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KANSAS CITY LIFE INSURANCE COMPANY. Kansas City Life Variable Life Separate Account

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KANSAS CITY LIFE INSURANCE COMPANY Kansas City Life Variable Life Separate Account Supplement dated May 1, 2016 to the Prospectus dated May 1, 2016 for the Century II Accumulator Variable Universal Life
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KANSAS CITY LIFE INSURANCE COMPANY Kansas City Life Variable Life Separate Account Supplement dated May 1, 2016 to the Prospectus dated May 1, 2016 for the Century II Accumulator Variable Universal Life Insurance Contract CONNECTICUT For Contracts sold in the state of Connecticut, we change the Prospectus as follows to provide for the Right to Exchange provision: Add the following paragraph to Transfer Privilege on page 32 of the Prospectus. Right to Exchange The Right to Exchange provision allows you to exchange the Contract for one that provides benefits that don t vary based on the performance of the Funds. Once within the first 24 months of the Contract or within 24 months following the effective date of an increase to the Specified Amount, you may exercise a one-time Right to Exchange by requesting that this Contract be exchanged for any flexible premium fixed benefit policy we offer for exchange on the Contract Date. 5815 CENTURY II ACCUMULATOR VARIABLE UNIVERSAL LIFE PROSPECTUS INDIVIDUAL FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE CONTRACT KANSAS CITY LIFE VARIABLE LIFE SEPARATE ACCOUNT OF KANSAS CITY LIFE INSURANCE COMPANY Street Address: Send correspondence to: 3520 Broadway Variable Administration Kansas City, Missouri P.O. Box Telephone (816) Kansas City, Missouri Telephone (800) This Prospectus describes an individual flexible premium variable life insurance contract ( Contract ) offered by Kansas City Life Insurance Company ( Kansas City Life ). We have provided a definitions section at the end of this Prospectus for your reference as you read. The Contract is designed to provide insurance protection on the person named. The Contract also provides you the opportunity to allocate your premiums to one or more divisions ( Subaccounts ) of the Kansas City Life Variable Life Separate Account ( Variable Account ) or the Fixed Account. The assets of each Subaccount are invested in a corresponding portfolio ( Portfolio ) of a designated mutual fund ( Fund ) as follows: AIM Variable Insurance Funds (Invesco Variable Insurance Funds) Invesco V.I. American Franchise Fund Series I Shares Invesco V.I. Core Equity Fund Series I Shares Invesco V.I. Technology Fund Series I Shares American Century Variable Portfolios, Inc. VP Capital Appreciation Fund Class I VP Income & Growth Fund Class I VP International Fund Class I VP Mid Cap Value Fund Class I VP Ultra Fund Class I VP Value Fund Class I American Century Variable Portfolios II, Inc. VP Inflation Protection Fund Class II American Funds Insurance Series Asset Allocation Fund Class 2 Shares Capital Income Builder Class 2 Shares Global Bond Fund Class 2 Shares Global Growth Fund Class 2 Shares Growth-Income Fund Class 2 Shares New World Fund Class 2 Shares American Funds Insurance Series Managed Risk Funds Managed Risk Asset Allocation Fund Class P2 Shares Managed Risk Blue Chip Income and Growth Fund Class P2 Shares Managed Risk Growth Fund Class P2 Shares Managed Risk Growth-Income Fund Class P2 Shares Managed Risk International Fund Class P2 Shares Calamos Advisors Trust Calamos Growth and Income Portfolio Columbia Funds Variable Series Trust II Columbia Variable Portfolio Mid Cap Growth Fund (Class 2) Columbia Variable Portfolio Seligman Global Technology Fund (Class 2) Columbia Variable Portfolio Select Smaller-Cap Value Fund (Class 2) Dreyfus Variable Investment Fund Appreciation Portfolio Initial Shares Opportunistic Small Cap Portfolio Initial Shares Dreyfus Stock Index Fund, Inc. Initial Shares The Dreyfus Socially Responsible Growth Fund, Inc. Initial