Exhibit 13, Form 10-K
Kansas City Life
Insurance Company


                                               To Our Stockholders

Management  prepared the following  consolidated  financial  statements  and all
other  financial  information  included in this Annual Report and is responsible
for its integrity,  consistency and objectivity.  In preparing these statements,
management  necessarily  made  certain  estimates  and  judgments  and  selected
accounting   principles  in  conformity  with  generally   accepted   accounting
principles appropriate in the circumstances.

The Company maintains a system of internal accounting controls and procedures to
provide  reasonable  assurance,  at an  appropriate  cost,  that its  assets are
protected  and that its  financial  transactions  are  properly  authorized  and
recorded. Qualified personnel in the Company maintain and monitor these internal
controls on an ongoing basis.

The  Audit  Committee  of the Board of  Directors,  composed  solely of  outside
directors,  meets  annually  and, as required,  with the  independent  auditors,
management and the internal  auditors.  Each has free and separate access to the
committee.  The committee reviews audit procedures,  scope and findings, and the
adequacy of the Company's financial reporting.

The  independent  auditors,  Ernst & Young  LLP,  are  elected  by the  Board of
Directors to audit the financial statements and render an opinion thereon.




/s/ Richard L. Finn
    Richard L. Finn
Senior Vice President, Finance




MANAGEMENT'S  DISCUSSION  and  analysis of  financial  condition  and results of
operations

Operating Results

Operating  income per share  climbed  steadily  over the past three years,  from
$2.86 a share  in 1997 to  $3.32  in 1998 to  $3.51  in  1999.  However,  1997's
earnings  were below trend due to less  favorable  mortality  experience  at the
affiliates  and  adverse  claims  experience  in the home  health  care block of
business which was sold in 1998. Thus 1996's operating earnings of $3.26 a share
offers a more  comparable  base year. Net income per share varied over the three
year period as realized  investment gains fluctuated.  Net income per share rose
from $3.63 a share in 1997 to $3.92 in 1998 and then  declined to $3.66 in 1999.
Return on equity  averaged  9.05  percent  over the three years while the pretax
operating profit margin averaged 11.9 percent.

Kansas  City  Life's  performance  is best  analyzed  by  reviewing  each of the
Company's  operating  segments.  However,  corporate-wide  factors are discussed
first, namely, investments, operating expenses and income taxes.

Investment  earnings  increased 2 percent each of the past two years.  Over this
period the net return on the investment  portfolio  declined  slightly from 7.40
percent to 7.31 percent as yields lost through maturities,  repayments and sales
exceeded those acquired through new investments.  However, investment margins on
the interest sensitive products improved this year after narrowing significantly
in 1998. Rising interest rates in 1999 lowered the securities' market value thus
contributing to the  substantial  reduction in realized  investment  gains and a
significant  unrealized  loss  on  those  securities  valued  at  market  in the
financial  statements.  Investments,  on an amortized cost basis, grew 2 percent
each of the past two years.  This  year's net new  investments,  totaling  $63.7
million,  focused primarily on bonds. The new money available for investment was
provided  by  $69.5  million  of  borrowed  funds.  The  average  yield  on  new
investments  equaled  7.86  percent,  contrasted  with 7.53 percent the previous
year.  Approximately 90 percent of the securities  portfolio is investment grade
compared to 96 percent in 1997. The Company has assumed added risk as management
seeks to improve yields while being  adequately  compensated  for the additional
risk.  Securities  delinquencies and defaults  represent just 0.3 percent of the
securities  portfolio.  The mortgage  portfolio  consists of loans on commercial
properties,  largely  industrial  warehouses,  dispersed  throughout the nation,
except in the  Northeast.  A third of the  properties  are  situated on the West
Coast.  Currently  0.4  percent of the  mortgage  portfolio  is in  foreclosure,
slightly above the industry  average.  Restructured  mortgage loans comprise 0.5
percent of the mortgage portfolio.  Five properties acquired through foreclosure
were sold  during the year for a $1.1  million  gain,  net of tax.  The  Company
currently holds five such properties  valued at $4.7 million,  the lower of cost
or net realizable  value.  The estimated fair value of the real estate and joint
venture  investments  currently exceed their carrying value by over $40 million.
Also  refer to the  analysis  of market  and  interest  rate risk  later in this
discussion.

