace period to submit a sufficient payment to
avoid termination of coverage under the Contract. The notice
will specify the amount that must be repaid to prevent
termination. See "Premium Payments to Prevent Lapse," page 22.
Surrendering the Contract for Cash Surrender Value
You may surrender your Contract at any time for its Cash
Surrender Value by submitting a written request to the Home
Office. Kansas City Life may require return of the Contract. A
surrender request will be processed as of the date your written
request and all required documents are received. Payment will
generally be made within seven calendar days. See "When Proceeds
are Paid," page 42. The Cash Surrender Value may be taken in one
lump sum or it may be applied to a payment option. See "Payment
Options," page 36. Your Contract will terminate and cease to be
in force if it is surrendered for one lump sum. It cannot later
be reinstated. Surrenders may have adverse tax consequences. See
"Tax Considerations," page 44.
Partial Surrenders
You may make partial surrenders under your Contract at any time
subject to the conditions below. You must submit a written
request to the Home Office. Each partial surrender must be at
least $500. The partial surrender amount may not exceed the Cash
Surrender Value, less $300. A Partial Surrender Fee will be
assessed on a partial surrender. See "Partial Surrender Fee,"
page 27. This charge will be deducted from your Contract Value
along with the amount requested to be surrendered and will be
considered part of the surrender (together, "partial surrender
amount"). As of the date Kansas City Life receives a written
request for a partial surrender, the Contract Value will be
reduced by the partial surrender amount.
When you request a partial surrender, you can direct how the
partial surrender amount will be deducted from your Contract
Value in the Subaccounts and Fixed Account. If you provide no
directions, the partial surrender amount will be deducted from
your Contract Value in the Subaccounts and Fixed Account on a pro-
rata basis. See "Minimum Guaranteed and Current Interest Rates,"
page 24. Partial surrenders may have adverse tax consequences.
See "Tax Considerations," page 44.
If Coverage Option A or L is in effect, Kansas City Life will
reduce the Contract Value by the partial surrender amount. The
Total Sum Insured will be reduced by the partial surrender amount
minus the excess, if any, of the Death Benefit over the Total Sum
Insured at the time the partial surrender is made. If the
partial surrender amount is less than the excess of the Death
Benefit over the Total Sum Insured, the Total Sum Insured will
not be reduced. If Coverage Option B is in effect we will
reduce the Contract Value by the partial surrender amount. We
reserve the right to reject a partial surrender request if the
partial surrender would reduce the Total Sum Insured below the
minimum amount for which the Contract would be issued under
Kansas City Life's then-current rules, as interpreted by Kansas
City Life.
Partial surrender requests will be processed as of the date your
written request is received, and generally will be paid within
seven calendar days. See "When Proceeds Are Paid," page 42.
Payment Options
The Contract offers a variety of ways of receiving proceeds
payable under the Contract, such as on surrender or death, other
than in a lump sum. These payment options are summarized below.
All of these options are forms of fixed-benefit annuities which
do not vary with the investment performance of a separate
account. Any agent authorized to sell this Contract can further
explain these options upon request.
You may apply proceeds of $2,000 ($2,000 minimum may not apply in
some states) or more which are payable under this Contract to any
of the following options:
Option 1 - Interest Payments. We will make interest payments
to the payee annually or monthly as elected. Interest on the
proceeds will be paid at the guaranteed rate of 3.0% per year and
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. Interest on the proceeds will be paid at the
guaranteed rate of 3.0% per year and 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. Interest on the proceeds will be paid
at the guaranteed rate of 3.0% per year and may be increased by
additional interest. The present value of any unpaid
installments may be withdrawn at any time.
Option 4 - Life Income. We will pay an income during the
payee's lifetime. A minimum guaranteed payment period may be
chosen. Payments received under the Installment Refund Option
will continue until the total income payments received equal the
proceeds applied.
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.
Minimum Amounts. Kansas City Life reserves the right to pay
the total amount of the Contract in one lump sum, if less than
$2,000. If payments are less than $50, payments may be made less
frequently at Kansas City Life's option.
If Kansas City Life has available at the time a payment option is
elected options or rates on a more favorable basis than those
guaranteed, the more favorable benefits will apply.
Specialized Uses of the Contract
Because the Contract provides for an accumulation of cash value
as well as a Death Benefit, the Contract can be used for various
individual and business financial planning purposes. Purchasing
the Contract in part for such purposes entails certain risks.
For example, if the investment performance of Subaccounts to
which Variable Account Value is allocated is poorer than expected
or if sufficient premiums are not paid, the Contract may lapse or
may not accumulate sufficient Variable Account Value to fund the
purpose for which the Contract was purchased. Partial surrenders
and Contract loans may significantly affect current and future
Contract Value, Cash Surrender Value, or Death Benefit proceeds.
Depending upon Subaccount investment performance and the amount
of a Contract loan, the loan may cause a Contract to lapse.
Because the Contract is designed to provide benefits on a long-
term basis, before purchasing a Contract for a specialized
purpose a purchaser should consider whether the long-term nature
of the Contract is consistent with the purpose for which it is
being considered. Using a Contract for a specialized purpose may
have tax consequences. See "Tax Considerations" on page 44.
ILLUSTRATIONS OF CONTRACT VALUES, CASH SURRENDER VALUES, DEATH
BENEFITS AND ACCUMULATED PREMIUM PAYMENTS
The following tables have been prepared to illustrate
hypothetically how certain values under a Contract change with
investment performance over an extended period of time. The
tables illustrate how Contract Values, Cash Surrender Values and
Death Benefits under a Contract covering both Insureds of a given
age on the Contract Date, would vary over time if planned premium
payments were paid annually and the return on the assets in each
of the Funds were an assumed uniform gross annual rate of 0%, 6%
and 12%. The values would be different from those shown if the
returns averaged 0%, 6% or 12% but fluctuated over and under
those averages throughout the years shown. The tables also show
Planned Periodic Premiums accumulated at 5% interest compounded
annually. The hypothetical investment rates of return are
illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of
return for a particular Contract may be more or less than the
hypothetical investment rates of return and will depend on a
number of factors including the investment allocations made by an
Owner and prevailing interest rates and rates of inflation.
These illustrations assume that Net Premiums are allocated
equally among the 14 Subaccounts available under the Contract,
and that no amounts are allocated to the Fixed Account. These
illustrations also assume that no Contract loans have been made
and that the premium is paid at the beginning of each Contract
Year. Values would be different if the premiums are paid with a
different frequency or in different amounts.
The illustrations reflect the fact that the net investment return
on the assets held in the Subaccounts is lower than the gross
after tax return of the selected Portfolios. The current values
shown in the tables assume an average annual expense ratio of
1.0% of the average daily net assets of the Portfolios available
under the Contracts. This average annual expense ratio is based
on the expense ratios of each of the Portfolios for the last
fiscal year, adjusted, as appropriate, for any material changes
in expenses effective for the current fiscal year of a Portfolio.
For information on the Portfolios' expenses, see the prospectuses
for the Funds and Portfolios accompanying this Prospectus.
In addition, the current values shown in the illustrations
reflect the current daily charge to the Variable Account for
assuming mortality and expense risks, which is equivalent to an
annual charge of 0.625%. After deduction of Portfolio expenses
and the mortality and expense risk charge, the illustrated gross
annual investment rates of return of 0%, 6% and 12% would
correspond to approximate net annual rates of -1.54%, 4.43% and
10.39% respectively on a current basis. The guaranteed values
shown in the illustrations reflect the guaranteed daily charge to
the Variable Account for assuming mortality and expense risks,
which is equivalent to an annual charge of 0.90%. After
deduction of Portfolio expenses and the mortality and expense
risk charge, the illustrated gross annual investment rates of
return of 0%, 6% and 12% would correspond to approximate net
annual rates of -1.81%, 4.14% and 10.09%, respectively on a
guaranteed basis.
The illustrations also reflect the deduction of the Premium
Expense Charges and the Monthly Deductions and assume that the
Guaranteed Minimum Death Benefit Option is not in effect. The
Monthly Deduction includes the cost of insurance charge. Kansas
City Life has the contractual right to charge higher guaranteed
maximum charges than its current cost of insurance charges. In
addition, the bonus, which, if paid, would partially offset the
Monthly Deduction, is not guaranteed and will be paid in Kansas
City Life's sole discretion. The current cost of insurance
charges and payment of the bonus and, alternatively, the
guaranteed cost of insurance charges and nonpayment of the bonus,
are reflected in separate illustrations on each of the following
pages. All the illustrations reflect the fact that no charges
for Federal or state income taxes are currently made against the
Variable Account and assume no Indebtedness or charges for
optional benefits.
The illustrations are based on Kansas City Life's sex distinct
rates for nontobacco users. Upon request, an Owner will be
furnished with a comparable illustration based upon the proposed
Insureds' specific circumstances. Such illustrations may assume
different hypothetical rates of return than those illustrated in
the following tables.
<TABLE>
$6,534.50 ANNUAL PREMIUM
$1,000,000 TOTAL SUM INSURED: $1,000,000 SPECIFIED AMOUNT
COVERAGE OPTION A
USING CURRENT COST OF INSURANCE RATES
Male, Standard Nontobacco, Age 35; Female, Standard Nontobacco, Age 35
<CAPTION>
0% Hypothetical Gross 6% Hypothetical Gross 12% Hypothetical Gross
Investment Return Investment Return Investment Return
End of Premiums Contract Cash Death Contract Cash Death Contract Cash Death
Contract Accumulated Value Surrender Benefit Value Surrender Benefit Value Surrender Benefit
Year at 5% Interest Value Value Value
per Year
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 6,861 2,427 2,427 1,000,000 2,587 2,587 1,000,000 2,748 2,748 1,000,000
2 14,066 7,062 7,062 1,000,000 7,672 7,672 1,000,000 8,300 8,300 1,000,000
3 21,630 11,620 11,620 1,000,000 12,974 12,974 1,000,000 14,422 14,422 1,000,000
4 29,573 16,099 16,099 1,000,000 18,504 18,504 1,000,000 21,172 21,172 1,000,000
5 37,913 20,501 20,501 1,000,000 24,270 24,270 1,000,000 28,613 28,613 1,000,000
6 46,669 25,552 25,552 1,000,000 31,048 31,048 1,000,000 37,625 37,625 1,000,000
7 55,864 30,513 30,513 1,000,000 38,114 38,114 1,000,000 47,560 47,560 1,000,000
8 65,519 35,382 35,382 1,000,000 45,476 45,476 1,000,000 58,511 58,511 1,000,000
9 75,656 40,158 40,158 1,000,000 53,147 53,147 1,000,000 70,582 70,582 1,000,000
10 86,300 44,839 44,839 1,000,000 61,137 61,137 1,000,000 83,886 83,886 1,000,000
15 148,055 67,986 67,986 1,000,000 107,736 107,736 1,000,000 175,543 175,543 1,000,000
20 226,873 88,298 88,298 1,000,000 164,454 164,454 1,000,000 324,726 324,726 1,000,000
25 327,466 106,123 106,123 1,000,000 234,125 234,125 1,000,000 568,331 568,331 1,439,892
30 455,852 120,602 120,602 1,000,000 319,079 319,079 1,000,000 963,660 963,660 2,041,641
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS
INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND
RATES OF INFLATION. THE VALUES FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD OF
YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL
CONTRACT YEARS. NO REPRESENTATION CAN BE MADE BY KANSAS CITY LIFE OR ANY
FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
<TABLE>
$6,534.50 ANNUAL PREMIUM
$1,000,000 TOTAL SUM INSURED: $1,000,000 SPECIFIED AMOUNT
COVERAGE OPTION A
USING GUARANTEED COST OF INSURANCE RATES
Male, Standard Nontobacco, Age 35; Female, Standard Nontobacco, Age 35
<CAPTION>
0% Hypothetical Gross 6% Hypothetical Gross 12% Hypothetical Gross
Investment Return Investment Return Investment Return
End of Premiums Contract Cash Death Contract Cash Death Contract Cash Death
Contract Accumulated Value Surrender Benefit Value Surrender Benefit Value Surrender Benefit
Year at 5% Interest Value Value Value
per Year
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 6,861 2,419 2,419 1,000,000 2,579 2,579 1,000,000 2,739 2,739 1,000,000
2 14,066 7,034 7,034 1,000,000 7,641 7,641 1,000,000 8,267 8,267 1,000,000
3 21,630 11,559 11,559 1,000,000 12,905 12,905 1,000,000 14,345 14,345 1,000,000
4 29,573 15,994 15,994 1,000,000 18,379 18,379 1,000,000 21,028 21,028 1,000,000
5 37,913 20,339 20,339 1,000,000 24,070 24,070 1,000,000 28,375 28,375 1,000,000
6 46,669 25,320 25,320 1,000,000 30,750 30,750 1,000,000 37,256 37,256 1,000,000
7 55,864 30,196 30,196 1,000,000 37,692 37,692 1,000,000 47,020 47,020 1,000,000
8 65,519 34,967 34,967 1,000,000 44,905 44,905 1,000,000 57,751 57,751 1,000,000
9 75,656 39,634 39,634 1,000,000 52,397 52,397 1,000,000 69,546 69,546 1,000,000
10 86,300 44,193 44,193 1,000,000 60,177 60,177 1,000,000 82,509 82,509 1,000,000
15 148,055 66,538 66,538 1,000,000 105,153 105,153 1,000,000 171,033 171,033 1,000,000
20 226,873 85,431 85,431 1,000,000 158,676 158,676 1,000,000 312,723 312,723 1,000,000
25 327,466 99,890 99,890 1,000,000 221,645 221,645 1,000,000 539,212 539,212 1,366,118
30 455,852 105,389 105,389 1,000,000 291,991 291,991 1,000,000 893,944 893,944 1,893,938
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATE OF RETURN. ACTUAL RATES OF RETURN MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS
INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND
RATES OF INFLATION. THE VALUES FOR A CONTRACT WOULD BE DIFFERENT FROM THOSE
SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD OF
YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL
CONTRACT YEARS. NO REPRESENTATION CAN BE MADE BY KANSAS CITY LIFE OR ANY
FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR
OR SUSTAINED OVER ANY PERIOD OF TIME.
</TABLE>
OTHER CONTRACT BENEFITS AND PROVISIONS
Limits on Rights to Contest the Contract
Incontestability. After the Contract has been in force during
the Insureds' lifetime for two years from the Contract Date (or
less if required by state law), Kansas City Life may not contest
the Contract, except if the Contract lapses after the end of a
grace period.
Any increase in the Additional Insurance Amount will not be
contested after the increase has been in force during the
Insureds' lifetime for two years following the effective date of
the increase (or less if required by state law).
If a Contract lapses and it is reinstated, we cannot contest the
reinstated Contract after the Contract has been in force during
the Insureds' lifetime for two years from the date of the
reinstatement application (or less if required by state law).
Suicide Exclusion. If either Insured dies by suicide, while
sane or insane, within two years of the Contract Date (or less if
required by state law), the Contract will terminate on the date
of such suicide and the amount payable by Kansas City Life (in
place of all other benefits, if any) will be equal to the
Contract Value less any Indebtedness.
If either Insured dies by suicide, while sane or insane, within
two years after the effective date of any increase in the
Additional Insurance Amount (or less if required by state law),
the amount of the Additional Insurance Amount associated with the
increase will terminate and the amount payable by Kansas City
Life associated with such increase will be limited to the cost of
insurance charges associated with the increase.
Changes in the Contract or Benefits
Misstatement of Age or Sex. If, while the Contract is in force
and either or both the Insureds are alive, it is determined that
the Age or sex of either Insured as stated in the Contract is not
correct, Kansas City Life will adjust the Contract Value under
the Contract. The adjustment to the Contract Value will be the
difference between the following amounts accumulated at 4%
interest annually. The two amounts are: (1) the cost of
insurance deductions that have been made; and (2) the cost of
insurance deductions that should have been made. If, after the
death of the last surviving Insured while this Contract is in
force, it is determined the Age or sex of either Insured as
stated in the Contract is not correct, the Death Benefit will be
the net amount at risk that the most recent cost of insurance
deductions at the correct Age and sex would have provided plus
the Contract Value on the date of death (unless otherwise
required by state law).
Other Changes. Upon notice, Kansas City Life may modify the
Contract, but only if such modification is necessary to: (1)
make the Contract or the Variable Account comply with any
applicable law or regulation issued by a governmental agency to
which Kansas City Life is subject; (2) assure continued
qualification of the Contract under the Internal Revenue Code or
other federal or state laws relating to variable life contracts;
(3) reflect a change in the operation of the Variable Account; or
(4) provide additional Variable Account and/or fixed accumulation
options. Kansas City Life reserves 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, Kansas City Life
will issue an appropriate endorsement to the Contract, if
required. Kansas City Life will exercise these rights in
accordance with applicable law, including approval of Contract
Owners if required.
When Proceeds Are Paid
Kansas City Life will ordinarily pay any Death Benefit proceeds,
loan proceeds, partial surrender proceeds, or full surrender
proceeds within seven calendar days after receipt at the Home
Office of all the documents required for such a payment.