Shares Federated Insurance Series Federated Managed Tail Risk Fund II P Federated High Income Bond Fund II P Federated Government Money Fund II S (formerly Federated Prime Money Fund II) Fidelity Variable Insurance Products VIP Contrafund Portfolio Service Class 2 VIP Freedom Income Portfolio Service Class 2 VIP Freedom 2010 Portfolio Service Class 2 VIP Freedom 2015 Portfolio Service Class 2 VIP Freedom 2020 Portfolio Service Class 2 VIP Freedom 2025 Portfolio Service Class 2 VIP Freedom 2030 Portfolio Service Class 2 VIP Freedom 2035 Portfolio Service Class 2 VIP Freedom 2040 Portfolio Service Class 2 VIP Freedom 2045 Portfolio Service Class 2 VIP Freedom 2050 Portfolio Service Class 2 Franklin Templeton Variable Insurance Products Trust Franklin Global Real Estate VIP Fund Class 2 Franklin Small-Mid Cap Growth VIP Fund Class 2 Templeton Developing Markets VIP Fund Class 2 Templeton Foreign VIP Fund Class 2 JPMorgan Insurance Trust JPMorgan Insurance Trust Mid Cap Value Portfolio Class 1 Shares JPMorgan Insurance Trust Small Cap Core Portfolio Class 1 Shares JPMorgan Insurance Trust U.S. Equity Portfolio Class 1 Shares MFS Variable Insurance Trust MFS Growth Series Initial Class Shares MFS Research Series Initial Class Shares MFS Total Return Bond Series Initial Class Shares MFS Total Return Series Initial Class Shares MFS Utilities Series Initial Class Shares MFS Variable Insurance Trust II MFS Strategic Income Portfolio Initial Class Shares Northern Lights Variable Trust TOPS Managed Risk Balanced ETF Portfolio Class 2 Shares TOPS Managed Risk Growth ETF Portfolio Class 2 Shares TOPS Managed Risk Moderate Growth ETF Portfolio Class 2 Shares The accompanying prospectuses for the Funds describe these Portfolios. The value of amounts allocated to the Variable Account will vary according to the investment performance of the Funds. You bear the entire investment risk of amounts allocated to the Variable Account. Another choice available for allocation of premiums is our Fixed Account. The Fixed Account is part of Kansas City Life s general account. It pays interest at declared rates guaranteed to equal or exceed 3%. The Contract also offers you the flexibility to vary the amount and timing of premiums and to change the amount of death benefit payable. This flexibility allows you to provide for your changing insurance needs under a single insurance contract. You can select from three coverage options available under the Contract: Option A: a level death benefit; Option B: a death benefit that fluctuates with the contract value; and Option C: a death benefit that fluctuates with the amount of premiums paid and partial surrenders withdrawn. We guarantee that the death proceeds will never be less than a specified amount of insurance (less any outstanding loans and past due charges) as long as you pay sufficient premiums to keep the Contract in force. The Contract provides for a value that you can receive by surrendering the Contract. There is no guaranteed minimum value and there may be no cash surrender value on early surrenders. If the value is insufficient to cover the charges due under the Contract, the Contract will lapse without value. It may not be advantageous to replace existing insurance. Within certain limits, you may return the Contract or exercise a no-fee transfer right. This Prospectus and the accompanying Fund prospectuses provide important information you should have before deciding to purchase a Contract. Please keep these for future reference. The Subaccounts and the Fixed Account are not deposits or obligations of, or guaranteed or endorsed by, any bank, nor are 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 premiums (principal). The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense. The date of this Prospectus is May 1, 2016. PROSPECTUS CONTENTS SUMMARY OF THE CONTRACT...1 CONTRACT BENEFITS...1 CONTRACT RISKS...3 PORTFOLIO RISKS...4 FEE TABLE...5 GENERAL INFORMATION ABOUT KANSAS CITY LIFE...17 KANSAS CITY LIFE INSURANCE