As chronicled in past reports, Kansas City Life improved efficiency considerably
over the past  several  years.  This trend  slowed  during  1999 as home  office
operating  expenses  rose  6  percent  in the  face  of  declining  consolidated
statutory  premiums,  sales  and  overall  insurance  revenues.   Expenses  rose
primarily for two reasons. First, added costs were incurred, such as consulting,
moving and dual processing,  in order to integrate Sunset Life's operations into
the home office.  Second,  considerable  lump sum pension payments were incurred
due to closing  Sunset's office and retirements in the home office.  Expenses in
the coming year will benefit fully from the $2.0 to $3.0 million  annual savings
generated by the Sunset integration  effort. The Company plans to open a Federal
savings  bank,  Generations  Bank,  in  mid-2000  in order to  expand  financial
services  available to its  policyholders  and sales agents.  Additionally,  new
technologies   will  be  developed  to  improve  the   management   of  customer
relationships and to facilitate cross-marketing of financial products. These new
endeavors are expected to enhance  future  revenue  growth.  Overall home office
expenses are anticipated to decline slightly in the coming year.

The effective  income tax rate was essentially  unchanged from 1997 to 1998. The
rate  rose  one  percentage  point  to 29.7  percent  in 1999  due to  declining
affordable  housing tax credits.  The Company has $37.1 million invested in real
estate joint ventures generating such credits, which provide much of Kansas City
Life's rate reduction from the 35.0 percent Federal income tax rate.

The  following  comments  address  the  financial  performance  of  each  of the
Company's  four  reportable  operating  segments:  the Parent  Company,  divided
between its individual and group insurance operations,  and each of its two life
insurance  affiliates.  Refer  also  to  the  Segment  Information  Note  to the
Consolidated Financial Statements.

Kansas City Life - Individual

The Company's  individual  business includes  variable,  interest  sensitive and
traditional  products  marketed through a general agency system.  Universal life
and annuity  products are offered in both the  variable  and interest  sensitive
lines.

The segment's sales, in terms of new annualized  premiums,  increased 44 percent
to a record  level in 1998 and then  declined  3 percent  in 1999.  Despite  the
decline,  this year's sales remain double those of three years ago. Sales in the
segment have been increasingly  dominated by variable products.  Variable sales,
both  universal  life and  annuity,  nearly  doubled in 1998 and rose 10 percent
further this year.  Variable products increased from 47 percent of segment sales
in 1997 to 70 percent in 1999,  and provided 41 percent of the  segment's  total
statutory premiums.  The variable line has generated $260 million in assets thus
far, an 82 percent  increase from a year ago.  Sales of  non-variable  products,
principally  universal life and flexible  annuities,  improved 3 percent in 1998
but declined 23 percent this year.

Total insurance  revenues,  including renewal receipts,  rose 24 percent in 1998
and 1  percent  in  1999.  However,  nearly  half of  1998's  growth  was due to
comparing  against a  partial  year's  revenues  for the  acquired  block in the
previous year. Life insurance in force increased 2 percent in 1998 and 4 percent
in 1999.  This segment  generated  three-fourths  of  consolidated  sales and 42
percent of consolidated insurance revenues this year.

Interest and mortality  margins  widened in the interest  sensitive and variable
blocks of business this year. This improvement offset  considerably more adverse
mortality and persistency in the block of life insurance acquired two years ago.
Benefits ratios in the  traditional  line  deteriorated  somewhat as well due to
less favorable mortality.  Earnings in 1998 were impacted by narrowed investment
margins in the interest sensitive lines. This was offset by favorable  mortality
experience  in the  acquired  block of  business  and in the  traditional  line.
Surrenders,  as a percent of cash values  available to be surrendered,  remained
largely constant over the three year period.  Total benefits,  including changes
in policy  reserves,  equaled 62 percent of  operating  revenues for each of the
three years.

Deferred  acquisition  cost  assumptions  were unlocked,  or changed,  this year
largely in recognition of improving  mortality in the interest  sensitive lines.
This reduced amortization $4.0 million, thus benefiting earnings.

Insurance  operating  expenses in the segment  declined 3 percent in 1998 before
rising 2 percent this year. Over the past two years  insurance  revenues rose 25
percent  while  insurance  operating  expenses  decreased 1 percent,  generating
improved efficiencies.

Reflecting the factors above,  operating earnings rose 13 percent and 10 percent
in 1998 and 1999, respectively. Kansas City Life's individual business generated
nearly three-quarters of consolidated operating income this year.

Kansas City Life - Group

Kansas  City  Life  offers  group  life,  disability  and  dental  coverage  and
administrative  services only (ASO).  New annualized group premiums and ASO fees
declined 10 percent in 1998 but rose 1 percent in 1999.  This year's  growth was
restrained  by the  discontinuation  of the stop loss line as  discussed  below.
Total  group  insurance  revenues,  including  renewal  premiums  and ASO  fees,
declined 2 percent in 1998 but rose 1 percent in 1999.  Dental premiums  account
for 59 percent of group revenues while group life provides 16 percent, stop loss
10 percent and ASO 8 percent. Group provided one-fifth of consolidated insurance
revenues.