Death Benefits and full surrender proceeds will generally be paid
through Kansas City Life's Personal Growth Account, an interest-
bearing checking account. A Contract Owner or beneficiary
(whichever applicable) will have immediate access to the proceeds
by writing a check on the account. We pay interest from the date
of death to the date the personal Growth Account is closed. If a
Kansas City Life agent helps the beneficiary of a policy to
prepare the documents that are required for payment of the
proceeds, we will send the Personal Growth Account checkbook or
check to the agent. Our agents will take reasonable steps to
arrange for prompt delivery to the individual to whom the
proceeds are payable.
Other than the Death Benefit, which is determined as of the date
of death, the amount will be determined as of the date of receipt
of required documents. However, Kansas City Life may delay
making a payment or processing a transfer request if (1) the New
York Stock Exchange is closed for other than a regular holiday or
weekend, trading is restricted by the SEC, or the SEC declares
that an emergency exists as a result of which the disposal or
valuation of Variable Account assets is not reasonably
practicable; or (2) the SEC by order permits postponement of
payment to protect Kansas City Life's Contract Owners.
Reports to Contract Owners
At least once each Contract Year, you will be sent a report at
your last known address showing, as of the end of the current
report period providing updated information about the Contract
since the last report, including any information required by law.
You will also be sent an annual and a semi-annual report for each
Fund or Portfolio underlying a Subaccount to which you have
allocated Contract Value, including a list of the securities held
in each Fund, as required by the 1940 Act. In addition, when you
pay premium payments , or if you take out a loan, transfer
amounts among the Variable Accounts and Fixed Account or take
surrenders, you will receive a written confirmation of these
transactions.
Assignment
The Contract may be assigned in accordance with its terms. In
order for any assignment to be binding upon Kansas City Life, it
must be in writing and filed at the Home Office. Once Kansas
City Life has received a signed copy of the assignment, the
Owner's rights and the interest of any Beneficiary (or any other
person) will be subject to the assignment. Kansas City Life
assumes no responsibility for the validity or sufficiency of any
assignment. An assignment is subject to any Indebtedness.
Reinstatement of Contract
The Contract may be reinstated within two years (or such longer
period if required by state law) after lapse, subject to
compliance with certain conditions, including the payment of a
necessary premium payment and submission of satisfactory evidence
of insurability. See your Contract for further information.
Optional Benefits and Riders
The following optional benefits are available and may be added to
your Contract. Monthly charges for these optional benefits will
be deducted from your Contract Value as part of the Monthly
Deduction. All of these benefits may not be available in all
states.
Contract Split Option Rider
Issue Ages: 20-75
This rider allows you to split the Contract equally into two
individual policies, one on the life of each Insured. This
split option will be offered without evidence of insurability
under the conditions that the request is made as the result of
either (1) the divorce of the two Insureds; or (2) as a result
of a change in the Unlimited Federal Estate Tax marital
deduction or a reduction in the maximum Federal Estate Tax
bracket rate to a rate below 25%. Specific other conditions
must also be met in order to qualify. When this option is
exercised, the existing Contract will be terminated.
The new contracts will be based on the Insureds' Age, sex, and
risk class at the time of issue of the original Contract.
This rider will terminate at the older Insured's age 80. The
rider will also terminate if you elect to keep the Guaranteed
Minimum Death Benefit Option in effect after it is determined
that funding is not adequate to cover these rider charges.
See "Guaranteed Minimum Death Benefit Option," page 31.
Joint First to Die Term Life Insurance Rider
Issue Ages: 20-85
This rider covers the Insureds under the Contract and provides
yearly renewable term coverage on the first Insured to die on
or before the older Insured's age 99 and while this rider is
in force. The coverage under this rider may be increased
(subject to insurability) or decreased. You may also choose
at issue a schedule for the coverage to decrease annually.
The scheduled decreases may be based on the percentage of the
coverage amount or may be a flat dollar amount. If this rider
is elected, the Guaranteed Minimum Death Benefit Option is not
available on the Contract.
Joint Survivorship Four-Year Term Life Insurance Rider
Issue Ages: 20-85
This rider provides four-year level term insurance and expires
four years after the effective date of the rider. The term
insurance provides a death benefit payable at the death of the
last surviving Insured. The minimum coverage is $100,000 and
the maximum coverage is equal to the Total Sum Insured.
The rider will also terminate if you elect to keep the Guaranteed
Minimum Death Benefit Option in effect after it is determined
that funding is not adequate to cover these rider charges.
See "Guaranteed Minimum Death Benefit Option," page 31.
Additional rules and limits apply to these optional riders. Not
all such benefits may be available at any time, and optional
benefits or riders in addition to those listed above may be made
available. Please ask your Kansas City Life agent for further
information, or contact the Home Office.
TAX CONSIDERATIONS
The following summary provides a general description of the
Federal income tax considerations associated with the Contract
and does not purport to be complete or to cover all situations.
This discussion is not intended as tax advice. Counsel or other
competent tax advisers should be consulted for more complete
information. This discussion is based upon Kansas City Life's
understanding of the present Federal income tax laws as they are
currently interpreted by the Internal Revenue Service (the
"Service"). No representation is made as to the likelihood of
continuation of the present Federal income tax laws or of the
current interpretations by the Service.
Tax Status of the Contract
Section 7702 of the Internal Revenue Code of 1986, as amended
(the "Code") sets forth a definition of a life insurance contract
for Federal income tax purposes. Although the Secretary of the
Treasury (the "Treasury") is authorized to prescribe regulations
implementing Section 7702, while proposed regulations and other
interim guidance has been issued, final regulations have not been
adopted. In short, guidance as to how Section 7702 is to be
applied is limited. If a Contract were determined not to be a
life insurance contract for purposes of Section 7702, such
Contract would not provide the tax advantages normally provided
by a life insurance contract.
With respect to a Contract issued on a standard basis, Kansas
City Life believes that such a Contract should meet the Section
7702 definition of a life insurance contract. With respect to a
Contract that is issued on a substandard basis (i.e., a premium
class with extra rating involving higher than standard mortality
risk), there is less guidance, in particular as to how the
mortality and other expense requirements of Section 7702 are to
be applied in determining whether such a Contract meets the
Section 7702 definition of a life insurance contract. Thus, it
is not clear whether or not a Contract issued on a substandard
basis would satisfy Section 7702, particularly if the owner pays
the full amount of premiums permitted under the Contract.
If it is subsequently determined that a Contract does not satisfy
Section 7702, Kansas City Life may take whatever steps are
appropriate and reasonable to attempt to cause such a Contract to
comply with Section 7702. For these reasons, Kansas City Life
reserves the right to restrict Contract transactions as necessary
to attempt to qualify it as a life insurance contract under
Section 7702.
Section 817(h) of the Code requires that the investments of each
of the Subaccounts must be "adequately diversified" in accordance
with Treasury regulations in order for the Contract to qualify as
a life insurance contract under Section 7702 of the Code
(discussed above). The Subaccounts, through the Portfolios,
intend to comply with the diversification requirements prescribed
in Treas. Reg. 1.817-5, which affect how the Portfolio's assets
are to be invested. Kansas City Life believes that the
Subaccounts will, thus, meet the diversification requirements,
and Kansas City Life will monitor continued compliance with this
requirement.
In certain circumstances, owners of variable life insurance
contracts may be considered the owners, for federal income tax
purposes, of the assets of the subaccounts used to support their
contracts. In those circumstances, income and gains from the
subaccount assets would be includible in the variable contract
owner's gross income.
The IRS has stated in published rulings that a variable contract
owner will be considered the owner of subaccount assets if the
contract owner possesses incidents of ownership in those assets,
such as the ability to exercise investment control over the
assets. The Treasury Department has also announced, in
connection with the issuance of regulations concerning
diversification, that those regulations "do not provide guidance
concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor
(i.e., the Contract Owner), rather than the insurance company, to
be treated as the owner of the assets in the account." This
announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which Contract holders
may direct their investments to particular subaccounts without
being treated as owners of the underlying assets."
The ownership rights under the Contract are similar to, but
different in certain respects from, those described by the IRS in
rulings in which it was determined that Contract owners were not
owners of subaccount assets. For example, an Owner has
additional flexibility in allocating Net Premium payments and
Contract Value. These differences could result in an Owner being
treated as the owner of a pro rata portion of the assets of the
Subaccounts. In addition, Kansas City Life does not know what
standards will be set forth, if any, in the regulations or
rulings which the Treasury Department has stated it expects to
issue. Kansas City Life therefore reserves the right to modify
the Contract as necessary to attempt to prevent an Owner from
being considered the Owner of a pro rata share of the assets of
the Subaccounts.
The following discussion assumes that the Contract will qualify
as a life insurance contract for Federal income tax purposes.
Tax Treatment of Contract Benefits
In General. Kansas City Life believes that the proceeds and
Contract Value increases of a Contract should be treated in a
manner consistent with a fixed-benefit life insurance Contract
for Federal income tax purposes. Thus, the Death Benefit under
the Contract should be excludable from the gross income of the
beneficiary under Section 101(a)(1) of the Code.
Depending on the circumstances, the exchange of a Contract, a
change in the Contract's Coverage Option, a Contract loan, a
partial surrender, a surrender, a change in ownership, or an
assignment of the Contract may have Federal income tax
consequences. In addition, federal, state and local transfer,
and other tax consequences of ownership or receipt of Contract
proceeds depends on the circumstances of each Owner or
beneficiary.
The Contract may also be used in various arrangements, including
nonqualified deferred compensation or salary continuance plans,
split dollar insurance plans, executive bonus plans, retiree
medical benefit plans and others. The tax consequences of such
plans may vary depending on the particular facts and
circumstances of each individual arrangement. Therefore, if you
are contemplating the use of a Contract in any arrangement the
value of which depends in part on its tax consequences, you
should be sure to consult a qualified tax adviser regarding the
tax attributes of the particular arrangement.
Generally, the Owner will not be deemed to be in constructive
receipt of the Contract Value, including increments thereof,
until there is a distribution. The tax consequences of
distributions from, and loans taken from or secured by, a
Contract depend on whether the Contract is classified as a
"Modified Endowment Contract." Whether a Contract is or is not a
Modified Endowment Contract, upon a complete surrender or lapse
of a Contract, if the amount received plus the amount of
Indebtedness exceeds the total investment in the Contract, the
excess will generally be treated as ordinary income subject to
tax.
Modified Endowment Contracts. Section 7702A establishes a
class of life insurance contracts designated as "Modified
Endowment Contracts." The rules relating to whether a Contract
will be treated as a Modified Endowment Contract are extremely
complex and cannot be adequately described in the limited
confines of this summary. In general, a Contract will be a
Modified Endowment Contract if the accumulated premiums paid at
any time during the first seven Contract Years exceed the sum of
the net level premiums which would have been paid on or before
such time if the Contract provided for paid-up future benefits
after the payment of seven level annual premiums. A Contract may
also become a Modified Endowment Contract after a material
change. The determination of whether a Contract will be a
Modified Endowment Contract after a material change generally
depends upon the relationship of the Death Benefit and Contract
Value at the time of such change and the additional premiums paid
in the seven years following the material change.
Due to the Contract's flexibility, classification as a Modified
Endowment Contract will depend on the individual circumstances of
each Contract. In view of the foregoing, a current or
prospective Owner should consult with a tax adviser to determine
whether a Contract transaction will cause the Contract to be
treated as a Modified Endowment Contract. However, at the time a
premium is credited which in Kansas City Life's view would cause
the Contract to become a Modified Endowment Contract, Kansas City
Life will notify the Owner that unless a refund of the excess
premium (with any appropriate interest) is requested by the
Owner, the Contract will become a Modified Endowment Contract.
The Owner will have 30 days after receiving such notification to
request the refund.
Distributions from Contracts Classified as Modified Endowment
Contracts. Contracts classified as Modified Endowment Contracts
will be subject to the following tax rules: First, all
distributions, including distributions upon surrender and partial
surrender from such a Contract are treated as ordinary income
subject to tax up to the amount equal to the excess (if any) of
the Contract Value immediately before the distribution over the
investment in the Contract (described below) at such time.
Second, loans taken from or secured by such a Contract, are
treated as distributions from the Contract and taxed accordingly.
Past due loan interest that is added to the loan amount will be
treated as a loan. Third, a 10 percent additional income tax is
imposed on the portion of any distribution from, or loan taken
from or secured by, such a Contract that is included in income
except where the distribution or loan is made on or after the
Owner attains age 59r, is attributable to the Owner's becoming
disabled, or is part of a series of substantially equal periodic
payments for the life (or life expectancy) of the Owner or the
joint lives (or joint life expectancies) of the Owner and the
Owner's beneficiary.
If a Contract becomes a modified endowment contract after it is
issued, distributions made during the Contract Year in which it
becomes a modified endowment contract, distributions in any
subsequent Contract Year and distributions within two years
before the Contract becomes a modified endowment contract will be
subject to the tax treatment described above. This means that a
distribution from a Contract that is not a modified endowment
contract could later become taxable as a distribution from a
modified endowment contract.
Distributions From Contracts Not Classified as Modified
Endowment Contracts. Distributions from a Contract that is not a
Modified Endowment Contract are generally treated as first,
recovering the investment in the Contract (described below) and
then, only after the return of all such investment in the
Contract, as distributing taxable income. An exception to this
general rule occurs in the case of a decrease in the Contract's
Death Benefit or any other change that reduces benefits under the
Contract in the first 15 years after the Contract is issued and
that results in a cash distribution to the Owner in order for the
Contract to continue complying with the Section 7702 definitional
limits. Such a cash distribution will be taxed in whole or in
part as ordinary income (to the extent of any gain in the
Contract) under rules prescribed in Section 7702.
Loans from, or secured by, a Contract that is not a Modified
Endowment Contract are not treated as distributions. Instead,
such loans are treated as Indebtedness of the Owner. A preferred
loan may not, however, be treated as Indebtedness; instead it may
be treated as a distribution.
Finally, neither distributions (including distributions upon
surrender) nor loans from, or secured by, a Contract that is not
a Modified Endowment Contract are subject to the 10 percent
additional income tax rule.
Contract Loan Interest. Interest paid on a loan under a
Contract generally is not deductible. A qualified tax adviser
should be consulted before deducting any Contract loan interest.
Investment in the Contract. Investment in the Contract means:
(i) the aggregate amount of any premiums or other consideration
paid for a Contract, minus (ii) the aggregate amount received
under the Contract which is excluded from gross income of the
Owner (except that the amount of any loan from, or secured by, a
Contract that is a Modified Endowment Contract, to the extent
such amount is excluded from gross income, will be disregarded),
plus (iii) the amount of any loan from, or secured by, a Contract
that is a Modified Endowment Contract to the extent that such
amount is included in the gross income of the owner.
Multiple Contracts. All Modified Endowment Contracts that are
issued by Kansas City Life (or its affiliates) to the same Owner
during any calendar year are treated as one Modified Endowment
Contract for purposes of determining the amount includible in an
Owner's gross income under Section 72(e) of the Code.
Possible Charge for Kansas City Life's Taxes
At the present time, Kansas City Life only makes a charge for the
Federal DAC tax and for state and local premium taxes. Kansas
City Life, however, reserves the right in the future to make
additional charges for any additional Federal, state or local
taxes or other economic burden resulting from the application of
the tax laws that it determines to be properly attributable to
the Subaccounts or to the Contracts.
OTHER INFORMATION ABOUT THE CONTRACTS AND KANSAS CITY LIFE
Sale of the Contracts
The Contracts will be offered to the public on a continuous
basis, and we do not anticipate discontinuing the offering of the
Contracts. However, we reserve the right to discontinue the
offering. Applications for Contracts are solicited by agents who
are licensed by applicable state insurance authorities to sell
our variable life contracts and who are also registered
representatives of Sunset Financial Services, Inc. ("Sunset
Financial"), one of our wholly-owned subsidiaries or of broker-
dealers who have entered into written sales agreements with
Sunset Financial. Sunset Financial is registered with the SEC
under the Securities Exchange Act of 1934 as a broker-dealer and
is a member of the National Association of Securities Dealers,
Inc.
Sunset Financial acts as the Principal Underwriter, as defined in
the 1940 Act, of the Contracts for the Variable Account pursuant
to an Underwriting Agreement between Kansas City Life and Sunset
Financial. Sunset Financial is not obligated to sell any
specific number of Contracts. Sunset Financial's principal
business address is P.O. Box 419365, Kansas City, Missouri 64141-
6365.
Registered representatives may be paid commissions on a Contract
they sell based on premiums paid in amounts up to 50% of premiums
paid during the first Contract Year and up to 3% of premiums paid
after the first Contract Year. Additional commissions may be
paid in certain circumstances. Other allowances and overrides
also may be paid.
When policies are sold through other broker-dealers that have
entered into selling agreements with us, the commission which
will be paid by such broker-dealers to their representatives will
be in accordance with their established rules. The commission
rates may be more or less than those set forth above for Kansas
City Life's representatives. In addition, their qualified
registered representatives may be reimbursed by the broker-
dealers under expense reimbursement allowance programs in any
year for approved voucherable expenses incurred. We will
compensate the broker-dealers as provided in the selling
agreements, and Sunset Financial Services, Inc. will reimburse
Kansas City life for such amounts and for certain other direct
expenses in connection with marketing the Contracts through other
broker-dealers.