COMPANY FIXED ACCOUNT THE VARIABLE ACCOUNT AND THE FUNDS...18 KANSAS CITY LIFE VARIABLE LIFE SEPARATE ACCOUNT THE FUNDS ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS VOTING RIGHTS CHARGES AND DEDUCTIONS...26 PREMIUM EXPENSE CHARGE MONTHLY DEDUCTION DAILY MORTALITY AND EXPENSE RISK CHARGE TRANSFER PROCESSING FEE SURRENDER CHARGE PARTIAL SURRENDER FEE NET LOAN INTEREST CHARGE FUND EXPENSES THE CONTRACT...29 PURCHASING A CONTRACT WHO SHOULD PURCHASE A CONTRACT APPLYING FOR A CONTRACT OWNERSHIP CHANGE OF OWNERSHIP DETERMINATION OF CONTRACT DATE REPLACEMENT OF EXISTING INSURANCE FREE LOOK RIGHT TO CANCEL CONTRACT ALLOCATIONS AND TRANSFERS...31 PREMIUM ALLOCATIONS AND CREDITING TRANSFER PRIVILEGE DOLLAR COST AVERAGING PLAN PORTFOLIO REBALANCING PLAN CHANGES IN THE CONTRACT OR BENEFITS SUPPLEMENTAL AND/OR RIDER BENEFITS ADDITIONAL SUPPLEMENTAL AND/OR RIDER BENEFITS PREMIUMS...45 PREMIUMS PREMIUMS TO PREVENT LAPSE HOW YOUR CONTRACT VALUES VARY...47 BONUS ON CONTRACT VALUE IN THE VARIABLE ACCOUNT DETERMINING THE CONTRACT VALUE CASH SURRENDER VALUE COMPANY HOLIDAYS DEATH BENEFIT AND CHANGES IN SPECIFIED AMOUNT...48 AMOUNT OF DEATH PROCEEDS COVERAGE OPTIONS INITIAL SPECIFIED AMOUNT AND COVERAGE OPTION CHANGES IN COVERAGE OPTION... 49 CHANGES IN SPECIFIED AMOUNT SELECTING AND CHANGING THE BENEFICIARY CASH BENEFITS...50 CONTRACT LOANS SURRENDERING THE CONTRACT FOR CASH SURRENDER VALUE PARTIAL SURRENDERS PAYMENT OPTIONS PAYMENT OF PROCEEDS UNCLAIMED PROPERTY LAWS REINSTATEMENT TAX CONSIDERATIONS...54 INTRODUCTION TAX STATUS OF THE CONTRACT TAX TREATMENT OF CONTRACT BENEFITS OUR INCOME TAXES POSSIBLE TAX LAW CHANGES OTHER INFORMATION ABOUT THE CONTRACTS AND KANSAS CITY LIFE...58 SALE OF THE CONTRACTS TELEPHONE, FACSIMILE, ELECTRONIC MAIL AND INTERNET AUTHORIZATIONS LITIGATION BUSINESS DISRUPTION AND CYBER SECURITY RISKS CHANGE OF ADDRESS NOTIFICATION FINANCIAL STATEMENTS DEFINITIONS...62 APPENDIX A...65 APPENDIX B...66 STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS...67 SUMMARY OF THE CONTRACT The Contract is an individual flexible premium variable life insurance contract. As long as it remains in force it provides lifetime insurance protection on the Insured. You pay Premiums for insurance coverage. The Contract also provides for accumulation of Premiums and a Cash Surrender Value if the Contract terminates. The Cash Surrender Value, if any, during the early years of the Contract is likely to be much lower than the Premiums paid. The Contract is built around its Contract Value. The Contract Value will increase or decrease depending on the investment performance of the Subaccounts, the amount of interest we credit to the Fixed Account, the Premiums you pay, the Contract fees and charges we deduct, and the effect of any Contract transactions (such as transfers, partial surrenders, and loans). We do not guarantee any minimum Contract Value. You could lose some or all of your money. This summary describes the Contract s important benefits and risks. The sections in the Prospectus following this summary discuss the Contract s benefits and other provisions in more detail. The Definitions section at the end of the Prospectus defines certain words and phrases used in this Prospectus. The Contract is not available in all states. This Prospectus does not offer the Contracts in any jurisdiction where they cannot be lawfully sold. You should rely only on the information contained in this Prospectus or that we have referred you to. We have not authorized anyone to provide you with information that is different. We may offer other variable life insurance contracts that have different death benefits, contract features and optional programs. These contracts would also have different charges that would affect your Subaccount performance and Contract Value. To obtain more information about these other contracts, contact your registered representative. NOTE: Because this is a summary, it does not contain all the information that may be important to you. You should read