Claims ratios,  after  remaining  unchanged in 1998,  improved  slightly in 1999
primarily  due to the dental line.  While the overall group claims ratio remains
historically  high,  two steps were taken  this year to  improve  future  profit
performance.  First, all existing  long-term  disability  business was reinsured
late in the year.  Kansas City Life will  continue to offer these  products with
the business 80 percent reinsured and claims processed by the reinsurer. Second,
also late in the year, the stop loss line was  discontinued.  Where possible the
business  will be  placed  with a new  insurer  over  the  course  of 2000  with
placement  fees  accruing to Kansas City Life.  The  discontinuation  negatively
impacted group sales, so a more  representative  view of group sales progress in
1999 should exclude stop loss. On this basis, group sales rose 12 percent. While
exiting  the stop loss  market will  benefit  earnings,  group sales and revenue
comparisons next year will be difficult since the line represented 12 percent of
1999 group sales and 10 percent of its insurance revenues.

Group  operating  expenses  increased 11 percent and 3 percent in 1998 and 1999,
respectively. The increase in 1998 largely reflected added ASO processing costs.

Profit margins expanded slightly this year after deteriorating in 1998. Although
the bottom line improved  during 1999,  group continued to generate an operating
loss. However, actions taken this year are expected to benefit future earnings.
<TABLE>
<CAPTION>


                                              SELECTED FINANCIAL DATA
                                        (Thousands, except per share data)

                                       1999             1998              1997             1996              1995
<S>                                 <C>               <C>               <C>              <C>               <C>
Revenues:
  Insurance                         $   255 595          259 559           244 695          219 593           205 458

  Investment income, net                202 003          197 302           193 064          186 601           187 981
  Other                                  13 956           14 671             9 998            9 768             8 882
    Operating revenues              $   471 554          471 532           447 757          415 962           402 321
  Realized investment gains               2 860           11 426            14 505            3 013             4 950
                                    $   474 414          482 958           462 262          418 975           407 271

Operating income                    $    43 186           41 085            35 433           40 357            38 521
Realized investment gains, net            1 859            7 427             9 428            1 958             3 217
  Net income                        $    45 045           48 512            44 861           42 315            41 738
Per common share:
  Operating income                  $      3.51             3.32              2.86             3.26              3.12
  Realized investment gains, net            .15              .60               .77              .16               .26

    Net income                      $      3.66             3.92              3.63             3.42              3.38

  Cash dividends                    $      .960             .900              .880             .840              .815
  Stockholders' equity:
    As reported                     $     40.86            46.58             42.84            37.40             37.00
    Excluding unrealized
      gains and losses                    45.28            42.42             39.90            37.16             34.59

Assets                              $ 3 621 284        3 577 414         3 439 452        2 954 710         2 903 768
Net return on invested assets              7.31%            7.20              7.40             7.68              8.03
Life insurance in force             $26 747 316       26 641 664        26 595 709       22 148 738        21 023 702


The above is not covered by the report of independent auditors.

Per common share earnings information represents both basic and diluted earnings
per common share.

Per share data has been adjusted for a two-for-one stock split in June 1999.
</TABLE>


Sunset Life

Sunset Life is primarily a marketer of interest sensitive  products,  consisting
of universal  life and  flexible  annuities,  to  individuals  through  personal
producing  general  agents.  Sunset's  sales  climbed  31 percent in 1998 due to
strong flexible  annuity sales.  However,  this year's sales fell by half as the
marketing effort was disrupted by the integration  project and the transition to
a new senior marketing officer. Sales are anticipated to improve in 2000 without
these  disruptions.  As would be  expected  with the  decline  in  sales,  total
insurance  revenues declined 7 percent this year after rising 2 percent in 1998.
The segment provided one-tenth of consolidated insurance revenues.

Benefits as a percentage  of operating  revenues  improved  from 49.1 percent in
1997 to 48.2 percent last year.  However,  the ratio  deteriorated  this year to
50.1  percent  due  to  less  favorable  mortality  experience.  Universal  life
surrenders  remained  constant over the three years as a percent of  accumulated
values available to be surrendered. Flexible annuity withdrawals, on this basis,
improved from 16.6 percent of accumulated  values last year to 13.7 percent this
year.

As mentioned previously,  Sunset's operations were successfully  integrated into
Kansas City Life's home  office this year and the  targeted  expense  reductions
were achieved.  However,  the requisite  duplication of staff in Kansas City and
Olympia for a few months,  moving  costs,  training and added  consulting  costs
associated with the integration  effort caused Sunset's  expenses to rise during
the first nine months of the year.  Operating  expenses  rose 10 percent for the
year, but fell 4 percent in the fourth quarter after the integration was largely
complete.  Sunset's  2000  earnings  will  benefit  from a full  year's  expense
reduction  from the  integration  effort.  Additionally,  Sunset's  home  office
building in Olympia was sold for a $1.3 million pretax profit.