Telephone Transfer, Premium Allocation and Loan Privileges
Telephone Transfer and Loan Privileges A transfer of Contract
Value, change in premium allocation or Contract loan may be made
by telephone if an Authorization for Telephone Requests
("Telephone Authorization") has been properly completed, signed
and filed at our Home Office. Telephone transfers, change in
premium allocation and loans will be based upon instructions
given by telephone, provided the appropriate election has been
made at the time of application or proper authorization has been
provided to us. We reserve the right to suspend telephone
transfer and loan privileges at any time, for any reason, if we
deem such suspension to be in the best interests of Contract
Owners.
We will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine, and if we follow those
procedures we will not be liable for any losses due to
unauthorized or fraudulent instructions. We may be liable for
such losses if we do not follow those reasonable procedures. The
procedures we will follow for telephone transfers and loans
include requiring some form of personal identification prior to
acting on instructions received by telephone, providing written
confirmation of the transaction, and making a tape recording of
the instructions given by telephone.
Kansas City Life Directors and Executive Officers
The following table sets forth the name, address and principal
occupations during the past five years of each of Kansas City
Life's directors and executive officers.
Name and Principal
Business Address *Principal Occupation During Past Five Years
Joseph R. Bixby Director, Kansas City Life; Chairman of the Board
since 1972; President from 1964 until he
retired in April, 1990; responsible for
overall corporate policy. Director of
Sunset Life, a subsidiary of Kansas City
Life.
Walter E. Bixby Director, Kansas City Life; Vice Chairman of the
Board since 1974; elected Executive Vice
President in January, 1987 and President
and CEO in April, 1990; primarily
responsible for the operation of the
Company. Chairman of the Board of
Sunset Life and Chairman of the Board of
Old American Insurance Company,
subsidiaries of Kansas City Life.
R. Philip Bixby Director, Kansas City Life; Elected Assistant
Secretary in 1979; Assistant Vice
President in 1982, Vice President in
1984 and Senior Vice President,
Operations in 1990; Executive Vice
President in 1996.
W. E. Bixby, III Director and President of Old American Insurance
Company, a subsidiary of Kansas City
Life.
Charles R. Duffy Jr. Elected Vice President, Insurance
Administration in November, 1989; Senior
Account Executive, Cybertek Corporation,
January, 1989 to November, 1989; Senior
Vice President, Operations in 1996;
responsible for Computer Information
Systems, Customer Services and Claims.
Director of Sunset Life and Old
American, subsidiaries of Kansas City
Life.
Richard L. Finn Director, Kansas City Life; Elected Vice President
in 1976; Financial Vice President in
1983 and Senior Vice President, Finance,
in 1984; Chief Financial Officer and
responsible for investment of Kansas
City Life's funds, accounting and taxes.
Director, Vice President and Chief
Financial Officer of Old American, a
subsidiary of Kansas City Life.
Jack D. Hayes Director, Kansas City Life; Elected Senior Vice
President, Marketing in February, 1994,
responsible for Marketing, Marketing
Administration, Communications and
Public Relations. Served as Executive
Vice President and Chief Marketing
Officer of Fidelity Union Life, Dallas,
Texas, from June, 1981 to January, 1994.
Francis P. Lemery Director, Kansas City Life; Elected Vice
President in 1979; Vice President and
Actuary in 1980, and Senior Vice
President and Actuary in 1984;
responsible for Group Insurance
Department, Actuarial, State Compliance
and New Business Issue and Underwriting.
Director of Sunset Life and Old
American, subsidiaries of Kansas City
Life.
C. John Malacarne Director, Kansas City Life; Elected Associate
General Counsel in 1976; General Counsel
in 1980; Vice President and General
Counsel in 1981; and Vice President,
General Counsel and Secretary in 1991.
Responsible for Legal Department, Office
of the Secretary and Stock Transfer
Department. Director of Sunset Life and
Director and Secretary of Old American,
subsidiaries of Kansas City Life.
Robert C. Miller Elected Assistant Auditor in 1972;
Auditor in 1973; Vice President and Auditor
in 1987, and Senior Vice President,
Administrative Services, in 1991. Responsible
for Human Resources and Home Office
building and maintenance.
Webb R. Gilmore Director, Kansas City Life since 1990; Partner -
Gilmore and Bell.
Nancy Bixby Hudson Director, Kansas City Life since 1996; Investor.
Warren J. Hunzicker, M.D.Director, Kansas City Life since 1989.
Daryl D. Jensen Director, Kansas City Life; Elected Vice Chairman
of the Board and President, Sunset Life
Insurance Company of America, a
subsidiary of Kansas City Life, in 1975.
Michael J. Ross Director, Kansas City Life since 1972; President
and Chairman of the Board, Jefferson
Bank and Trust Company, St. Louis,
Missouri, since 1971.
Larry Winn Jr. Director, Kansas City Life since 1985; Retired as
the Kansas Third District Representative
to the U.S. Congress.
John K. Koetting Elected Assistant Controller in 1975 and Vice
President and Controller in 1980; chief
accounting officer; responsible for all
corporate accounting reports. Director
and Vice President and Controller of Old
American, a subsidiary of Kansas City
Life.
* The principal business address of all the persons listed above
is
3520 Broadway, Kansas City, Missouri 64111.
State Regulation
Kansas City Life is subject to regulation by the Department of
Insurance of the State of Missouri, which periodically examines
the financial condition and operations of Kansas City Life.
Kansas City Life is also subject to the insurance laws and
regulations of all jurisdictions where it does business. The
Contract described in this prospectus has been filed with and,
where required, approved by, insurance officials in those
jurisdictions where it is sold.
Kansas City Life is required to submit annual statements of
operations, including financial statements, to the insurance
departments of the various jurisdictions where it does business
to determine solvency and compliance with applicable insurance
laws and regulations.
Additional Information
A registration statement under the Securities Act of 1933 has
been filed with the SEC relating to the offering described in
this prospectus. This prospectus does not include all the
information set forth in the registration statement. The omitted
information may be obtained at the SEC's principal office in
Washington, D.C. by paying the SEC's prescribed fees.
Experts
The consolidated balance sheets for Kansas City Life at December
31, 1996 and 1995 and the related consolidated statements of
income, stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1996, appearing herein
have been audited by Ernst & Young LLP, independent auditors, as
set forth in their report thereon appearing elsewhere herein, and
are included herein in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
Actuarial matters included in this prospectus have been examined
by Mark A. Milton, Vice President and Associate Actuary of Kansas
City Life.
Litigation
The Variable Account is not a party to any litigation. Its
depositor, Kansas City Life, as an insurance company, ordinarily
is involved in litigation. Kansas City Life is of the opinion
that such litigation is not material to the Contract Owners of
the Variable Account.
Legal Matters
Matters relating to the federal securities laws and matters of
Missouri law pertaining to the Contracts, including Kansas City
Life's right to issue the Contracts and its qualification to do
so under applicable laws and regulations issued thereunder, have
been passed upon by C. John Malacarne, General Counsel of Kansas
City Life.
Financial Statements
Kansas City Life's consolidated balance sheets as of December 31,
1996 and 1995, and the related consolidated statements of income,
stockholders' equity, and cash flows for each of the three years
in the period ended December 31, 1996 appearing herein should be
distinguished from financial statements of the Variable Account
and should be considered only as bearing upon Kansas City Life's
ability to meet its obligations under the Contracts. They should
not be considered as bearing on the investment performance of the
assets held in the Account. No financial statements of the
Variable Account are included herein.
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
The By-Laws of Kansas City Life Insurance Company provide, in part, in
Article XII:
1. The Company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit, or proceeding, whether civil, criminal, administrative or investigative,
other than an action by or in the right of the Company, by reason of the fact
that he or she is or was a Director, Officer or employee of the Company, or is
or was serving at the request of the Company as a Director, Officer or
employee of another company, partnership, joint venture, trust or other
enterprise, against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the Company, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was
unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
2. The Company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the company to procure a judgment in its favor
by reason of the fact that he or she is or was a director, officer or employee
of the company, or is or was serving at the request of the company as a
director, officer or employee of another company, partnership, joint venture,
trust or other enterprise against expenses, including attorneys' fees,
actually and reasonably incurred by him or her in connection with the defense
or settlement of the action or suit if he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the company; except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his or her duty to the company unless and only to the extent that the court in
which the action or suit was brought determines upon application that, despite
the adjudication of liability and in view of all the circumstances of the
case, the person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper.
Missouri law authorizes Missouri corporations to provide indemnification
to directors, officers and other persons.
Kansas City Life owns a directors and officers liability insurance policy
covering liabilities that directors and officers of Kansas City Life and its
subsidiaries and affiliates may incur in acting as directors and officers.
Insofar as indemnification for liability arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
REPRESENTATIONS PURSUANT TO
CONTENTS OF REGISTRATION
STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The prospectus consisting of ___ pages.
Undertaking to file reports.
Rule 484 undertaking.
The signatures.
Written consents of the following persons:
(a) C. John Malacarne, Esq. **
(b) Mark A. Milton, Vice President and Associate Actuary **
(c) Sutherland, Asbill & Brennan.**
(d) Independent Auditors.**
The following exhibits, corresponding to those required by paragraph A of
the instructions as to exhibits in Form N-8B-2:
1.A. (1) Resolutions of the Board of Directors of Kansas City Life Insurance
Company establishing the Kansas City Life Variable Life Separate
Account.*
(2) Not applicable.
(3) Distributing Contracts:
(a) Distribution Agreement between Kansas City Life Insurance
Company and Sunset Financial Services, Inc..**
(b) Not applicable.
(c) Schedule of Sales Commissions. **
(4) Not applicable.
(5) (a) Specimen Contract Form.
(b) Contract Split Option Rider.
(c) Joint First to Die Term Life Insurance Rider.
(d) Joint Survivorship Four-Year Term Life Insurance Rider.
(6) (a) Articles of Incorporation of Bankers Life Association of
Kansas City.*
(b) Restated Articles of Incorporation of Kansas City Life
Insurance Company.*
(c) By-Laws of Kansas City Life Insurance Company.*
(7) Not applicable.
(8) (a) Agreement between Kansas City Life Insurance Company, MFS
Variable Insurance Trust, and Massachusetts Financial Services
Company.*
(b) Agreement between Kansas City Life Insurance Company, TCI
Portfolios, Inc. and Investors Research Corporation.*
(c) Agreement between Kansas City Life Insurance Company,
Insurance Management Series, and Federated Securities Corp.*
(d) Agreement between Kansas City Life Insurance Company
and each of Dreyfus Variable Investment Fund, The Dreyfus
Socially Responsible Growth Fund, Inc., and Dreyfus Life
and Annuity Index Fund, Inc.
(9) Not Applicable.
(10) Application Form.**
(11) Memorandum describing issuance, transfer, and redemption
procedures. **
B. Not applicable.
C. Not applicable.
2. Opinion and consent of C. John Malacarne, Esq.,
as to the legality of the securities being registered. **
3. Not applicable.
4. Not applicable.
5. Not applicable.
7. (a) Consent of Ernst & Young LLP.**
(b) Consent of C. John Malacarne. See Exhibit 2.**
______________________
* Incorporated herein by reference to the Form S-6 Registration Statement
(File No. 33-95354) for Kansas City Life Variable Life Separate Account filed
on August 2, 1995. (Accession Number 0000948972-95-000003)
** To be filed by pre-effective amendment.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Kansas City Life Variable Life Separate Account, has duly
caused this Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, in the City of Kansas City
and the State of Missouri, on the 17th day of April, 1997.
Kansas City Life Variable Life Separate Account (Registrant)
By: Kansas City Life Insurance Company (Depositor)
Attest: /s/ C. John Malacarne
By:/s/ W. E. Bixby
W.E. Bixby, President
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Kansas
City Life Insurance Company has duly caused this Registration Statement
to be signed on its behalf by the undersigned thereunto duly authorized, and
its seal to be hereunto affixed and attested, all in the City of Kansas
City and the State of Missouri on the 17th day of April, 1997.
[SEAL]
Kansas City
Life Insurance Company
Attest: /s/ C. John Malacarne
By:/s/ W. E. Bixby
W.E. Bixby, President
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following persons in
the capacities indicated on the date(s) set forth below.
Signature Title Date
/s/ W. E. Bixby Vice Chairman of the Board, April 17, 1997
W. E. Bixby President, CEO, and Director
(Principal Executive Officer)
/s/ Richard L. Finn Senior Vice President, Finance April 17, 1997
Richard L. Finn Director (Principal Financial Officer)
/s/ John K. Koetting Vice President and Controller April 17, 1997
John K. Koetting (Principal Accounting Officer)
/s/ R. Philip Bixby Director April 17, 1997
R. Philip Bixby
___________________ Director April , 1997
Daryl D. Jensen
/s/ Francis P. Lemery Director April 17, 1997
Francis P. Lemery
/s/ C. John Malacarne Director April 17, 1997
C. John Malacarne
/s/ Jack D. Hayes Director April 17, 1997
Jack D. Hayes
/s/ J. R. Bixby Director April 17, 1997
J.R. Bixby
___________________ Director April , 1997
Webb R. Gilmore
____________________ Director April , 1997
Warren J. Hunzicker, M.D.
____________________ Director April , 1997
Michael J. Ross
___________________ Director April , 1997
E. Larry Winn Jr.
/s/ W. E. Bixby, III Director April 17, 1997
W. E. Bixby, III
___________________ Director April , 1997
Nancy Bixby Hudson
Exhibit Index
List
Page
1.A.(5)(a) Speciman Contract Form
1.A.(5)(b) Contract Split Option Rider
1.A.(5)(c) Joint First to Die Term Life Insurance Rider
1.A.(5)(d) Joint Survivorship Four-Year Term Life Insurance Rider
1.A.(8)(d) Agreement between Kansas City Life Insurance Company
and each of Dreyfus Variable Investment Fund, The Dreyfus
Socially Responsible Growth Fund, Inc., and Dreyfus Life
and Annuity Index Fund, Inc.
Exhibit 1
1.A.(5)(a)
Flexible Premium Variable
Survivorship Life Insurance
Contract - Nonparticipating
Adjustable death benefit. Death proceeds payable at death of the last
surviving Insured. Flexible premiums payable until the death of the last
surviving Insured.
The amount and duration of the death benefit may increase or decrease as
described in this contract, depending on the investment experience of the
subaccounts. The contract may provide a Guaranteed Minimum Death Benefit
Option, if elected at issue.
The contract value of this contract may increase or decrease daily
depending on the investment experience of the subaccounts. 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 Insuranc e Company. READ YOUR CONTRACT CAREFULLY.
Signed for Kansas City Life Insurance Company, a stock company, at its Home
Office, 3520 Broadway, PO Box 419139, Kansas City, MO 64141-6139.
/s/C. John Malacarne /s/W. E. 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 any premium
paid will be refunded.
Contract Number
9999999
Insureds
Jane Doe
Jane Doe
Agency
0001
GUIDE TO CONTRACT PROVISIONS
Page
Section 1: Contract Data 3
Section 2: Definition of Certain Terms 9
Section 3: Contract Proceeds 11
Section 4: General Provisions 12
4.1 Contract
4.2 Incontestability
4.3 Suicide
4.4 Age and Sex
4.5 Termination of Coverage
4.6 Modifications
4.7 Nonparticipating
4.8 Annual Report
Section 5: Premium and Reinstatement Provisions 13
Section 6: Ownership, Assignment and Beneficiary Provisions 15
Section 7: Contract Change Provisions 15
Section 8: Contract Values 16
Section 9: Loan Provisions 19
Section 10: The Variable Account 19
Section 11: Transfer Privilege 21
Section 12: Settlement Options 22
A copy of the original application and any additional benefits provided by
rider or endorsement follow page 24.
SECTION 1: CONTRACT DATA
BENEFICIARY
As stated in the application or in the
last beneficiary designation filed with us.
OWNER
As stated in the application or in the last ownership
designation filed with us.
INSUREDS' ISSUE AGE and SEX
Jane Doe, age 35, Female
John Doe, age 35, Male
RISK CLASSIFICATION
Jane Doe - Standard Nontobacco
John Doe - Standard Nontobacco
MINIMUM TOTAL SUM INSURED
$200,000
TOTAL SUM INSURED
Specified Amount $1,000,000
Additional Insurance Amount $ 0
Total $1,000,000
CONTRACT NUMBER
9999999
INSUREDS
Jane Doe
John Doe
CONTRACT DATE
July 01, 1997
AGENCY
0001
SECTION 1: CONTRACT DATA (CONTINUED) DATE PREPARED: 07/01/1997
INSUREDS CONTRACT NUMBER
Jane Doe 9999999
John Doe
MINIMUM PREMIUM: $4,900.88
TARGET PREMIUM: $6,534.50
PLANNED PREMIUM PAYMENT: $6,534.50 Annually
FORM NO. BENEFIT DESCRIPTION
J150
Coverage Option A: Death benefit equals the Total Sum Insured at the time of
death.