this entire Prospectus and the Funds prospectuses carefully before investing. CONTRACT BENEFITS Death Benefits. We pay a death benefit to the Beneficiary if the Insured dies while the Contract is in force. We pay the death benefit when we receive satisfactory proof at our Home Office of the Insured s death. Death benefits are available as lump sum or under a variety of payment options. The Minimum Specified Amount is $100,000 for issue ages 0-49 and $50,000 for issue ages We may allow these minimum limits to be reduced. (See APPLYING FOR A CONTRACT ) There are three Coverage Options available: Option A at least equal to the Specified Amount. Option B at least equal to the Specified Amount plus Contract Value. Option C at least equal to the Specified Amount plus total Premiums paid, minus the amount of any partial surrenders. Option C is only available at issue. A Guaranteed Minimum Death Benefit Rider is also available on this Contract (if requested). This rider guarantees the payment of the Contract death benefit, regardless of the investment performance of the Subaccount. The cumulative Guaranteed Minimum Death Benefit Rider Premium requirement must be met in order for this guarantee to remain in effect. (See SUPPLEMENTAL AND/OR RIDER BENEFITS ) There is flexibility to change the Coverage Option and Specified Amount. However, Coverage Option C is only available at issue. (See CHANGES IN COVERAGE OPTION for rules and limits) Changing the Coverage Option or Specified Amount may have tax consequences. We deduct any Loan Balance from the amount payable. Cash Benefits Contract Loans. You may take loans for amounts up to the Cash Surrender Value less loan interest to the next Contract Anniversary. A 5% annual effective interest rate applies. Currently, a preferred loan is available in the 11 th Contract Year. Loans reduce the amount available for allocations and transfers. Loans may have tax consequences. (See TAX CONSIDERATIONS ) 1 Full Surrender. You may surrender your Contract at any time for its Cash Surrender Value. A surrender charge may apply. Surrendering the Contract may have tax consequences. (See TAX CONSIDERATIONS ) Partial Surrender. Partial surrenders generally are available provided you have enough remaining Cash Surrender Value. A partial surrender fee applies. Partial surrenders may have adverse tax consequences. (See TAX CONSIDERATIONS ) Transfers. You may transfer amounts among the Subaccounts and the Fixed Account, subject to certain restrictions. There is no limit on the number of transfers you can make between the Subaccounts or to the Fixed Account. The first six transfers during each Contract Year are free. After the first six transfers, we will assess a $25 Transfer Processing Fee. Unused free transfers do not carry over to the next Contract Year. We will deduct any Transfer Processing Fee from the remaining Contract Value. Tax Benefits. We intend for the Contract to satisfy the definition of life insurance under the Internal Revenue Code ( Code ). Therefore, the death benefit generally should be excludable from the gross income of its recipient, but may be subject to state and federal estate taxes. Similarly, you should not be deemed to be in constructive receipt of the Contract Value, and therefore should not be taxed on increases in the Contract Value, until you take out a loan or partial surrender or surrender the Contract. In addition, transfers of Contract Value among the Subaccounts and/or the Fixed Account are not taxable transactions. (See TAX CONSIDERATIONS, ) 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 ) During this free-look period, we will allocate Premiums to the Federated Government Money Fund II Subaccount for 30 days. (See PREMIUM ALLOCATIONS AND CREDITING ) For a limited time after requesting an increase in the Contract's amount of insurance coverage, you may cancel the increase and you may be entitled to a refund of certain charges. Guaranteed Payment Period and Guaranteed Monthly Premium. If the value is