Thus decreased  operating  revenues and narrowed  profit margins caused Sunset's
operating  income to decline 10 percent this year.  The opposite  results caused
last year's operating income to rise 8 percent.  It is anticipated that improved
sales and revenues in 2000,  combined with a full year of expense savings,  will
increase the segment's  profitability.  As it was, Sunset provided 19 percent of
consolidated operating income.

Old American

Old  American  offers  whole life final  expense  coverage in the senior  market
through a general agency sales force.  Integral to its marketing  approach,  the
Company  seeks to generate  reasonably  priced,  productive  sales leads for its
agents.  Sales,  in terms of annualized  premiums,  declined 23 percent in 1998.
More rigorous  underwriting  procedures  initiated  last year dampened sales but
should  improve  earnings as an ever greater  portion of the  insurance in force
benefits from these improved underwriting procedures.  Sales were little changed
this year. In order to rejuvenate its marketing  results,  the Company strove to
enhance its lead generation  capability,  lower its cost per lead and expand the
sales force. The segment's insurance revenues declined 5 percent this year and 2
percent  last  year.  Old  American  accounts  for  one-fourth  of  consolidated
insurance revenues.

Operating  expenses  declined  in 1998 but  rose 7  percent  in  1999.  However,
operating  expenses remain below expense goals  established when the Company was
purchased. Old American's administrative systems are fully integrated with those
of Kansas City Life and Sunset Life in order to maximize economies of scale. The
Companies also share staff functions in order to spread overhead over as large a
book of business as possible.

Old American's  operating earnings improved 75 percent last year since the prior
year's results were depressed by adverse claims experience,  particularly in the
home  health care block  which was sold  during  1998.  As a result of the sale,
improved  earnings  in the  accident  and health line in 1999 caused a 4 percent
increase in Old American's operating earnings.  The segment generated one-eighth
of this year's consolidated operating income.

Market and Interest Rate Risk Analysis

The  Kansas  City  Life  Corporate  Group  holds  a  diversified   portfolio  of
investments  which  includes  cash,  bonds,  preferred  stocks,  mortgage-backed
securities,  commercial  mortgages and real estate. Each of these investments is
subject, in varying degree, to market risks which can affect its ability to earn
a competitive  return,  which, in turn,  affects its fair value. The majority of
these assets are debt instruments and are considered  fixed income  investments.
Thus the primary market risk affecting the Company is interest rate risk.

Generally the coupon or dividend income represents the greatest portion of fixed
income instruments' overall total return. When interest rates fall, as they have
for  most of the  past  decade,  the  coupon  and  dividend  streams  of  older,
higher-paying   investments   become   relatively   more  valuable  than  newer,
lower-yielding opportunities.  Thus the market value of the older, higher-paying
investments increases.  The opposite effect occurs when interest rates rise. The
market value of such investments varies inversely to market interest rates.

As interest rates fell in 1998, the Kansas City Life's investments  increased in
value,  and the  securities'  market  value  exceeded  their book value by $91.7
million.  In 1999 the  Federal  Reserve  Open  Market  Committee  began  raising
interest  rates to reduce the risks of  increasing  inflation,  thus pushing all
interest  rates  higher and  reducing  the value of bonds.  At year end the book
value of our securities  exceeded market value by $86.7 million, a reversal from
the previous year end.

Due to the complex nature of interest rate movements and their uneven effects on
the value of fixed income investments,  the Company uses sophisticated  computer
programs to help predict  changes in the value of the  portfolio.  Assuming that
changes  occur  equally over the entire term  structure  of interest  rates (the
"yield  curve"),  it is estimated that a one percent (or 100 basis point) change
in rates would  translate to a $97.0  million  ($70.2  million - 1998) change in
market value for the $2.3 billion  securities  portfolio.  Most financial market
professionals  quantify this relationship with the term duration, a mathematical
measurement  of the  sensitivity  of  investment  cash flow to small  changes in
market rates. Additionally,  the larger potential gain compared to the potential
loss indicates the portfolio has positive convexity, a term which applies to the
skew in the securities' value changes.

Market changes rarely follow a linear pattern in one direction for any length of
time.  Within any diversified  portfolio,  an investor will likely find embedded
options,  puts and calls,  that change the  structure  of the cash flow  stream.
Mortgage-backed  securities are particularly sensitive to interest rate changes.
As long-term  interest  rates fall,  homeowners  become more likely to refinance
their  mortgages  or move up to a  larger  home,  causing  a  prepayment  of the
outstanding  mortgage  principal  which must then be reinvested at a lower rate.
Should  interest  rates rise  suddenly,  prepayments  expected by investors  may
cease,  extending the maturity of a mortgage pool by many years. This represents
a further interest rate risk to investors.