(Effective: July 01, 1997)
SECTION 1: CONTRACT DATA (CONTINUED) DATE PREPARED: 07/01/1997
INSUREDS CONTRACT NUMBER
Jane Doe 9999999
John Doe
PREMIUM EXPENSE CHARGES - DEDUCTIONS FROM PREMIUM PAYMENTS
Year 1 50% of premium up to target premium, 2% of excess premium
Years 2-5 15% of premium up to target premium, 2% of excess premium
Years 6-10 6% of premium up to target premium, 2% of excess premium
Years 11-20 2% of premium
Years 21+ Beginning in the 21st contract year there is no charge
Premium Processing Charge 4.85% of premium for all contract years
DEDUCTIONS FROM CONTRACT VALUE
Monthly Expense Charges
Administrative Expense Charge
$7.50 per month for all contract years plus $.02 per $1,000 of total
sum insured per month for all contract years.
Issue Expense Charge
$12.50 per month for first five contract years.
Monthly Cost Of Insurance
Deducted each month for all contract years; see Table One on
page 6.
MORTALITY AND EXPENSE RISK CHARGE
The current mortality and expense risk charge is .625% (on an annual
basis) of the average daily net assets of the variable account.
The guaranteed mortality and expense risk charge is .900% (on an
annual basis) of the average daily net assets of the variable account.
PARTIAL SURRENDER FEE
The partial surrender fee is the lesser of: (a) 2% of the amount
surrendered; or (b) $25.00
SECTION 1: CONTRACT DATA (CONTINUED) DATE PREPARED: 07/01/1997
INSUREDS CONTRACT NUMBER
Jane Doe 9999999
John Doe
MONTHLY COST OF INSURANCE RATES
The monthly cost of insurance rates used in calculating the cost of
insurance on each monthly anniversary day are based on each Insured's age,
number of completed contract years, sex, and risk class.
The cost of insurance rates used will be determined by us based on
our expectations as to future mortality experience. Any change in the
current cost of insurance rates will be on a uniform basis for Insureds of
the same age, sex and risk class whose contracts have been in force the same
length of time. The current cost of insurance rates will never be increased
to recover losses incurred, or decreased to distribute gains realized by us
prior to the change.
The cost of insurance rates used will not exceed those shown in the
tables below. The rates for Tobacco User Risk Class are based on the 1980
Commissioners Standard Ordinary Smoker Mortality Table, age last birthday.
The rates for Nontobacco User Risk Class are based on the 1980 Commissioners
Standard Ordinary Nonsmoker Mortality Table, age last birthday.
The guaranteed maximum cost of insurance rates for special risk classes
will be adjusted appropriately and reflected in Table One below.
Table One
Guaranteed Monthly Cost of Insurance Rates per $1,000
Contract Year Rate
1 $.00022
2 $.00070
3 $.00129
4 $.00199
5 $.00284
6 $.00387
7 $.00512
8 $.00658
9 $.00830
10 $.01030
11 $.01269
12 $.01548
13 $.01875
14 $.02257
15 $.02708
16 $.03245
17 $.03886
18 $.04663
19 $.05598
20 $.06696
21 $.07997
22 $.09501
23 $.11209
24 $.13177
25 $.15499
26 $.18262
27 $.21593
28 $.25694
29 $.30738
30 $.36776
31 $.43876
32 $.52066
33 $.61386
34 $.72013
35 $.84393
36 $.99117
37 $1.16945
38 $1.38762
39 $1.65191
40 $1.96470
41 $2.32637
42 $2.73577
43 $3.19270
44 $3.70153
45 $4.27485
46 $4.93039
47 $5.68596
48 $6.55862
49 $7.54960
50 $8.64926
51 $9.84252
52 $11.11673
53 $12.46043
54 $13.86761
55 $15.34597
56 $16.90553
57 $18.57708
58 $20.41868
59 $22.56727
60 $25.33395
61 $29.33313
62 $35.77192
63 $46.89109
64 $66.10462
65 $90.91184
The rates in the table above show the guaranteed monthly cost of insurance
rates from the first contract year to the contract year in which the youngest
Insured is age 100.
SECTION 1: CONTRACT DATA (CONTINUED) DATE PREPARED: 07/01/1997
INSUREDS CONTRACT NUMBER
Jane Doe 9999999
John Doe
Table Two
Corridor Percentages and Option L
Death Benefit Percentages
Contract
Year
Corridor
Percentages Option L
Death Benefit
Percentages
1 637% ----
2 612% ----
3 589% ----
4 566% ----
5 544% ----
6 523% ----
7 503% ----
8 484% ----
9 466% ----
10 448% ----
11 431% ----
12 414% ----
13 399% ----
14 384% ----
15 369% ----
16 355% ----
17 342% ----
18 329% ----
19 317% ----
20 305% ----
21 294% ----
22 283% ----
23 273% ----
24 263% ----
25 253% ----
26 244% ----
27 236% ----
28 227% ----
29 219% ----
30 212% ----
31 205% ----
32 198% ----
33 191% ----
34 185% ----
35 179% ----
36 174% ----
37 169% ----
38 164% ----
39 159% ----
40 154% ----
41 150% ----
42 147% ----
43 143% ----
44 140% ----
45 137% ----
46 134% ----
47 131% ----
48 128% ----
49 126% ----
50 124% ----
51 122% ----
52 120% ----
53 119% ----
54 117% ----
55 116% ----
56 115% ----
57 113% ----
58 112% ----
59 111% ----
60 109% ----
61 108% ----
62 106% ----
63 105% ----
64 103% ----
65 100% ----
The percentages in the table above are shown from the first contract year to
the contract year in which the youngest Insured is age 100.
SECTION 1: CONTRACT DATA (CONTINUED) DATE PREPARED: 07/01/1997
INSUREDS CONTRACT NUMBER
Jane Doe 9999999
John Doe
Investment Options
[ KCL Fixed Account
Subaccounts that invest in the Kansas City Life Variable Life Separate Account:
MFS Research Series
MFS Emerging Growth Series
MFS Total Return Series
MFS Bond Series
MFS World Governments Series
MFS Utilities Series
American Century VP Capital Appreciation
American Century VP International
Federated American Leaders Fund II
Federated High Income Bond Fund II
*Federated Prime Money Fund II
Dreyfus Capital Appreciation Portfolio
Dreyfus Small Cap Portfolio
Dreyfus Stock Index Fund
*The Federated Prime Money Fund II subaccount is referred to in this contract
as the money market subaccount.]
Section 2: Definition of Certain Terms
The following are key words used in this contract and are important in
describing both your rights and ours. As you read this contract, refer back
to these definitions.
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 variable subaccounts.
2.2 Additional Insurance Amount
An amount of insurance coverage under the contract which is not part of the
specified amount
2.3 Age
Age means the age of each Insured on their last birthday as of each contract
anniversary.
2.4 Allocation Date
The date on which the initial net premium is allocated to the money market
subaccount. The allocation date is the later of the date when all
underwriting and other requirements have been met and your application has
been approved, or the date the initial premium is received at the Home Office.
2.5 Beneficiary
The beneficiary is 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 last surviving Insured.
2.6 Cash Surrender Value
The contract value at the time of surrender less any contract indebtedness.
2.7 Contract Anniversary
The same day and month as the contract date each year that this contract
remains in force.
2.8 Contract Date
The date from which contract months, years and anniversaries are computed.
The incontestability and suicide periods for the total sum insured are
measured from this date.
2.9 Contract Value
The sum of the variable account value and the fixed account value (including
the loan account value). These values are described in more detail in
Section 8, Contract Values.
2.10 Contract Year
A period of twelve months starting with the contract date and each contract
anniversary thereafter.
2.11 Cost of Insurance
The charge we make for providing pure insurance protection using the current
cost of insurance rates for this contract. It does not include the cost of
any additional benefits provided by riders.
2.12 Coverage Options
The coverage option selected determines the amount of death proceeds payable.
Three coverage options (A, B or L) are available. These options are
described in Section 3.2, Amount of Proceeds Payable at Death.
2.13 Excess Premium
The portion of the total premiums received during any contract year that
exceeds the target premium.
2.14 Fixed Account
An account that is part of our general account, and is not part of or
dependent on the investment performance of the variable account.
2.15 Fixed Account Value
The contract value in the fixed account.
2.16 Insureds
The two persons whose lives are insured under this contract.
2.17 Minimum Premium
The amount required in the first year to issue this contract.
2.18 Monthly Anniversary Day
The day of each month when we make the monthly deductions for this contract.
It is the same day of each month as the contract date or the last day of the
month for those months not having such a day.
2.19 Monthly Deductions
The amount we deduct on the monthly anniversary day from the contract value
to pay the Deductions from Contract Value as shown in Section 1, Contract Data.
2.20 Mortality and Expense Risk Charge
This is a charge we deduct from the assets of the subaccounts to compensate
us for assuming the mortality and expense risks for this contract. This
charge is shown in Section 1, Contract Data.
Section 2: Definitions of Certain Terms (continued)
2.21 Net Investment Factor
The ratio of the subaccount performance of the current valuation day to the
immediately prior valuation day. The subaccount performance includes gains
or losses in the subaccounts, dividends paid, any capital gains or losses,
any taxes, and mortality and expense risk charges.
2.22 Net Premium
The premium payment minus the applicable premium expense charges.
2.23 Nontobacco
A rate class that defines an Insured who does not use tobacco products in
any form during the time period as defined in our underwriting guidelines.
2.24 Owner
The person entitled to exercise all rights and privileges provided in this
contract.
2.25 Planned Premium Payments
The amount and frequency of premium payments you elected to pay in your last
application. This is only an indication of your preference of future premium
payments. You may change the amount and frequency of premium payments at any
time. Section 5.8, Grace Period for Contract, describes the amount of premium
required to keep your contract in force. Section 5.6, Guaranteed Minimum
Death Benefit Option Premium Requirement, describes the amount of premium
required to keep the guaranteed minimum death benefit option in force. The
actual amount and frequency of premium payments will affect the contract
value and the amount and duration of insurance.
2.26 Premium Expense Charges
The premium expense charges are the amounts we deduct from each premium
payment. These charges are shown in Section 1, Contract Data.
2.27 Proceeds
The total amount we are obligated to pay under the terms of this contract.
2.28 Reallocation Date
The date the contract value in the money market subaccount is allocated to
the subaccounts and to the fixed account based on the net premium payment
allocation percentages specified in the application. The reallocation date is
30 days after the allocation date.
2.29 Specified Amount
The total sum insured less any additional insurance amount provided under this
contract. The actual death benefit will depend upon the coverage option in
effect at the time of death of the last surviving Insured.
2.30 Subaccounts
The division of accounts making up the variable account. The assets of each
subaccount are invested in a corresponding portfolio of a designated mutual
fund.
2.31 Target Premium
The annual target premium amount is shown in Section 1, Contract Data.
2.32 Tobacco
A rate class that defines an Insured who uses tobacco products in any form
during the time period as defined in our underwriting guidelines.
2.33 Total Sum Insured
The total sum insured equals the sum of the specified amount and any additional
insurance amount provided under this contract. This amount does not include
any additional benefits provided by riders.
2.34 Valuation Day
Each day on which both the New York Stock Exchange and Kansas City Life are
open for business.
2.35 Valuation Period
The interval of time commencing at the close of business one valuation day
and ending at the close of business on the next succeeding valuation day.
2.36 Variable Account
The Kansas City Life Variable Life Separate Account. This is not part of
our general account. The variable account has subaccounts each of which is
invested in a corresponding portfolio of a designated mutual fund.
2.37 Variable Account Value
The total value of a contract allocated to subaccounts of the variable account.
2.38 We, Our, Us
Kansas City Life Insurance Company.
Section 2: Definition of Certain Terms (continued)
2.39 Written Notice
A written notice or notice in a form satisfactory to us, which is signed by
the owner and received at the Home Office.
2.40 You, Your
The owner of this contract. The owner may be someone other than the Insureds'.
Section 3: Contract Proceeds
3.1 Payment of Proceeds
We will pay the death proceeds to the beneficiary upon receiving proof of death
of last surviving Insured while this contract is in force. We may also
require proof of death of the Insured who died first. When the proceeds are
paid, this contract must be returned to us.
Death proceeds will be increased by any premiums received after the date of
death of the last surviving Insured. Death proceeds will be decreased by any
unpaid indebtedness.
To the extent permitted by law, proceeds will not be subject to any claims of a
beneficiary's creditors.
3.2 Amount of Proceeds Payable at Death
The amount of proceeds payable upon the death of the last surviving Insured
is determined according to the coverage option you have elected. The
coverage option you elected is shown in Section 1, Contract Data. The death
benefit will be the greater of the amount determined by the coverage option
you have elected or the corridor death benefit, as described in Section 3.3.
Coverage Option A
The death benefit is the total sum insured on the date of death of the
last surviving Insured.
Coverage Option B
The death benefit is the total sum insured on the date of death of
the last surviving Insured, plus the contract value on the date of such death.
Coverage Option L
The death benefit will be the sum of:
(1) the total sum insured on the date of death of the
last surviving Insured; plus
(2) an amount calculated on the last contract anniversary
equal to the contract value multiplied by the applicable Option L death
benefit percentage shown in Table Two on page 7, less the total sum insured.
3.3 Corridor Death Benefit
The corridor death benefit is calculated by multiplying the contract value
on the date of death of the last surviving Insured by the applicable
corridor percentage in Table Two as shown in Section 1, Contract Data.
The purpose of the corridor percentages is to ensure that your contract
will not be disqualified as a life insurance contract under Section 7702 of
the Internal Revenue Code, as amended.
If changes occur in the Internal Revenue Code which would disqualify this
contract as a life insurance contract, we reserve the right to amend this
contract in order to make it qualify under any new federal income tax laws.
3.4 Guaranteed Minimum Death Benefit Option
The guaranteed minimum death benefit option is only available at issue and is
not available if Coverage Option B is elected. If the guaranteed minimum death
benefit option has been elected at issue, it will be shown in Section 1,
Contract Data. This option guarantees payment of the specified amount upon
the death of the last surviving Insured, regardless of this contract's
investment performance, provided the cumulative paid premiums equal or exceed
the cumulative guaranteed minimum death benefit option premium, plus
indebtedness, on each monthly anniversary day. These premiums are defined
in Section 5.6, Guaranteed Minimum Death Benefit Option Premium Requirement.
The charge for this option is shown in Section 1, Contract Data.
The guaranteed minimum death benefit option, if elected, does not guaranteed
the additional insurance amount.
3.5 Proceeds Applied Under Settlement Options
Prior to the death of the last surviving Insured you may elect to apply
surrender proceeds under any settlement option described in Section 12,
Settlement Options. The amount of proceeds will be equal to the cash
surrender value.
Section 3: Contract Proceeds (continued)
3.6 Proceeds Payable Upon Surrender
The proceeds payable upon surrender will be the cash surrender value as
defined in Section 8.9, Cash Surrender.
The amount of proceeds payable upon a partial surrender is defined in
Section 8.10, Partial Surrenders.
3.7 Interest on Death Proceeds
We will pay interest on single sum death proceeds from the date of the death
of the last surviving Insured 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.
Section 4: General Provisions
4.1 Contract
This contract and application and any supplemental applications are the
entire contract. This contract is issued in consideration of the application
and payment of the premiums. A copy of any application is attached when this
contract is issued and any supplemental applications will be attached to or
endorsed on this contract when the supplemental coverage becomes effective.
In the absence of fraud, all statements made in any applications either by
you or by the Insureds' will be considered representations and not
warranties. Statements may be used to contest a claim or the validity of
this contract only if they are contained in an application.
4.2 Incontestability
After this contract has been in force during the Insureds' lifetime for two
years from the contract date, we cannot contest this contract, unless this
contract lapses as described in Section 5.8, Grace Period for Contract.
Any increase in the additional insurance amount will not be contested after
the increase has been in force during the Insureds' lifetime for two years
following the effective date of the increase.
4.3 Suicide
If either Insured dies by suicide, while sane or insane, within two years of
the contract date, this contract will terminate on the date of such suicide
and the amount payable by us will be equal to the contract value less any
indebtedness on the date of death.
If either Insured dies by suicide, while sane or insane, within two years
after the effective date of any increase in the additional insurance amount,
this contract will terminate on the date of such suicide and the amount
payable by us associated with such increase will be limited to the cost of
insurance for the increase on the date of death.
4.4 Age and Sex
If, while this contract is in force and one or both Insureds are alive, it is
determined that the age or sex of either Insured as stated in Section 1,
Contract Data is not correct, we will adjust the contract value under this
contract. The adjustment to the contract value will be the difference
between the following two amounts accumulated at 4% interest annually. The
two amounts are:
(1) the cost of insurance deductions that have been made; and
(2) the cost of insurance deductions that should have been made.
If, after the death of the last surviving Insured and while this contract is
in force, it is determined that the age or sex of either Insured as stated in
Section 1, Contract Data is not correct, the death benefit will be the net
amount at risk that the most recent cost of insurance deductions at the
correct age and sex would have provided plus the contract value on the date
of such death.
4.5 Termination of Coverage
Coverage under this contract terminates when any of the following events occur:
(1) you request that coverage terminate;
(2) the last surviving Insured dies; or
(3) this contract lapses, as described in Section 5.8, Grace Period
for Contract, and the grace period ends without sufficient premiums being paid.