not enough to pay charges due, the Contract will terminate without value after a Grace Period. (See PREMIUMS TO PREVENT LAPSE ) However, we guarantee to keep the Contract in force during the first seven years of the Contract as long as you meet a Premium requirement. (See GUARANTEED PAYMENT PERIOD AND GUARANTEED MONTHLY PREMIUM ) Supplemental Benefits. The following supplemental and/or rider benefits are available and may be added to your Contract. We may deduct monthly charges for some of these benefits and/or riders from your Contract Value as part of the Monthly Deduction. Each is subject to its own requirements as to eligibility and possible additional cost, including processing fee. Guaranteed Minimum Death Benefit Rider. Lifetime Guaranteed Minimum Death Benefit. Disability Continuance of Insurance. Disability Premium Benefit Rider. Accidental Death Benefit. Option to Increase Specified Amount. Spouse's Term Insurance. Children's Term Insurance. Other Insured Term Insurance. Additional Life Insurance Rider. Monthly Benefit Rider. Acceleration of Death Proceeds/Enhanced Living Benefits Rider. Accelerated Death Benefit/Living Benefits Rider. Accelerated Death Benefit/Terminal Illness Rider. All of these riders may not be available in all states. Additional rules and limits apply to these supplemental and/or rider benefits. Please ask your registered representative for further information or contact the Home Office. Illustrations. We may prepare, for use in marketing and other materials, tables to illustrate hypothetically how certain values under a Contract change with investment performance over an extended period of time. Such tables illustrate how Contract Values, Cash Surrender Values and death benefits under a Contract covering an Insured of a given Age would vary over time if Planned Premiums were paid annually and the return on the assets in each of the Funds were an assumed uniform gross annual rate. 2 Actual returns will fluctuate over time and will be both positive and negative. The actual values under the Contract could be significantly different from those shown, even if actual returns averaged the rates used in the illustrations but fluctuated over and under those averages throughout the years shown. Depending on the timing and degree of fluctuation, the actual values could be substantially less than those shown, and may, under certain circumstances, result in the lapse of the Contract unless the Owner pays more than the stated Premium. Such illustrations show Contract Values based on both current charges and guaranteed charges. CONTRACT RISKS Investment Risk. If you invest your Contract Value in one or more Subaccounts, then you will be subject to the risk that investment performance will be unfavorable and that the Contract Value will decrease. In addition, we deduct Contract fees and charges from your Contract Value. There is no minimum guaranteed Contract Value. The Contract Value may decrease if the investment performance of the Subaccounts (to which Contract Value is allocated) is negative or is not sufficiently positive to cover the charges deducted under the Contract. During times of poor investment performance, these deductions will have an even greater impact on your Contract Value. You could lose everything you invest. If you allocate net Premiums to the Fixed Account, then we credit your Fixed Account Value with a declared rate of interest. You assume the risk that the rate may decrease, although it will never be lower than a guaranteed minimum annual effective rate of 3%. Risk of Lapse. If the Contract Value is not enough to pay the Monthly Deduction when due, the Contract will terminate without value after a Grace Period. The purpose of the Grace Period is to give you the chance to pay enough Premiums to keep your Contract in force. If your Contract does lapse you must pay the required amount before the end of the Grace Period. The Grace Period is 61 days and starts when we
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