Kansas City Life currently owns $66 million of foreign bonds, all denominated in
dollars,  and  consequently is not exposed to any direct foreign  currency risk.
The Company has an indirect  exposure to exchange markets to the extent that the
issuers of these securities can obtain dollars to fully fund their  obligations.
The  Company  has no material  foreign  exposure in its  mortgage or real estate
holdings.

Kansas City Life manages its  investments  under the  constraints  imposed by an
Asset/Liability   Management   (ALM)   program.   The   firm's   obligation   to
policyholders,  mainly  represented by the anticipated cash flows paid out under
insurance and annuity  contracts,  dictates the nature and  construction  of the
portfolio.  The ALM program  attempts to balance  the  investment  opportunities
available  in the market  place with future cash  obligations  while  optimizing
policyholder returns.

As interest rates rise,  policyholders  become more likely to surrender policies
or to  borrow  against  the  cash  value  in  order  to meet  cash  needs  in an
inflationary  environment or to invest in higher  yielding  opportunities.  This
disintermediation may force liquidation of parts of the portfolio at a time when
the market value of the fixed income investments is falling. Due to the strength
of the  Company's  cash flow,  it can adapt to small sudden  changes in interest
rates and large  changes  over longer  periods of time.  Extreme  sudden  market
volatility,  however,  poses the greatest risk to the Company.  Kansas City Life
quantifies  and  mitigates  this risk under ALM.  The Company  also  maintains a
number of credit lines with the capacity to borrow funds for added liquidity.

The Company may hedge this risk with the purchase or sale of certain  derivative
contracts,  mainly  in the  form of caps,  floors,  swaps  or  swaptions.  These
contracts  work mainly as volatility  insurance,  to provide value in periods of
extreme  interest rate  movement.  Thus their value is largely a function of the
likelihood  of a rapid,  dramatic  market  change.  Kansas  City  Life  conducts
numerous  probability-based  computer  simulations  to test  the  effect  on our
profitability  of these market shifts,  and to determine the value of derivative
hedging.  To date,  the  Company  has not used  derivatives  due to a number  of
factors  including  pricing,  liquidity,  and the  net  value  to the  Company's
business position.  As a policy, the Company will never engage in the trading of
such instruments for speculative  purposes,  and will only enter into derivative
markets to hedge a  specific,  identifiable  risk for a specific  period of time
under specific conditions.

                                                EXPECTED CASH FLOWS


                                                         There-  Total      Fair
                            2000  2001  2002  2003  2004  after Principal  Value
                                                 (dollars in millions)
Corporate bonds currently
       callable             $15     38    49    40    12     79     233      230
  Average interest rate    9.38% 10.69 12.16 11.11 10.67   9.14    10.46
Mortgage backed securities
       and CMO's              -      -     1     2     1    328     332      324
  Average interest rate       -%     -  7.03  7.11  7.29   6.99     7.00
All other securities         78     75    84   198   102  1 113   1 650    1 645
  Average interest rate    8.66%  9.37  7.49  7.52  8.03   8.08     8.06

Total                       $93    113   134   240   115  1 520   2 215    2 199


 . The table shows expected  cashflows from principal  repayments of bonds in the
form of maturities, calls, sinking funds and prepayments

Changes in Reporting Regulations

Financial  Accounting Standard No. 133,  "Accounting for Derivative  Instruments
and for Hedging Activities," provides  comprehensive,  consistent standards for
the  recognition  and  measurement  of derivative  and hedging  activities.  The
standard is effective  January 1, 2001, and is being evaluated for its effect on
Kansas  City Life and to ensure its  implementation  in a timely  manner.  It is
currently  anticipated that the guideline will not have a significant  impact on
the Company's reported results.

The  National  Association  of  Insurance  Commissioners  (NAIC)  has  issued  a
comprehensive  new  guide  to  statutory  accounting  principles  for  the  life
insurance  industry  which will be  effective  January 1,  2001.  These  revised
guidelines  have generally been referred to as  "codification."  Each state must
ratify these guidelines.  Missouri, the Company's state of domicile, has not yet
adopted codification,  but it is anticipated that it will. While such guidelines
do not  impact  stockholder  reporting,  which is based  on  generally  accepted
accounting  principles  (GAAP),  they govern accounting  practice and procedures
required  for  reporting  to  state   regulators.   Assuming   Missouri   adopts
codification, Kansas City Life will implement the guidelines as required and, it
is believed, with little impact to statutory surplus.