4.6 Modifications
Upon notice to you, we may modify this contract, but only if such
modification is necessary to:
(1) make this contract or the variable account comply with any
law or regulation issued by a governmental agency to which we are subject; or
Section 4: General Provisions (continued)
(2) assure continued qualification of this contract under the
Internal Revenue Code or other federal or state laws relating to variable
life 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 reserve the right to modify this 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 this contract, if required.
4.7 Nonparticipating
This contract is nonparticipating. It will not participate in any of our
profits, losses or surplus earnings.
4.8 Annual Report
At least annually we will send you a report about your contract. The report
will show:
(1) current total sum insured;
(2) current specified amount;
(3) current death benefit;
(4) contract value;
(5) value in the fixed account;
(6) number of accumulation units, accumulation unit value and
total value in each of the subaccounts of the variable account;
(7) cash surrender value;
(8) partial surrenders since the last report;
(9) premiums paid since the last report;
(10) all deductions since the last report;
(11) (11) amount of any indebtedness; and
(12) loan repayments, since the last report.
Upon receiving your written request, we will send you a report at any other
time during the year.
Section 5: Premium and Reinstatement Provisions
5.1 Payment
Your first premium must be paid when this contract is delivered. After the
first premium has been paid, subsequent premiums may be paid at any time.
There is no insurance until the first premium is received by us. All
premiums after the first are payable at the Home Office or to a
representative authorized to receive premiums. A receipt signed by us will
be furnished on request.
5.2 Right to Refund
If we receive a premium payment which affects the tax qualification of this
contract as described in Section 7702 of the Internal Revenue Code, as
amended, we reserve the right to refund any premium that cause the death
benefit of this contract to increase under Section 7702 of the Internal
Revenue Code, as amended.
5.3 Planned Premium Payments
The planned annual, semi-annual, quarterly or monthly premium payment is
shown in Section 1, Contract Data.
5.4 Amount and Frequency
Planned premiums may be paid annually, semi-annually, quarterly or monthly.
You may change the amount and frequency of planned premium payments at any
time. However, the actual amount and frequency of premium payments will
affect the contract value and the amount and duration of insurance. Each
premium payment will be credited by us as described in Section 8, Contract
Values.
The premium paid during the first contract year must by equal to or greater
than the minimum premium shown in Section 1, Contract Data.
We reserve the right to limit the amount of any increase in planned premium
payment.
5.5 Unscheduled Premiums
Unscheduled premiums may be paid at any time. We reserve the right to limit
the number and amount of unscheduled premium payments.
5.6 Guaranteed Minimum Death Benefit Option Premium Requirement
The guaranteed minimum death benefit option premium is the amount which
guarantees that the guaranteed minimum death benefit option will remain in
effect. To determine if the guaranteed Section 5: Premium and Reinstatement
Provisions (continued)
minimum death benefit option premium requirement has been met, the cumulative
paid premiums must equal or exceed the cumulative guaranteed minimum death
benefit option premium, plus indebtedness, on each monthly anniversary day.
The cumulative paid premium is an amount equal to the sum of all premiums
paid less the sum of all partial surrenders as described in Section 8.10,
Partial Surrenders, each accumulated at an annual effective interest rate of
4% to the date the guaranteed minimum death benefit option premium
requirement is tested.
The cumulative guaranteed minimum death benefit option premium equals the sum
of the guaranteed minimum death benefit option premium shown in Section 1,
Contract Data, paid monthly, accumulated at an annual effective interest rate
of 4% from the date of issue up to the date the guaranteed minimum death
benefit option premium requirement is tested.
If the guaranteed minimum death benefit option premium requirement is not
met, the guaranteed minimum death benefit option is in default. A 61-day
notice period begins on the day we mail the notice that the guaranteed
minimum death benefit option is in default and the premium required to
maintain the guaranteed minimum death benefit option. The default premium
will be the amount by which the cumulative guaranteed minimum death benefit
option premium plus indebtedness is greater than the cumulative paid premium.
The guaranteed minimum death benefit option will terminate if sufficient
premium is not paid by the end of the notice period.
If this contract contains an additional insurance amount or other optional
benefit riders, then in addition to testing the guaranteed minimum death
benefit option premium as outlined above, the contract value will be tested
to ensure that this contract is funded at a sufficient level to support the
additional insurance amount or other optional benefit riders. On each monthly
anniversary day the cash surrender value will be tested to determine if it is
sufficient to cover the monthly deductions.
If not, a 61-day notice period begins on the day we mail notice of the
default premium amount. The default premium will be equal to the payment
which would be sufficient to provide a cash surrender value equal to three
monthly deductions. The additional insurance amount and other optional
benefit riders will be removed from this contract if payment at least equal
to the default premium is not received by the end of the notice period.
5.7 Reactivation of the Guaranteed Minimum Death Benefit Option
The contract owner may apply to have the guaranteed minimum death benefit
option reactivated within two years of termination of such option.
Reactivation requires:
(1) a written notice to restore the guaranteed minimum death benefit option;
(2) evidence of insurability of the Insureds satisfactory to us, unless
reactivation is requested within one year after the beginning of the notice
period; and
(3) payment of the amount by which the cumulative guaranteed minimum
death benefit option premium, plus indebtedness, exceeds the cumulative paid
premiums on the date of reactivation, as described in Section 5.6, Guaranteed
Minimum Death Benefit Option Premium Requirement.
On the monthly anniversary day on which the reactivation takes effect, we
will deduct from the contract value any unpaid guaranteed minimum death
benefit option charges as described in Section 1, Contract Data. We reserve
the right to deny reactivation of the guaranteed minimum death benefit
option more than once during the life of this contract.
5.8 Grace Period for Contract
If the guaranteed minimum death benefit option has not been elected or has
been removed, a grace period begins if the cash surrender value on a monthly
anniversary day will not cover the monthly deduction for the month beginning
on that monthly anniversary day.
A 61-day grace period will begin on the day we mail notice of the premium
required to keep this contract in force. A total premium sufficient to
provide a cash surrender value equal to the next three monthly deductions
must be paid during the grace period to keep this contract in force.
This contract will terminate without value if sufficient premium is not paid
by the end of the grace period.
Section 5: Premium and Reinstatement Provisions (continued)
The cash surrender value and monthly deductions are described in Section 8,
Contract Values. If the last surviving Insured dies during the grace period,
any past due monthly deductions will be deducted from the proceeds.
5.9 Reinstatement of Contract
If the grace period expires without sufficient premiums being paid, this
contract may be reinstated within two years after the expiration of the grace
period. Your contract cannot be reinstated if it has been surrendered.
Reinstatement is subject to:
(1) receipt of evidence of insurability of the Insureds
satisfactory to us; and
(2) payment of the premium amount which would have been
sufficient to keep this contract from lapsing, as described in Section 5.8,
Grace Period for Contract, with 6% interest from the date of lapse; plus
(3) payment of three monthly deductions.
If this contract lapses and it is reinstated, we cannot contest the
reinstated contract after this contract has been in force during the
Insureds' lifetime for two years from the date of the reinstatement
application.
Section 6: Ownership, Assignment and Beneficiary Provisions
6.1 Ownership
The owner is shown in the application or in the last ownership designation
filed with us. As owner, you may exercise every right provided by your
contract. These rights and privileges end at the death of the last surviving
Insured.
The consent of the beneficiary is required to exercise these rights if you
have not reserved the right to change the beneficiary.
6.2 Change of Ownership
You may change the ownership of this contract by giving written notice to us
at our Home Office. The change will be effective on the date your request
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 this contract be submitted
for endorsement to show the change.
6.3 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.
6.4 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 death of the last surviving Insured, that
beneficiary's interest will pass to any other beneficiaries according to
their respective interests.
If all beneficiaries die before the death of the last surviving Insured, 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 request in a form satisfactory to us. In order to be
effective, the written request for change of beneficiary must be signed
while your contract is in force and one or both Insureds are living. The
change will be effective on the date your request 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 death of
the last surviving Insured.
6.5 Simultaneous Death of Beneficiary and the Last Surviving Insured
Death proceeds will be paid as though the beneficiary died before the death
of the last surviving Insured if:
(1) the beneficiary dies at the same time as or within 15 days of
the death of the last surviving Insured; and
(2) we have not paid the proceeds to the beneficiary within this
15-day period.
Section 7: Contract Change Provisions
7.1 Right to Change
You may request the changes provided for in this Section at any time. Your
request must be in writing to us at our Home Office.
7.2 Decreases in Total Sum Insured
The total sum insured may be decreased after the contract has been in force
for one year. When a decrease in total sum insured is made, we will first
reduce any additional insurance amount remaining and only then reduce the
specified amount. If the specified amount is decreased, the guaranteed
minimum death benefit option coverage amount will be decreased by the same
amount.
Once the total sum insured has been decreased, it cannot be decreased again
for the next twelve months. The effective date of decrease will be the
monthly anniversary day on or next following the date we receive your
application for decrease.
We reserve the right to decline to make any total sum insured decrease that
we determine would cause this contract to not qualify as life insurance under
applicable tax laws.
We reserve the right to require that the total sum insured remaining in force
after any requested decrease may not be less than the Minimum Total Sum
Insured shown in Section 1, Contract Data.
A decrease in the total sum insured will not decrease the Target Premium or
Guaranteed Minimum Death Benefit Option Premium, as shown in Section 1,
Contract Data.
7.3 Increases in Additional Insurance Amount
The additional insurance amount may be increased after the contract has been
in force for one year. Once the additional insurance amount has been
increased, it cannot be increased again for the next twelve months. The
effective date of increase will be the monthly anniversary day on or next
following the date we receive and approve your application for increase.
Increases to the additional insurance amount may be made either through
scheduled annual increases or requested increases. The maximum additional
insurance amount allowed at issue is four times the specified amount. After
issue, the additional insurance amount may increase to a maximum of eight
times the specified amount through scheduled annual increases.
Scheduled increases to the additional insurance amount, subject to our
approval, may be based on a flat amount annual increase or a percentage
annual increase, as shown in Section 1, Contract Data. The percentage
increase will be based on the specified percentage of the additional
insurance amount at the time the scheduled increase occurs. The guaranteed
minimum death benefit option will not be available if the additional
insurance amount exceeds or is scheduled to exceed the specified amount at
issue.
Any requested, unscheduled increase in the additional insurance amount must
be at least $25,000, and an application must be submitted. We reserve the
right to require satisfactory evidence of insurability.
7.4 Change in Coverage Option
The coverage option can be changed any time after the contract has been in
force one year. Once the coverage option has been changed, it cannot be
changed again for the next twelve months. Coverage Option L is only
available at issue.
If the coverage option is Option B or Option L, it may be changed to
Option A. The total sum insured will not change. The effective date of
change will be the monthly anniversary day on or next following the date we
receive and approve your application for change.
If the coverage option is Option A or Option L, it may be changed to Option B
subject to evidence of insurability satisfactory to us. The new total sum
insured will be the greater of the total sum insured less the contract value
as of the date of change; or $25,000. The effective date of change will be
the monthly anniversary day on or next following the date we receive and
approve your application for change. If the coverage option is changed to
Option B, the guaranteed minimum death benefit option, if in effect, will
terminate.
We reserve the right to decline any coverage option change that we determine
would cause this contract to not qualify as life insurance under applicable
tax laws.
7.5 Changing Your Contract
Any change to your contract that is not provided for in this Section must be
approved by us and signed by our President, Vice President, Secretary or
Assistant Secretary.
Section 7: Contract Change Provisions (continued)
An approved change must be endorsed on or attached to your contract. No
agent has the authority to make any changes or waive any of the terms of your
contract.
Section 8: Contract Values
8.1 Net Premium
The net premium is the premium payment received less the premium expense
charges shown in Section 1, Contract Data.
8.2 Contract Value
As of the contract date the contract value equals:
(1) the initial net premium paid; less
(2) the monthly deductions, as defined in Section 2.19 of this
contract.
On any day after the contract date, the contract value is equal to the fixed
account value (including the loan account value) plus the variable account
value.
8.3 Fixed Account Value
As of the contract date the fixed account value equals:
(1) the portion of the net premium allocated to
the fixed account; less
(2) the portion of the monthly deduction 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 day plus interest
from the preceding valuation day to the date of calculation.
"B" is the portion of the net premiums allocated to the fixed account and
received since the preceding valuation day, plus interest from the date such
net premiums were received to the date of calculation.
"C" is the amount of any transfers from the subaccounts to the fixed account
since the preceding valuation day, 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 subaccounts
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 deducted from the fixed account
since the preceding valuation day, plus interest on these surrendered amounts
from the effective date of the partial surrenders to the date of calculation.
"F" is a pro-rata share of the monthly deductions, as described in Section
8.6, Monthly Deductions, for the month beginning on that monthly anniversary
day.
8.4 Interest Rate for Fixed Account Value
The value in the fixed account is guaranteed to accumulate at a minimum
effective annual interest rate of 4%. We may credit a rate in excess of 4%
while this contract is in force.
The interest rate credited to new deposits can be changed at any time by us.
The interest rate credited to funds in the fixed account will not change more
often than once each year.
8.5 Variable Account Value
The variable account value is the sum of the values of the subaccounts under
this contract.
As of the allocation date the value of each subaccount equals:
(1) the portion of the initial net premium allocated to the
subaccount; less
(2) the pro-rata share of the monthly deductions and the
mortality and expense risk charge allocated to the subaccounts.
8.6 Monthly Deductions
We will make monthly deductions from the contract value on each monthly
anniversary day equal to the sum of the following:
(1) the monthly cost of insurance, as described in Section 8.7,
Cost of Insurance;
(2) the monthly expense charges, as shown in Section 1, Contract
Data; and
Section 8: Contract Values (continued)
(3) the monthly deductions for optional benefit charges and any
additional benefits provided by riders, as shown in Section 1, Contract Data.
8.7 Cost of Insurance
The cost of insurance rates used will not exceed those shown in Table One,
Section 1, Contract Data.
The cost of insurance on any monthly anniversary day is equal to:
Q x (R - S)/1000
"Q" is the cost of insurance rate (as described in Monthly Cost of Insurance
Rates, Section 1, Contract Data.)
"R" is the Insureds' death benefit on that day divided by no less than
1.0032737.
"S" is the contract value, as described in Section 8.2, Contract Value,
prior to subtracting the cost of insurance.
8.8 Cost of Additional Benefits Provided by Riders
The cost of additional benefits provided by riders will be shown in
Section 1, Contract Data.
8.9 Cash Surrender
You may surrender this contract for its cash surrender value at any time by
submitting a signed request to us.
The cash surrender value of this contract is:
(1) the contract value of this contract at the time of surrender;
less
(2) any indebtedness on this contract.
We will also refund any cost of insurance deducted for the period beyond the
date of contract surrender.
8.10 Partial Surrenders
At any time before the death of the last surviving Insured, you may surrender a
portion of the contract value and have the proceeds paid to you in a lump
sum. At the time of the partial surrender we will add the partial surrender
fee shown in Section 1, Contract Data, to the partial surrender amount. The
minimum partial surrender requested must be for at least $500. The maximum
partial surrender is the cash surrender value, less $300. We will deduct the
partial surrender amount from the contract value on the day written notice
for the partial surrender is received at our Home Office.
We will pay you the amount requested and cancel units equal to the amount
surrendered from the subaccounts and/or the fixed account according to your
instructions. If you provide no instructions, the partial surrender amount
will be deducted from the subaccounts and/or the fixed account on a pro-rata
basis. In the event that the partial surrender amount exceeds the
subaccount(s) value and/or the fixed account value, we will process the partial
surrender for the amount available and contact you for further instructions.
Under Options A and L, the contract value will be reduced by the partial
surrender amount. The total sum insured will be reduced by the partial
surrender amount minus the excess, if any, of the death benefit at the time
the partial surrender is made, over the total sum insured at the time the
partial surrender is made.
However, if the partial surrender amount is less than or equal to the excess
of the death benefit over the total sum insured, the total sum insured will
not be reduced.
Under Option B, the contract value will be reduced by the partial surrender
amount.
We reserve the right to reject a partial surrender request if:
(1) the partial surrender would reduce the total sum insured below the
minimum total sum insured as shown in Section 1, Contract Data; or
(2) the partial surrender would cause the contract to fail to qualify as a
life insurance contract under applicable tax laws.
Certain federal income tax consequences may apply to partial surrenders from
this contract. Therefore, you should consult with your tax advisor before
requesting any partial surrenders.
8.11 Time Period for Payment
Any partial surrender, cash surrender value, loan or death benefit will
usually be paid within seven days of receiving your written notice in our
Home Office, or receipt and filing of due proof of death the Insureds.
However, we have the right to suspend or delay the date of any surrender,
partial surrender, loan or death benefit payment from the subaccounts for any
period during which:
Section 8: Contract Values (continued)
(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, loan or transfer from the fixed
account, we have the right to postpone making a payment to you for not more
than 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,
interest will be added to the amount paid from the date of receipt of
documentation at 4% or such higher rate required for a particular state.
8.12 Extended Term Insurance
If your contract lapses, as described in Section 5.8, Grace Period for
Contract, the cash surrender value will be applied to continue the total sum
insured and any additional benefits provided by riders for a portion of the
next month.