Y2K Postmortem

Kansas City Life's Y2K efforts  were  successful  and it is  estimated  that the
incremental cost of the Company's compliance effort was $1.0 million. While this
effort obviously was necessary to allow Kansas City Life to continue to function
effectively  in 2000 and beyond,  it also  benefited  the  Company by  upgrading
systems  and  better   standardizing   administrative   systems  throughout  the
organization.

Liquidity and Capital Resources

Life insurers  function as  generators  of  investment  capital for our economy.
Given this role,  liquidity is generally of little concern,  as was the case the
past three years. The Company generated,  on average,  $36.8 million annually in
funds from operations,  net of receipts and withdrawals of contract deposits. In
1999  this  source  of funds  equaled  $29.6  million.  Redemptions,  sales  and
maturities of investments  averaged  $751.4 million each year.  Kansas City Life
invested  an  average  of  $855.2  million  a year in the  form  of  securities,
commercial mortgages and real estate ventures.

The above  information  excludes  proceeds  from  variable  products  which were
invested in various  mutual funds  assigned to separate  accounts and segregated
from the general investments. Such funds totaled $260 million this year end.

The Company borrowed $69.5 million during 1999 to support investment strategies.
No borrowing was required for operating needs.  Forward  investment  commitments
are  minor.  Cash flow  testing  and  matching  of assets  and  liabilities  are
performed  regularly  to ensure  future  cash flows meet the level and timing of
future cash obligations.

Kansas City Life's  statutory  equity  exceeds the minimum  capital deemed to be
required  to  support  its book of  business,  as  determined  by the risk based
capital calculations and guidelines established by the NAIC.

Book value per share,  excluding unrealized gains and losses,  equaled $45.28 at
this year end and  averaged 7 percent  annual  growth over the three  years.  In
January 2000, the Board of Directors  raised the dividend to an indicated annual
rate of $1.00 a share,  a $.04 a share  increase.  The Board also  extended  the
stock  repurchase  program through 2000. An additional one million shares may be
purchased, which would represent 8 percent of the shares outstanding. Under this
program in 1999 the Company purchased 260,500 of its shares for $10.2 million.


                                           CONSOLIDATED INCOME STATEMENT
                                           (Thousands, except per share data)

                                            1999         1998        1997
REVENUES
Insurance revenues:
  Premiums:
    Life insurance                         $104 086     108 510     106 051
    Accident and health                      42 636      42 441      44 931
  Contract charges                          108 873     108 608      93 713
Investment revenues:
  Investment income, net                    202 003     197 302     193 064
  Realized investment gains, net              2 860      11 426      14 505
Other                                        13 956      14 671       9 998
     TOTAL REVENUES                         474 414     482 958     462 262


BENEFITS AND EXPENSES
Policy benefits:
  Death benefits                            110 672     107 355     100 037
  Surrenders of life insurance               14 592      19 368      14 999
  Other benefits                             70 702      72 190      71 338
  Increase in benefit and contract reserves  85 206      84 427      86 804
Amortization of deferred acquisition costs   31 261      36 201      35 712
Insurance operating expenses                 97 918      95 468      90 749

         TOTAL BENEFITS AND EXPENSES        410 351     415 009     399 639


Income before Federal income taxes           64 063      67 949      62 623

Federal income taxes:
  Current                                    21 172      20 471      15 073
  Deferred                                   (2 154)     (1 034)      2 689

                                             19 018      19 437      17 762


NET INCOME                                 $ 45 045      48 512      44 861


Basic and diluted earnings per share          $3.66        3.92        3.63

See accompanying Notes to Consolidated Financial Statements.



                                            CONSOLIDATED BALANCE SHEET


                                                          1999            1998
ASSETS
Investments:
 Fixed maturities:
  Available for sale, at fair value (amortized
    cost $2,079,458,000; $2,012,975,000 - 1998)        $1 999 215    2 094 362
  Held to maturity, at amortized cost
  (fair value $107,570,000; $123,515,000 - 1998)          107 606      115 504
     Equity securities available for sale, at fair value
     (cost $122,371,000; $98,509,000 - 1998)              115 968      100 749
  Mortgage loans on real estate, net                      340 704      315 705
  Real estate, net                                         42 011       43 840
  Real estate joint ventures                               37 336       39 388
  Policy loans                                            118 521      122 860
  Short-term                                               19 380       59 160
      TOTAL INVESTMENTS                                 2 780 741    2 891 568
Cash                                                       22 355       16 763
Accrued investment income                                  43 907       42 515
Receivables, net                                           15 823       12 997
Property and equipment, net                                22 010       22 436
Deferred acquisition costs                                236 370      218 957
Value of purchased insurance in force                      95 636      104 331
Reinsurance assets                                        123 724      117 772
Deferred income tax asset                                  14 716            -
Other                                                       6 103        7 067
Separate account assets                                   259 899      143 008
                                                       $3 621 284    3 577 414