The amount of extended term insurance is determined according to the coverage
option in effect as of the date insurance is extended under this option.
8.13 Basis of Computation
Reserves are based on the 1980 Commissioners Standard Ordinary Smoker or
Nonsmoker Mortality Tables, age last birthday at 4.5% per year. Reserves
will never be less than those provided for using the Commissioners Reserve
Valuation Method.
Guaranteed fixed account values and reserves under this contract are equal
to, or greater than, the minimum values required by law of the state in which
your contract is delivered. Where required, a detailed statement of the
method of computing these values has been filed with the insurance department
of that state.
The guaranteed fixed account values are based on the minimum guaranteed
interest rate as stated in Section 8.4, Interest Rate for Fixed Account
Value, and the guaranteed cost of insurance rates as shown in Table One,
Section 1, Contract Data.
Section 9: Loan Provisions
9.1 Contract Loans
You may obtain a contract loan by submitting a signed request to us. This
contract assigned to us is the only security needed.
When a loan is made, an amount equal to the loan will be transferred from the
fixed and variable accounts and transferred to the loan account. The loan
account is part of the fixed account, which is part of our general account.
If allocation instructions are not specified in your loan application, the
loan will be withdrawn pro rata from all subaccounts of the variable account
having subaccount values and from the fixed account.
Amounts transferred to the loan account do not participate in the investment
experience of the fixed or variable account from which they were withdrawn.
Amounts in the loan account will earn interest at the minimum guaranteed
effective annual interest rate of 4.0% per year. Different interest rates may
be applied to the loan account than the fixed account. Any interest credited
on loaned amounts will remain in the fixed account.
You may repay your contract loan in full or in part while your contract is
in force prior to the death of the last surviving Insured. Repayments must
be clearly marked as "loan repayments" or they will be credited as premiums.
Each loan repayment will result in a transfer of an amount equal to the loan
repayment from the loan account to the fixed and/or variable account. Your
current premium allocation schedule will be used to allocate the loan
repayments. We reserve the right to not accept partial loan repayments for
amounts less than $50.
A loan that exists at the end of the grace period may not be repaid unless
this contract is reinstated.
9.2 Amount of Loan Available
The amount of loan available will be equal to the cash surrender value of
this contract less any loan interest to the next contract anniversary.
Section 9: Loan Provisions (continued)
9.3 Loan Interest
Interest will be charged on a contract loan from the date of the loan at the
rate of 6% per year. We may establish a lower rate for any period for which
the contract loan is outstanding.
Interest is payable at the end of each contract year and on the date the loan
is repaid. If interest is not received by the contract anniversary, we will
transfer the accrued loan interest from the fixed and variable accounts to
the loan account on a pro rata basis.
9.4 Indebtedness
Indebtedness means all unpaid contract loans and accrued loan interest. Any
outstanding indebtedness will be deducted from the contract proceeds.
Your contract is terminated whenever your cash surrender value is no longer
positive. We will mail notice to your last known address recorded with us
and to the holder of any assignment of record at least 31 days before such
termination.
Section 10: The Variable Account
10.1 General Description
The name of the variable account is the Kansas City Life Variable Life
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 subaccounts within the variable account.
When permitted by law, we reserve the right to:
(1) create new separate accounts;
(2) combine separate accounts;
(3) remove, combine or add subaccounts and make the new
subaccounts 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) deregister 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.
10.2 Subaccounts
The subaccounts are separate investment accounts. They are named in
Section 1, Contract Data.
The subaccount values will fluctuate in accordance with the investment
experience of the applicable portfolio of the fund held within the subaccount.
The subaccount value is determined by multiplying the number of accumulation
units credited to the subaccount by 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 subaccount's unit value for the valuation period for that
transaction.
The number of units in any subaccount will be increased at the end of the
valuation period by any net premiums allocated to the subaccount during the
current valuation period and by any transfers to the subaccount from another
subaccount or from the fixed account during the current valuation period. The
number of units in any subaccount will be decreased at the end of the
valuation period by any amounts transferred from the subaccount to another
subaccount or the fixed account or surrendered during the current valuation
period. The number of units in any subaccount will also be reduced on each
monthly anniversary day by a pro-rata share of the monthly Section 10: The
Variable Account (continued)deduction. The monthly deduction will reduce
the subaccount units in proportion to each subaccount's value to the entire
contract value.
The value of an accumulation unit for each of the subaccounts has been
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 subaccount'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 - Z
Y
"X" equals the sum of:
(1) the net asset value per accumulation unit held in the
subaccount 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 subaccount during the current
valuation day; less
(3) the per accumulation unit amount of any capital loss
distribution on shares held in the subaccount 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 subaccount
as of the end of the immediately preceding valuation day.
"Z" equals the charges deducted from the subaccount on each valuation day for
the mortality and expense risk charge.
The mortality and expense risk charge is deducted from each of the
subaccounts on each valuation day and compensates us for assuming the
mortality and expense risks under this contract. These charges are shown in
Section 1, Contract Data.
The net investment factor may be greater, less than or equal to one.
Therefore, the value of the subaccount may increase, decrease or remain the
same.
10.3 Allocations
This contract provides investment options for the amount in the contract
value. The initial premium allocation percentages are indicated in the
application for this contract, a copy of which is attached. These
percentages will also apply to subsequent premium allocations until you
change them.
Allocation percentages must be zero or a whole number not greater than 100.
The sum of the premium allocation percentages must equal 100.
We reserve the right to limit the number of subaccount allocations in effect
at any one time.
On the allocation date the contract value will be allocated to the money
market subaccount. Any subsequent premiums that are received from this time
until the reallocation date, will also be allocated to the money market
subaccount. On the reallocation date, contract value in the money market
subaccount will be allocated to the subaccounts and to the fixed account
based on the premium payment allocation percentages in the contract
application. After the reallocation date, planned periodic premiums and
unscheduled premiums will be allocated as requested on the valuation day
they are received by the Home Office.
Section 11: Transfer Privilege
11.1 Transfer Fees
Six transfers per year may be made from subaccounts and the fixed account
free of charge. Any unused free transfers do not carry over to the next
contract year. Any additional transfers during a contract year will be
charged a $25 transfer fee. For the purpose of assessing a fee, each written
request or telephone request is considered to be one transfer. The
processing fee will be deducted from the amount being transferred, or from
the remaining contract value, according to your instructions.
Section 11: Transfer Privileges (continued)
11.2 Transfers From Subaccounts
After the right to examine period, you may transfer all or a part of an
amount from the value in any subaccount of the variable account to one or
more of the subaccounts 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 subaccount on that date.
Any transfer that would reduce the amount in a subaccount below $250 will be
treated as a transfer request for the entire amount in that subaccount.
A transfer fee may apply as described in Section 11.1, Transfer Fees.
We may suspend or modify this transfer privilege at any time.
11.3 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 subaccounts of the variable account. We
must receive the request in writing or other form acceptable to us. Only
one transfer may be made from the fixed account each contract year.
Transfers will only be made if the amount requested is not more than 25% of
the unloaned value in the fixed account.
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 11.1, Transfer Fees.
We may suspend or modify this transfer privilege at any time.
Section 12: Settlement Options
12.1 Payment Options
You may apply proceeds of $2,000 or more which are payable under this
contract to any of the following options:
Option 1. Interest Payments
We will make interest payments to the payee annually or monthly as
elected. Interest on the proceeds will be paid at the guaranteed
rate of 3.0% per year and 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. Interest on the proceeds will be paid at
the guaranteed rate of 3.0% per year and 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. Interest on the proceeds
will be paid at the guaranteed rate of 3.0% per year and 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. Payments received under
the Installment Refund Option will continue until the total income
payments received 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.
These options are supported by our general account. The payments will not
reflect the investment experience of the variable account.
Section 12: Settlement Options (continued)
12.2 Payee
The payee is the person receiving proceeds under a settlement option. The
payee can be you, an Insured 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.
12.3 Minimum Payments
The payment under any settlement option must be at least $50. We may make
payments less frequently so that each payment is at least $50.
12.4 Choice of Options
You may choose an option by written notice during one or both Insureds
lifetime. If a settlement option is not in effect at the death of the
last surviving Insured, a choice may be made by the beneficiary.
12.5 Availability of Options
We reserve the right to restrict these options if you designate an executor,
administrator, trustee, corporation, partnership or association as the payee.
12.6 Operative Date
The first payment will be payable on the payment mode following the date
proceeds become payable.
12.7 Death of Payee
At the death of the payee, any payments remaining will be paid according to
the terms of the settlement option chosen, 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 to us, name a new
contingent payee. The new contingent payee will receive any amount that
would otherwise have been payable to the payee's estate.
12.8 Claims of Creditors
To the extent permitted by law, proceeds will not be subject to any claims
of a payee's creditors. TABLE A - INSTALLMENT OPTION*
for Each $1,000 of Proceeds Applied
Term of
Years
Annual
Monthly
1 $1000.00 $84.47
2 507.39 42.86
3 343.23 28.99
4 261.19 22.06
5 211.99 17.91
6 179.22 15.14
7 155.83 13.16
8 138.31 11.68
9 124.69 10.53
10 113.82 9.61
11 $104.93 $8.86
12 97.54 8.24
13 91.29 7.71
14 85.95 7.26
15 81.33 6.87
16 77.29 6.53
17 73.74 6.23
18 70.59 5.96
19 67.78 5.73
20 65.26 5.51
21 $62.98 $5.32
22 60.92 5.15
23 59.04 4.99
24 57.33 4.84
25 55.76 4.71
26 54.31 4.59
27 52.97 4.47
28 51.74 4.37
29 50.60 4.27
30 49.53 4.18
TABLE B - LIFE INCOME OPTIONS*
Monthly Income for Each $1,000 of Proceeds Applied
Age MALE
Minimum Guaranteed Payment Period
None
120
Months
240
Months Install-ment
Refund
50 $4.23 $4.19 $4.06 $4.05
51 4.31 4.26 4.11 4.11
52 4.38 4.33 4.17 4.17
53 4.46 4.40 4.22 4.23
54 4.55 4.48 4.28 4.29
55 4.63 4.56 4.33 4.36
56 4.73 4.65 4.39 4.43
57 4.83 4.74 4.45 4.51
58 4.94 4.83 4.51 4.59
59 5.05 4.93 4.57 4.67
60 5.17 5.04 4.63 4.75
61 5.30 5.15 4.69 4.85
62 5.44 5.27 4.75 4.94
63 5.60 5.39 4.81 5.04
64 5.76 5.52 4.86 5.15
65 5.93 5.65 4.92 5.26
66 6.12 5.79 4.97 5.37
67 6.32 5.94 5.02 5.50
68 6.53 6.09 5.06 5.62
69 6.76 6.24 5.11 5.76
70 7.00 6.40 5.14 5.90
71 7.26 6.56 5.18 6.04
72 7.53 6.72 5.21 6.20
73 7.83 6.88 5.24 6.36
74 8.15 7.05 5.26 6.53
75 8.49 7.22 5.28 6.70
Age FEMALE
Minimum Guaranteed Payment Period
None
120
Months
240
Months Install-
ment
Refund
50 $3.89 $3.87 $3.81 $3.80
51 3.95 3.93 3.86 3.84
52 4.01 3.98 3.91 3.89
53 4.07 4.04 3.96 3.95
54 4.13 4.11 4.01 4.00
55 4.20 4.17 4.07 4.06
56 4.28 4.24 4.12 4.12
57 4.36 4.32 4.18 4.18
58 4.44 4.40 4.24 4.25
59 4.53 4.48 4.30 4.32
60 4.63 4.57 4.37 4.39
61 4.73 4.66 4.43 4.47
62 4.84 4.76 4.50 4.55
63 4.95 4.86 4.56 4.64
64 5.08 4.97 4.63 4.73
65 5.21 5.09 4.69 4.83
66 5.35 5.21 4.76 4.93
67 5.50 5.34 4.82 5.04
68 5.66 5.47 4.88 5.15
69 5.84 5.61 4.94 5.27
70 6.02 5.76 5.00 5.39
71 6.23 5.92 5.05 5.53
72 6.45 6.08 5.10 5.67
73 6.70 6.25 5.14 5.81
74 6.96 6.43 5.18 5.97
75 7.24 6.61 5.22 6.14
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
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
*Amounts not shown for available options will be furnished on request.
Flexible Premium Variable
Survivorship Life Insurance
Contract - Nonparticipating
Adjustable death benefit. Death proceeds payable at death of the last
surviving Insured. Flexible premiums payable until the death of the last
surviving Insured.
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.
1.A.(8)(d)
FUND PARTICIPATION AGREEMENT
This Agreement is entered into as of the day of _________,
1997, between KANSAS CITY LIFE INSURANCE COMPANY, a life
insurance company organized under the laws of the State of
Missouri ("Insurance Company"), and each of DREYFUS VARIABLE
INVESTMENT FUND, THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND,
INC. and DREYFUS LIFE AND ANNUITY INDEX FUND, INC. (d/b/a DREYFUS
STOCK INDEX FUND) (each a "Fund").
ARTICLE I 1.
DEFINITIONS
1.1 "Act" shall mean the Investment Company Act of 1940, as
amended.
1.2 "Board" shall mean the Board of Directors or Trustees, as
the case may be, of a Fund, which has the responsibility for
management and control of the Fund.
1.3 "Business Day" shall mean any day for which a Fund
calculates net asset value per share as described in the Fund's
Prospectus.
1.4 "Commission" shall mean the Securities and Exchange
Commission.
1.5 "Contract" shall mean a variable annuity or life insurance
contract that uses any Participating Fund (as defined below) as
an underlying investment medium. Individuals who participate
under a group Contract are "Participants."
1.6 "Contractholder" shall mean any entity that is a party to a
Contract with a Participating Company (as defined below).
1.7 "Disinterested Board Members" shall mean those members of
the Board of a Fund that are not deemed to be "interested
persons" of the Fund, as defined by the Act.
1.8 "Dreyfus" shall mean The Dreyfus Corporation and its
affiliates, including Dreyfus Service Corporation.
1.9 "Participating Companies" shall mean any insurance company
(including Insurance Company) that offers variable annuity and/or
variable life insurance contracts to the public and that has
entered into an agreement with one or more of the Funds.
1.10 "Participating Fund" shall mean each Fund, including, as
applicable, any series thereof, specified in Exhibit A, as
such Exhibit may be amended from time to time by agreement
of the parties hereto, the shares of which are available to
serve as the underlying investment medium for the aforesaid
Contracts.
1.11 "Prospectus" shall mean the current prospectus and statement
of additional information of a Fund, as most recently filed
with the Commission.
1.12 "Separate Account" shall mean each of Kansas City Life
Variable Annuity Separate Account and Kansas City Life
Variable Universal Life Separate Account, each of which is a
separate account established by Insurance Company in
accordance with the laws of the State of Missouri.
1.13 "Software Program" shall mean the software program used by a
Fund for providing Fund and account balance information
including net asset value per share. Such Program may
include the Lion System. In situations where the Lion
System or any other Software Program used by a Fund is not
available, such information may be provided by telephone.
The Lion System shall be provided to Insurance Company at no
charge.
1.14 "Insurance Company's General Account(s)" shall mean the
general account(s) of Insurance Company and its affiliates
that invest in a Fund.
ARTICLE II 2.
REPRESENTATIONS
2.1 Insurance Company represents and warrants that (a) it is an
insurance company duly organized and in good standing under
applicable law; (b) it has legally and validly established the
Separate Account pursuant to the Missouri Insurance Code for the
purpose of offering to the public certain individual and group
variable annuity and life insurance contracts; (c) it has
registered the Separate Account as a unit investment trust under
the Act to serve as the segregated investment account for the
Contracts; and (d) the Separate Account is eligible to invest in
shares of each Participating Fund without such investment
disqualifying any Participating Fund as an investment medium for
insurance company separate accounts supporting variable annuity
contracts or variable life insurance contracts.
2.2 Insurance Company represents and warrants that (a) the
Contracts will be described in a registration statement filed
under the Securities Act of 1933, as amended ("1933 Act"); (b)
the Contracts will be issued and sold in compliance in all
material respects with all applicable federal and state laws; and
(c) the sale of the Contracts shall comply in all material
respects with state insurance law requirements. Insurance
Company agrees to notify each Participating Fund promptly of any
investment restrictions imposed by state insurance law and
applicable to the Participating Fund.
2.3 Insurance Company represents and warrants that the income,
gains and losses, whether or not realized, from assets allocated
to the Separate Account are, in accordance with the applicable
Contracts, to be credited to or charged against such Separate
Account without regard to other income, gains or losses from
assets allocated to any other accounts of Insurance Company.
Insurance Company represents and warrants that the assets of the
Separate Account are and will be kept separate from Insurance
Company's General Account and any other separate accounts
Insurance Company may have, and will not be charged with
liabilities from any business that Insurance Company may conduct
or the liabilities of any companies affiliated with Insurance
Company.
2.4 Each Participating Fund represents that it is registered
with the Commission under the Act as an open-end, management
investment company and possesses, and shall maintain, all legal
and regulatory licenses, approvals, consents and/or exemptions
required for the Participating Fund to operate and offer its
shares as an underlying investment medium for Participating
Companies. Each Participating Fund represents that its
investment policies, fees, operations and expenses are, and at
all times will be, in compliance with applicable federal and
state securities laws.