 LIABILITIES AND STOCKHOLDERS' EQUITY
Future policy benefits:
  Life insurance                                        $ 782 341      774 701
  Accident and health                                      47 215       47 641
Accumulated contract values                             1 688 706    1 731 262
Policy and contract claims                                 34 721       34 347
Other policyholders' funds:
  Dividend and coupon accumulations                        61 740       62 726
  Other                                                    90 885       75 033
Notes payable                                              69 500            -
Income taxes:
  Current                                                   7 870        4 582
  Deferred                                                      -       43 739
Other                                                      84 602       82 442
Separate account liabilities                              259 899      143 008
     TOTAL LIABILITIES                                  3 127 479    2 999 481
Stockholders' equity:
  Common stock, par value $1.25 per share
    Authorized 36,000,000 shares,
        issued 18,496,680 shares                           23 121       23 121
  Paid in capital                                          18 498       17 633
  Retained earnings                                       614 278      581 074
  Accumulated other comprehensive income (loss)           (59 095)      45 466
  Less treasury stock, at cost
     (6,411,738 shares; 6,087,894 shares - 1998)         (102 997)     (89 361)
    TOTAL STOCKHOLDERS  EQUITY                            493 805      577 933
                                                       $3 621 284    3 577 414


See accompanying Notes to Consolidated Financial Statements.



CONSOLIDATED STATEMENT OF STOCKHOLDERS'EQUITY


                                                    1999       1998       1997


COMMON STOCK, beginning and end of year            $ 23 121    23 121    23 121

PAID IN CAPITAL:
  Beginning of year                                  17 633    16 256    14 761
  Excess of proceeds over cost of treasury stock sold   865     1 377     1 495

  End of year                                        18 498    17 633    16 256

RETAINED EARNINGS:
  Beginning of year                                 581 074   543 715   509 748
  Net income                                         45 045    48 512    44 861
  Other comprehensive income:
    Unrealized gains (losses) on securities        (104 921)   15 094    33 485
    Decrease (increase) in unfunded pension liability   360    (6 076)        -
  Comprehensive income (loss)                       (59 516)   57 530    78 346
  Transfer other comprehensive (income) loss to
    accumulated other comprehensive income          104 561    (9 018)  (33 485)
  Stockholder dividends of $.96 per share
     ($.90 - 1998 and $.88 - 1997)                  (11 841)  (11 153)  (10 894)

  End of year                                       614 278   581 074   543 715


ACCUMULATED OTHER COMPREHENSIVE INCOME:
  Beginning of year                                  45 466    36 448     2 963
  Other comprehensive income (loss)                (104 561)    9 018    33 485
  End of year                                       (59 095)   45 466    36 448


TREASURY STOCK, at cost:
  Beginning of year                                 (89 361)  (88 946)  (87 729)
  Cost of 349,087 shares acquired (24,640
    shares - 1998 and 40,180 shares - 1997)         (14 094)   (1 063)   (1 440)
  Cost of 32,243 shares sold (47,296
    shares - 1998 and 47,372 shares - 1997)             458       648       223

  End of year                                      (102 997)  (89 361)  (88 946)

     TOTAL STOCKHOLDERS' EQUITY                    $493 805   577 933   530 594


See accompanying Notes to Consolidated Financial Statements.


          CONSOLIDATED STATEMENT OF CASH FLOWS


                                                     1999       1998       1997

OPERATING ACTIVITIES
Net income                                       $  45 045    48 512     44 861
Adjustments to reconcile net income to
  net cash from operating activities:
    Amortization of investment premium
      (discount), net                                2 061     2 398    (1 290)
    Depreciation                                     5 265     5 153      5 379
    Policy acquisition costs capitalized           (39 553)  (46 011)   (42 170)
    Amortization of deferred acquisition costs      31 261    36 201     35 712
    Realized investment gains                       (2 860)  (11 426)   (14 505)
    Changes in assets and liabilities:
     Future policy benefits                         12 375    25 855     16 227
     Accumulated contract values                   (10 182)  (12 264)    (9 933)
     Other policy liabilities                       14 867     6 842      7 137
     Income taxes payable and deferred             (14 748)  (11 399)     4 768
    Other, net                                      18 449      (718)    (3 685)