2.5 Each Participating Fund represents that it is currently
qualified as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"), and
that it will make every effort to maintain such qualification
(under Subchapter M or any successor or similar provision) and
that it will notify Insurance Company immediately upon having a
reasonable basis for believing that it has ceased to so qualify
or that it might not so qualify in the future.
2.6 Insurance Company represents and agrees that the Contracts
are currently, and at the time of issuance will be, treated as
life insurance policies or annuity contracts, whichever is
appropriate, under applicable provisions of the Code, and that it
will make every effort to maintain such treatment and that it
will notify each Participating Fund and Dreyfus immediately upon
having a reasonable basis for believing that the Contracts have
ceased to be so treated or that they might not be so treated in
the future. Insurance Company agrees that any prospectus
offering a Contract that is a "modified endowment contract," as
that term is defined in Section 7702A of the Code, will identify
such Contract as a modified endowment contract (or policy).
2.7 Each Participating Fund agrees that its assets shall be
managed and invested in a manner that complies with the
requirements of Section 817(h) of the Code.
2.8 Insurance Company agrees that each Participating Fund shall
be permitted (subject to the other terms of this Agreement) to
make its shares available to other Participating Companies and
Contractholders.
2.9 Each Participating Fund represents and warrants that any of
its directors, trustees, officers, employees, investment
advisers, and other individuals/entities who deal with the money
and/or securities of the Participating Fund are and shall
continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Participating Fund in an
amount not less than that required by Rule 17g-1 under the Act.
The aforesaid Bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
Each Participating Fund represents and warrants that it is
covered (along with certain other named parties) by a directors
and officers/errors and omissions insurance policy in an amount,
as of the date of this Agreement, of $100 million.
2.10 Insurance Company represents and warrants that all of its
employees and agents who deal with the money and/or securities of
each Participating Fund are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage in an
amount not less than the coverage required to be maintained by
the Participating Fund. The aforesaid Bond shall include
coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11 Insurance Company agrees that The Dreyfus Corporation and
Dreyfus Service Corporation shall each be deemed a third party
beneficiary under this Agreement and may enforce any and all
rights conferred by virtue of this Agreement.
ARTICLE III 3.
FUND SHARES
3.1 The Contracts funded through the Separate Account will
provide for the investment of certain amounts in shares of each
Participating Fund.
3.2 Each Participating Fund agrees to make its shares available
for purchase at the then applicable net asset value per share by
Insurance Company and the Separate Account on each Business Day
pursuant to rules of the Commission. Notwithstanding the
foregoing, each Participating Fund may refuse to sell its shares
to any person, or suspend or terminate the offering of its
shares, if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of
its Board, acting in good faith and in light of its fiduciary
duties under federal and any applicable state laws, necessary and
in the best interests of the Participating Fund's shareholders.
3.3 Each Participating Fund agrees that shares of the
Participating Fund will be sold only to (a) Participating
Companies and their separate accounts or (b) "qualified pension
or retirement plans" as determined under Section 817(h)(4) of the
Code. Except as otherwise set forth in this Section 3.3, no
shares of any Participating Fund will be sold to the general
public.
3.4 Each Participating Fund shall use its best efforts to
provide closing net asset value, dividend and capital gain
information on a per-share basis to Insurance Company by 6:00
p.m. Eastern time on each Business Day. Any material errors in
the calculation of net asset value, dividend and capital gain
information shall be reported immediately upon discovery to
Insurance Company. Non-material errors will be corrected in the
next Business Day's net asset value per share.
3.5 By the end of each Business Day, Insurance Company will use
the information described in Sections 3.2 and 3.4 to calculate
the unit values of the Separate Account for the day. Using this
unit value, Insurance Company will process the day's Separate
Account transactions received by it by the close of trading on
the floor of the New York Stock Exchange (currently 4:00 p.m.
Eastern time) to determine the net dollar amount of each
Participating Fund's shares that will be purchased or redeemed at
that day's closing net asset value per share. The net purchase
or redemption orders will be transmitted to each Participating
Fund by Insurance Company by 11:00 a.m. Eastern time on the
Business Day next following Insurance Company's receipt of that
information. Subject to Sections 3.6 and 3.8, all purchase and
redemption orders for Insurance Company's General Accounts shall
be effected at the net asset value per share of each
Participating Fund next calculated after receipt of the order by
the Participating Fund or its Transfer Agent.
3.6 Each Participating Fund appoints Insurance Company as its
agent for the limited purpose of accepting orders for the
purchase and redemption of Participating Fund shares for the
Separate Account. Each Participating Fund will execute orders at
the applicable net asset value per share determined as of the
close of trading on the day of receipt of such orders by
Insurance Company acting as agent ("effective trade date"),
provided that the Participating Fund receives notice of such
orders by 11:00 a.m. Eastern time on the next following Business
Day and, if such orders request the purchase of Participating
Fund shares, the conditions specified in Section 3.8, as
applicable, are satisfied. A redemption or purchase request that
does not satisfy the conditions specified above and in Section
3.8, as applicable, will be effected at the net asset value per
share computed on the Business Day immediately preceding the next
following Business Day upon which such conditions have been
satisfied in accordance with the requirements of this Section and
Section 3.8.
3.7 Insurance Company will make its best efforts to notify each
applicable Participating Fund in advance of any unusually large
purchase or redemption orders.
3.8 If Insurance Company's order requests the purchase of a
Participating Fund's shares, Insurance Company will pay for such
purchases by wiring Federal Funds to the Participating Fund or
its designated custodial account on the day the order is
transmitted. Insurance Company shall make all reasonable efforts
to transmit to the applicable Participating Fund payment in
Federal Funds by 12:00 noon Eastern time on the Business Day the
Participating Fund receives the notice of the order pursuant to
Section 3.5. Each applicable Participating Fund will execute
such orders at the applicable net asset value per share
determined as of the close of trading on the effective trade date
if the Participating Fund receives payment in Federal Funds by
12:00 midnight Eastern time on the Business Day the Participating
Fund receives the notice of the order pursuant to Section 3.5.
If payment in Federal Funds for any purchase is not received or
is received by a Participating Fund after 12:00 noon Eastern time
on such Business Day, Insurance Company shall promptly, upon each
applicable Participating Fund's request, reimburse the respective
Participating Fund for any charges, costs, fees, interest or
other expenses incurred by the Participating Fund in connection
with any advances to, or borrowings or overdrafts by, the
Participating Fund, or any similar expenses incurred by the
Participating Fund, as a result of portfolio transactions
effected by the Participating Fund based upon such purchase
request. If Insurance Company's order requests the redemption of
any Participating Fund's shares valued at or greater than $1
million dollars, the Participating Fund will wire such amount to
Insurance Company within seven days of the order.
3.9 Each Participating Fund has the obligation to ensure that
its shares are registered with applicable federal agencies at all
times.
3.10 Each Participating Fund will confirm each purchase or
redemption order made by Insurance Company. Transfer of
Participating Fund shares will be by book entry only. No share
certificates will be issued to Insurance Company. Insurance
Company will record shares ordered from a Participating Fund in
an appropriate title for the corresponding account.
3.11 Each Participating Fund shall credit Insurance Company with
the appropriate number of shares.
3.12 On each ex-dividend date of a Participating Fund or, if not
a Business Day, on the first Business Day thereafter, each
Participating Fund shall communicate to Insurance Company the
amount of dividend and capital gain, if any, per share. All
dividends and capital gains shall be automatically reinvested in
additional shares of the applicable Participating Fund at the net
asset value per share on the ex-dividend date. Each
Participating Fund shall, on the day after the ex-dividend date
or, if not a Business Day, on the first Business Day thereafter,
notify Insurance Company of the number of shares so issued.
ARTICLE IV 4.
STATEMENTS AND REPORTS
4.1 Each Participating Fund shall provide monthly statements of
account as of the end of each month for all of Insurance
Company's accounts by the fifteenth (15th) day of the following
month.
4.2 Each Participating Fund shall distribute to Insurance
Company copies of the Participating Fund's Prospectuses (in hard
copy, camera ready form or on diskette, as specified by Insurance
Company), proxy materials, notices, periodic reports and other
printed materials (which the Participating Fund customarily
provides to its shareholders) in quantities as Insurance Company
may reasonably request for distribution to each Contractholder
and Participant.
4.3 Each Participating Fund will provide to Insurance Company at
least one complete copy of all registration statements,
Prospectuses, reports, proxy statements, sales literature and
other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the
above, that relate to the Participating Fund or its shares,
contemporaneously with the filing of such document with the
Commission or other regulatory authorities.
4.4 Insurance Company will provide to each Participating Fund at
least one copy of all registration statements, Prospectuses,
reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to
the Contracts or the Separate Account, contemporaneously with the
filing of such document with the Commission.
4.5
ARTICLE V 5.
EXPENSES
5.1 The charge to each Participating Fund for all expenses and
costs of the Participating Fund, including but not limited to
management fees, administrative expenses and legal and regulatory
costs, will be made in the determination of the Participating
Fund's daily net asset value per share so as to accumulate to an
annual charge at the rate set forth in the Participating Fund's
Prospectus. Excluded from the expense limitation described
herein shall be brokerage commissions and transaction fees and
extraordinary expenses.
5.2 Except as provided in this Article V and, in particular in
the next sentence, Insurance Company shall not be required to pay
directly any expenses of any Participating Fund or expenses
relating to the distribution of its shares. Insurance Company
shall pay the following expenses or costs:
a. Such amount of the production expenses of any Participating
Fund materials, including the cost of printing a Participating
Fund's Prospectus, or marketing materials for prospective
Insurance Company Contractholders and Participants as Dreyfus and
Insurance Company shall agree from time to time.
b. Distribution expenses of any Participating Fund materials or
marketing materials for prospective Insurance Company
Contractholders and Participants.
c. Distribution expenses of any Participating Fund materials or
marketing materials for Insurance Company Contractholders and
Participants.
Except as provided herein, all other expenses of each
Participating Fund shall not be borne by Insurance Company.
ARTICLE VI 6.
EXEMPTIVE RELIEF
6.1 Insurance Company has reviewed a copy of the order dated
December 23, 1987 of the Securities and Exchange Commission under
Section 6(c) of the Act with respect to Dreyfus Variable
Investment Fund and a copy of the order dated August 23, 1989 of
the Securities and Exchange Commission under Section 6(c) of the
Act with respect to Dreyfus Life and Annuity Index Fund, Inc.
and, in particular, has reviewed the conditions to the relief set
forth in each related Notice. As set forth therein, if Dreyfus
Variable Investment Fund or Dreyfus Life and Annuity Index Fund,
Inc. is a Participating Fund, Insurance Company agrees, as
applicable, to report any potential or existing conflicts
promptly to the respective Board of Dreyfus Variable Investment
Fund and/or Dreyfus Life and Annuity Index Fund, Inc. and, in
particular, whenever contract voting instructions are
disregarded, and recognizes that it will be responsible for
assisting each applicable Board in carrying out its
responsibilities under such application. Insurance Company
agrees to carry out such responsibilities with a view to the
interests of existing Contractholders.
The Dreyfus Socially Responsible Growth Fund, Inc., if it is
a Participating Fund, shall furnish Insurance Company with a
copy of its application for an order of the Securities and
Exchange Commission under Section 6(c) of the Act for mixed
and shared funding relief, and the notice of such
application and order when issued by the SEC. Insurance
Company agrees to comply with the conditions on which such
order is issued, including reporting any potential or
existing conflicts promptly to the Board of The Dreyfus
Socially Responsible Growth Fund, Inc., and in particular
whenever Contractholder voting instructions are disregarded,
to the extent such conditions are not materially different
from the conditions of the mixed and shared funding relief
obtained by Dreyfus Variable Investment Fund and Dreyfus
Life and Annuity Index Fund, Inc., respectively; and
recognizes that it shall be responsible for assisting the
Board of The Dreyfus Socially Responsible Growth Fund, Inc.
in carrying out its responsibilities in connection with such
order. Insurance Company agrees to carry out such
responsibilities with a view to the interests of existing
Contractholders.
6.2 If a majority of the Board, or a majority of Disinterested
Board Members, determines that a material irreconcilable conflict
exists with regard to Contractholder investments in a
Participating Fund, the Board shall give prompt notice to all
Participating Companies and any other Participating Fund. If the
Board determines that Insurance Company is responsible for
causing or creating said conflict, Insurance Company shall at its
sole cost and expense, and to the extent reasonably practicable
(as determined by a majority of the Disinterested Board Members),
take such action as is necessary to remedy or eliminate the
irreconcilable material conflict. Such necessary action may
include, but shall not be limited to:
a. Withdrawing the assets allocable to the Separate Account
from the Participating Fund and reinvesting such assets in
another Participating Fund (if applicable) or a different
investment medium, or submitting the question of whether such
segregation should be implemented to a vote of all affected
Contractholders; and/or
b. Establishing a new registered management investment company.
6.3 If a material irreconcilable conflict arises as a result of
a decision by Insurance Company to disregard Contractholder
voting instructions and said decision represents a minority
position or would preclude a majority vote by all Contractholders
having an interest in a Participating Fund, Insurance Company may
be required, at the Board's election, to withdraw the investments
of the Separate Account in that Participating Fund.
6.4 For the purpose of this Article, a majority of the
Disinterested Board Members shall determine whether or not any
proposed action adequately remedies any irreconcilable material
conflict, but in no event will any Participating Fund be required
to bear the expense of establishing a new funding medium for any
Contract. Insurance Company shall not be required by this
Article to establish a new funding medium for any Contract if an
offer to do so has been declined by vote of a majority of the
Contractholders materially adversely affected by the
irreconcilable material conflict.
6.5 No action by Insurance Company taken or omitted, and no
action by the Separate Account or any Participating Fund taken or
omitted as a result of any act or failure to act by Insurance
Company pursuant to this Article VI, shall relieve Insurance
Company of its obligations under, or otherwise affect the
operation of, Article V.
ARTICLE VII 7.
VOTING OF PARTICIPATING FUND SHARES
7.1 Each Participating Fund shall provide Insurance Company with
copies, at no cost to Insurance Company, of the Participating
Fund's proxy material, reports to shareholders and other
communications to shareholders in such quantity as Insurance
Company shall reasonably require for distributing to
Contractholders or Participants.
Insurance Company shall:
(a) solicit voting instructions from Contractholders or
Participants on a timely basis and in accordance with applicable
law;
(b) vote the Participating Fund shares in accordance with
instructions received from Contractholders or Participants; and
(c) vote the Participating Fund shares for which no instructions
have been received in the same proportion as Participating Fund
shares for which instructions have been received.
Insurance Company agrees at all times to vote its
General Account shares in the same proportion as the
Participating Fund shares for which instructions have
been received from Contractholders or Participants.
Insurance Company further agrees to be responsible for
assuring that voting the Participating Fund shares for
the Separate Account is conducted in a manner
consistent with other Participating Companies.
7.2 Insurance Company agrees that it shall not, without the
prior written consent of each applicable Participating Fund
and Dreyfus, solicit, induce or encourage Contractholders to
(a) change or supplement the Participating Fund's current
investment adviser or (b) change, modify, substitute, add to
or delete from the current investment media for the
Contracts.
ARTICLE VIII 8.
MARKETING AND REPRESENTATIONS
8.1 Each Participating Fund or its underwriter shall
periodically furnish Insurance Company with the following
documents, in quantities as Insurance Company may reasonably
request:
a. Current Prospectus and any supplements thereto; and
b. Other marketing materials.
Expenses for the production of such documents shall be borne
by Insurance Company in accordance with Section 5.2 of this
Agreement.
8.2 Insurance Company shall designate certain persons or
entities that shall have the requisite licenses to solicit
applications for the sale of Contracts. No representation is
made as to the number or amount of Contracts that are to be sold
by Insurance Company. Insurance Company shall make reasonable
efforts to market the Contracts and shall comply with all
applicable federal and state laws in connection therewith.
8.3 Insurance Company shall furnish, or shall cause to be
furnished, to each applicable Participating Fund or its designee,
each piece of sales literature or other promotional material in
which the Participating Fund, its investment adviser or the
administrator is named, at least fifteen Business Days prior to
its use. No such material shall be used unless the Participating
Fund or its designee approves such material. Such approval (if
given) must be in writing and shall be presumed not given if not
received within ten Business Days after receipt of such material.
Each applicable Participating Fund or its designee, as the case
may be, shall use all reasonable efforts to respond within ten
days of receipt.
8.4 Insurance Company shall not give any information or make any
representations or statements on behalf of a Participating Fund
or concerning a Participating Fund in connection with the sale of
the Contracts other than the information or representations
contained in the registration statement or Prospectus of, as may
be amended or supplemented from time to time, or in reports or
proxy statements for, the applicable Participating Fund, or in
sales literature or other promotional material approved by the
applicable Participating Fund.
8.5 Each Participating Fund shall furnish, or shall cause to be
furnished, to Insurance Company, each piece of the Participating
Fund's sales literature or other promotional material in which
Insurance Company, including its affiliated broker-dealer, or the
Separate Account is named, at least fifteen Business Days prior
to its use. No such material shall be used unless Insurance
Company approves such material. Such approval (if given) must be
in writing and shall be presumed not given if not received within
ten Business Days after receipt of such material. Insurance
Company shall use all reasonable efforts to respond within ten
days of receipt.
8.6 Each Participating Fund shall not, in connection with the
sale of Participating Fund shares, give any information or make
any representations on behalf of Insurance Company or concerning
Insurance Company, the Separate Account, or the Contracts other
than the information or representations contained in a
registration statement or prospectus for the Contracts, as may be
amended or supplemented from time to time, or in published
reports for the Separate Account that are in the public domain or
approved by Insurance Company for distribution to Contractholders
or Participants, or in sales literature or other promotional
material approved by Insurance Company.
8.7 For purposes of this Agreement, the phrase "sales literature
or other promotional material" or words of similar import
include, without limitation, advertisements (such as material
published, or designed for use, in a newspaper, magazine or other
periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures or other
public media), sales literature (such as any written
communication distributed or made generally available to
customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, or reprints
or excerpts of any other advertisement, sales literature, or
published article), educational or training materials or other
communications distributed or made generally available to some or
all agents or employees, registration statements, prospectuses,
statements of additional information, shareholder reports and
proxy materials, and any other material constituting sales
literature or advertising under National Association of
Securities Dealers, Inc. rules, the Act or the 1933 Act.
ARTICLE IX 9.
INDEMNIFICATION
9.1 Insurance Company agrees to indemnify and hold harmless each
Participating Fund, Dreyfus, each respective Participating Fund's
investment adviser and sub-investment adviser (if applicable),
each respective Participating Fund's distributor, and their
respective affiliates, and each of their directors, trustees,
officers, employees, agents and each person, if any, who controls
or is associated with any of the foregoing entities or persons
within the meaning of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of Section 9.1), against any
and all losses, claims, damages or liabilities joint or several
(including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement
of, any action, suit or proceeding or any claim asserted) for
which the Indemnified Parties may become subject, under the 1933
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect to thereof) (i) arise out of
or are based upon any untrue statement or alleged untrue
statement of any material fact contained in information furnished
by Insurance Company for use in the registration statement or
Prospectus or sales literature or advertisements of the
respective Participating Fund or with respect to the Separate
Account or Contracts, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading; (ii) arise out of or as a result of
conduct, statements or representations (other than statements or
representations contained in the Prospectus and sales literature
or advertisements of the respective Participating Fund) of
Insurance Company or its agents, with respect to the sale and
distribution of Contracts for which the respective Participating
Fund's shares are an underlying investment; (iii) arise out of
the wrongful conduct of Insurance Company or persons under its
control with respect to the sale or distribution of the Contracts
or the respective Participating Fund's shares; (iv) arise out of
Insurance Company's incorrect calculation and/or untimely
reporting of net purchase or redemption orders; or (v) arise out
of any breach by Insurance Company of a material term of this
Agreement or as a result of any failure by Insurance Company to
provide the services and furnish the materials or to make any
payments provided for in this Agreement. Insurance Company will
reimburse any Indemnified Party in connection with investigating
or defending any such loss, claim, damage, liability or action;
provided, however, that with respect to clauses (i) and (ii)
above Insurance Company will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises
out of or is based upon any untrue statement or omission or
alleged omission made in such registration statement, prospectus,
sales literature, or advertisement in conformity with written
information furnished to Insurance Company by the respective
Participating Fund specifically for use therein. This indemnity
agreement will be in addition to any liability which Insurance
Company may otherwise have.
9.2 Each Participating Fund severally agrees to indemnify and
hold harmless Insurance Company, its affiliated broker-dealer,
and each of their directors, officers, employees, agents and each
person, if any, who controls Insurance Company within the meaning
of the 1933 Act against any losses, claims, damages or
liabilities to which Insurance Company or any such director,
officer, employee, agent or controlling person may become
subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
(1) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or Prospectus or sales literature or
advertisements of the respective Participating Fund; (2) arise
out of or are based upon the omission to state in the
registration statement or Prospectus or sales literature or
advertisements of the respective Participating Fund any material
fact required to be stated therein or necessary to make the
statements therein not misleading; or (3) arise out of or are
based upon any untrue statement or alleged untrue statement of
any material fact contained in the registration statement or
Prospectus or sales literature or advertisements with respect to
the Separate Account or the Contracts and such statements were
based on information provided to Insurance Company by the
respective Participating Fund; and the respective Participating
Fund will reimburse any legal or other expenses reasonably
incurred by Insurance Company or any such director, officer,
employee, agent or controlling person in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the respective
Participating Fund will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or omission or alleged
omission made in such registration statement, Prospectus, sales
literature or advertisements in conformity with written
information furnished to the respective Participating Fund by
Insurance Company specifically for use therein. This indemnity
agreement will be in addition to any liability which the
respective Participating Fund may otherwise have.
9.3 Each Participating Fund severally shall indemnify and hold
Insurance Company harmless against any and all liability, loss,
damages, costs or expenses which Insurance Company may incur,
suffer or be required to pay due to the respective Participating
Fund's (1) incorrect calculation of the daily net asset value,
dividend rate or capital gain distribution rate; (2) incorrect
reporting of the daily net asset value, dividend rate or capital
gain distribution rate; and (3) untimely reporting of the net
asset value, dividend rate or capital gain distribution rate;
provided that the respective Participating Fund shall have no
obligation to indemnify and hold harmless Insurance Company if
the incorrect calculation or incorrect or untimely reporting was
the result of incorrect information furnished by Insurance
Company or information furnished untimely by Insurance Company or
otherwise as a result of or relating to a breach of this
Agreement by Insurance Company.
9.4 Promptly after receipt by an indemnified party under this
Article of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Article, notify
the indemnifying party of the commencement thereof. The omission
to so notify the indemnifying party will not relieve the
indemnifying party from any liability under this Article IX,
except to the extent that the omission results in a failure of
actual notice to the indemnifying party and such indemnifying
party is damaged solely as a result of the failure to give such
notice. In case any such action is brought against any
indemnified party, and it notified the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, assume
the defense thereof, with counsel satisfactory to such
indemnified party, and to the extent that the indemnifying party
has given notice to such effect to the indemnified party and is
performing its obligations under this Article, the indemnifying
party shall not be liable for any legal or other expenses
subsequently incurred by such indemnified party in connection
with the defense thereof, other than reasonable costs of
investigation. Notwithstanding the foregoing, in any such
proceeding, any indemnified party shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties
to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests
between them. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written
consent.
A successor by law of the parties to this Agreement shall be
entitled to the benefits of the indemnification contained in
this Article IX. The provisions of this Article IX shall
survive termination of this Agreement.
9.5 Insurance Company shall indemnify and hold each respective
Participating Fund, Dreyfus and sub-investment adviser of
the Participating Fund harmless against any tax liability
incurred by the Participating Fund under Section 851 of the
Code arising from purchases or redemptions by Insurance
Company's General Accounts or the account of its affiliates.
ARTICLE X 10.
COMMENCEMENT AND TERMINATION
10.1 This Agreement shall be effective as of the date hereof and
shall continue in force until terminated in accordance with the
provisions herein.
10.2 This Agreement shall terminate without penalty:
a. As to any Participating Fund, at the option of Insurance
Company or the Participating Fund at any time from the date
hereof upon 180 days' notice, unless a shorter time is agreed to
by the respective Participating Fund and Insurance Company;
b. As to any Participating Fund, at the option of Insurance
Company, if shares of that Participating Fund are not reasonably
available to meet the requirements of the Contracts as determined
by Insurance Company. Prompt notice of election to terminate
shall be furnished by Insurance Company, said termination to be
effective ten days after receipt of notice unless the
Participating Fund makes available a sufficient number of shares
to meet the requirements of the Contracts within said ten-day
period;
c. As to a Participating Fund, at the option of Insurance
Company, upon the institution of formal proceedings against that
Participating Fund by the Commission, National Association of
Securities Dealers or any other regulatory body, the expected or
anticipated ruling, judgment or outcome of which would, in
Insurance Company's reasonable judgment, materially impair that
Participating Fund's ability to meet and perform the
Participating Fund's obligations and duties hereunder. Prompt
notice of election to terminate shall be furnished by Insurance
Company with said termination to be effective upon receipt of
notice;
d. As to a Participating Fund, at the option of each
Participating Fund, upon the institution of formal proceedings
against Insurance Company by the Commission, National Association
of Securities Dealers or any other regulatory body, the expected
or anticipated ruling, judgment or outcome of which would, in the
Participating Fund's reasonable judgment, materially impair
Insurance Company's ability to meet and perform Insurance
Company's obligations and duties hereunder. Prompt notice of
election to terminate shall be furnished by such Participating
Fund with said termination to be effective upon receipt of
notice;
e. As to a Participating Fund, at the option of that
Participating Fund, if the Participating Fund shall determine, in
its sole judgment reasonably exercised in good faith, that
Insurance Company has suffered a material adverse change in its
business or financial condition or is the subject of material
adverse publicity and such material adverse change or material
adverse publicity is likely to have a material adverse impact
upon the business and operation of that Participating Fund or
Dreyfus, such Participating Fund shall notify Insurance Company
in writing of such determination and its intent to terminate this
Agreement, and after considering the actions taken by Insurance
Company and any other changes in circumstances since the giving
of such notice, such determination of the Participating Fund
shall continue to apply on the sixtieth (60th) day following the
giving of such notice, which sixtieth day shall be the effective
date of termination;
f. As to a Participating Fund, upon termination of the
Investment Advisory Agreement between that Participating Fund and
Dreyfus or its successors unless Insurance Company specifically
approves the selection of a new Participating Fund investment
adviser after having been given a reasonable opportunity to do
so. Such Participating Fund shall promptly furnish notice of
such termination to Insurance Company;
g. As to a Participating Fund, in the event that Participating
Fund's shares are not registered, issued or sold in accordance
with applicable federal law, or such law precludes the use of
such shares as the underlying investment medium of Contracts
issued or to be issued by Insurance Company. Termination shall
be effective immediately as to that Participating Fund only upon
such occurrence without notice;
h. At the option of a Participating Fund upon a determination
by its Board in good faith that it is no longer advisable and in
the best interests of shareholders of that Participating Fund to
continue to operate pursuant to this Agreement. Termination
pursuant to this Subsection (h) shall be effective upon notice by
such Participating Fund to Insurance Company of such termination;
i. At the option of a Participating Fund if the Contracts cease
to qualify as annuity contracts or life insurance policies, as
applicable, under the Code, or if such Participating Fund
reasonably believes that the Contracts may fail to so qualify;
j. At the option of any party to this Agreement, if another
party shall breach any material provision of this Agreement and
such breach continues to be unremedied for a period of thirty
days after the receipt of written notice specifying such breach.
The right to cure a breach of a material provision of this
Agreement pursuant to this paragraph will not be available, and
this Agreement shall terminate immediately at the option of the
non-breaching party, with respect to a second breach of the same
or a substantially similar material provision of this Agreement
within any six month period after notice of the cure of the
initial breach;
k. At the option of a Participating Fund, if the Contracts are
not registered, issued or sold in accordance with applicable
federal and/or state law; or
l. Upon assignment of this Agreement, unless made with the
written consent of every other non-assigning party.
m. As to a Participating Fund, at the option of Insurance
Company, if Insurance Company shall determine, in its sole
judgment reasonably exercised in good faith, that the
Participating Fund has suffered a material adverse change in its
business or financial condition or is the subject of material
adverse publicity and such material adverse change or material
adverse publicity is likely to have a material adverse impact
upon the business and operation of Insurance Company, in which
case Insurance Company shall notify the Participating Fund in
writing of such determination and its intent to terminate this
Agreement, and after considering the actions taken by the
Participating Fund and any other changes in circumstances since
the giving of such notice, such determination of Insurance
Company shall continue to apply on the sixtieth (60th) day
following the giving of such notice, which sixtieth day shall be
the effective date of termination.
n. As to a Participating Fund, if the Participating
Fund fails to qualify as a regulated investment company
under Subchapter M of the Code, or fails to manage and
invest in a manner that complies with the requirements
of Section 817(h) of the Code.
Any such termination pursuant to Section 10.2a, 10.2d,
10.2e, 10.2f or 10.2k herein shall not affect the operation
of Article V of this Agreement. Any termination of this
Agreement shall not affect the operation of Article IX of
this Agreement.
10.3 Notwithstanding any termination of this Agreement pursuant
to Section 10.2 hereof, Insurance Company, at its option,
may continue to purchase additional shares of that
Participating Fund, as provided below, pursuant to the terms
and conditions of this Agreement for all Contracts in effect
on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Under
such circumstances, only the owners of the Existing
Contracts or Insurance Company, whichever shall have legal
authority to do so, shall be permitted to reallocate
investments in that Participating Fund, redeem investments
in that Participating Fund and/or invest in that
Participating Fund upon the making of additional purchase
payments under the Existing Contracts. Furthermore, the
provisions of this Agreement shall remain in effect and
thereafter either that Participating Fund or Insurance
Company may terminate the Agreement as to that Participating
Fund, as so continued pursuant to this Section 10.3, upon
prior written notice to the other party, such notice to be
for a period that is reasonable under the circumstances but,
if given by the Participating Fund, need not be for longer
than the greater of (i) six months or (ii) the period
required by Insurance Company to obtain any necessary
approval from the Commission or any state insurance
regulatory authority provided that Insurance Company makes a
reasonable good faith effort to obtain such approvals in a
reasonable period of time.
10.4 Termination of this Agreement as to any one Participating
Fund shall not be deemed a termination as to any other
Participating Fund unless Insurance Company or such other
Participating Fund, as the case may be, terminates this
Agreement as to such other Participating Fund in accordance
with this Article X.
ARTICLE XI 11.
AMENDMENTS
11.1 Any other changes in the terms of this Agreement, except for
the addition or deletion of any Participating Fund as
specified in Exhibit A, shall be made by agreement in
writing between Insurance Company and each respective
Participating Fund.
ARTICLE XII
NOTICE
12.1 Each notice required by this Agreement shall be given by
certified mail, return receipt requested, to the appropriate
parties at the following addresses:
Insurance Company: Kansas City Life
Insurance Company
3520 Broadway
Kansas City, Missouri 64141
Attn: Richard L. Finn
Participating Funds: [Name of Fund]
c/o Premier Mutual Fund Services, Inc.
200 Park Avenue,
6th Floor West
New York, New York 10166
Attn: Elizabeth Keeley, Esq.
with copies to: [Name of Fund]
c/o The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
Attn: Mark N. Jacobs, Esq.
Lawrence B. Stoller, Esq.
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004-2696
Attn: Lewis G. Cole, Esq.
Stuart H. Coleman, Esq.
Notice shall be deemed to be given on the date of receipt by
the addresses as evidenced by the return receipt.
ARTICLE XIII 12.
MISCELLANEOUS
13.1 This Agreement has been executed on behalf of each party by
the undersigned officer in his/her capacity as an officer.
The obligations of this Agreement shall only be binding upon
the assets and property of the party and shall not be
binding upon any director, trustee, officer or shareholder
of the individually. It is agreed that the obligations of
the Funds are several and not joint, that no Fund shall be
liable for any amount owing by another Fund and that the
Funds have executed one instrument for convenience only.
13.2 Each party shall cooperate with each other party in
connection with inquiries by appropriate governmental
authorities (including without limitation the Commission,
the National Association of Securities Dealers and state
insurance regulators) relating to this Agreement or the
transactions contemplated by this Agreement.
13.3 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all
rights, remedies and obligations, at law or in equity, which
the parties are entitled to under state and federal laws.
13.4 Subject to the requirement of legal process and regulatory
authority, each party shall treat as confidential the names
and addresses of the Contractholders and all information
reasonably identified as confidential in writing by any
other party and, except as permitted by this Agreement or as
otherwise required by applicable law or regulation, shall
not disclose, disseminate or utilize such names and
addresses and other confidential information without the
written consent of the affected party until such time as it
may come into the public domain.
13.5 The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of
the provisions of this Agreement or otherwise affect their
construction or effect.
13.6 If any provision of this Agreement shall be held invalid by
a court decision, statute, rule or otherwise, the remainder
of the Agreement shall not be affected.
ARTICLE XIV 13.
LAW
14.1 This Agreement shall be construed in accordance with the
internal laws of the State of New York, without giving
effect to principles of conflict of laws.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement to be duly executed and attested as of the date first
above written.
KANSAS CITY LIFE INSURANCE COMPANY
By:
Its:
Attest:_____________________
DREYFUS LIFE AND ANNUITY INDEX FUND,
INC. (d/b/a DREYFUS STOCK INDEX FUND)
By:
Its:
Attest:_____________________
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH
FUND, INC.
By:
Its:
Attest:_____________________
DREYFUS VARIABLE INVESTMENT FUND
By:
Its:
Attest:_____________________
EXHIBIT A
LIST OF PARTICIPATING FUNDS
Dreyfus Stock Index Fund
Dreyfus Variable Investment Fund:
Small Cap Portfolio
Capital Appreciation Portfolio