    NET CASH PROVIDED                               61 980    43 143     42 501

INVESTING ACTIVITIES
Purchases of investments:
  Fixed maturities available for sale             (654 943)  (644 087) (855 980)
  Fixed maturities held to maturity                 (3 354)         -         -
  Equity securities available for sale             (43 130)   (28 047)  (69 434)
Sales of fixed maturities available for sale       406 785    372 930   503 351
Maturities and principal paydowns
  of security investments:
    Fixed maturities available for sale            173 990    216 247   163 867
    Fixed maturities held to maturity               10 913     30 453   106 188
    Equity securities available for sale            22 644     28 043    31 473
Purchases of other investments                     (36 300)   (78 298) (152 045)
Sales, maturities and principal
  paydowns of other investments                     59 655     60 500    67 295
Acquisitions and dispositions of insurance
  blocks - net cash received (paid)                 (5 162)   (13 250)  213 092

    NET CASH PROVIDED (USED)                       (68 902)   (55 509)    7 807

FINANCING ACTIVITIES
Proceeds from borrowings                            95 850      1 100   245 050
Repayment of borrowings                            (26 350)    (1 100) (245 050)
Policyowner contract deposits                      148 993    175 421   169 699
Withdrawals of policyowner contract deposits      (181 367)  (187 028) (163 041)
Cash dividends to stockholders                     (11 841)   (11 153)  (10 894)
Disposition (acquisition) of treasury stock, net   (12 771)       962       278

    NET CASH PROVIDED (USED)                        12 514    (21 798)   (3 958)

Increase (decrease) in cash                          5 592    (34 164)   46 350
Cash at beginning of year                           16 763     50 927     4 577

    CASH AT END OF YEAR                         $   22 355     16 763    50 927


See accompanying Notes to Consolidated Financial Statements.


NOTES TO  CONSOLIDATED  FINANCIAL  STATEMENTS

(Amounts in tables are generally stated in thousands, except per share data)

SIGNIFICANT ACCOUNTING POLICIES

Organization

Kansas City Life Insurance  Company is a Missouri  domicled stock life insurance
company which, with its affiliates, is licensed to sell insurance products in 49
states and the District of Columbia.  The Company offers a diversified portfolio
of individual insurance, annuity and group products distributed through numerous
general  agencies.  In recent years, the Company's new business  activities have
been concentrated in interest sensitive and variable products.

Basis of Presentation

The  accompanying  consolidated  financial  statements have been prepared on the
basis of accounting  principles  generally  accepted in the United States (GAAP)
and  include  the  accounts  of  Kansas  City  Life  Insurance  Company  and its
subsidiaries, principally Sunset Life Insurance Company of America (Sunset Life)
and Old American  Insurance  Company (Old  American).  Significant  intercompany
transactions  have been eliminated in consolidation.  Certain  reclassifications
have  been  made to prior  year  results  to  conform  with the  current  year's
presentation. GAAP requires management to make certain estimates and assumptions
which affect  amounts  reported in the  financial  statements  and  accompanying
notes. Actual results could differ from these estimates.

Recognition of Revenues

Traditional  life insurance  products  include whole life  insurance,  term life
insurance and certain  annuities.  Premiums for these products are recognized as
revenues  when due.  Accident and health  insurance  premiums are  recognized as
revenues  over the  terms  of the  policies.  Revenues  for  universal  life and
flexible  annuity products are amounts assessed against contract values for cost
of insurance,  policy administration and surrenders,  as well as amortization of
deferred front-end contract charges.

Future Policy Benefits

For traditional  life insurance  products,  reserves have been computed by a net
level premium  method based upon  estimates at the time of issue for  investment
yields,  mortality and  withdrawals.  These  estimates  include  provisions  for
experience less favorable than actually  expected.  Investment yield assumptions
for new issues are graded  down and range from 7.00 to 5.00  percent.  Mortality
assumptions  are based on standard  mortality  tables.  The  1965-70  Select and
Ultimate Basic Table is used for business issued since 1977.

Reserves  and claim  liabilities  for  accident  and  health  insurance  include
estimated  unpaid claims and claims  incurred but not reported.  For traditional
life and  accident  and health  insurance,  benefits  and claims are  charged to
expense in the period incurred.

Liabilities  for  universal  life  and  flexible  annuity   products   represent
accumulated contract values,  without reduction for potential surrender charges,
and deferred front-end contract charges which are amortized over the term of the
policies.  Benefits and claims are charged to expense in the period incurred net
of related accumulated contract values.  Interest on accumulated contract values
is credited to contracts as earned. Crediting rates for universal life insurance
and flexible  annuity  products  ranged from 3.85 percent to 6.50 percent  (3.85
percent to 7.25  percent  during 1998 and 4.75  percent to 6.50  percent  during
1997).

Withdrawal assumptions for all products are based on corporate experience.

Policy  Acquisition  Costs

The costs of acquiring new business,  principally  commissions,  certain  policy
issue and  underwriting  expenses  and certain  variable  agency  expenses,  are
deferred.  For  traditional  life  products,   deferred  acquisition  costs  are
amortized in proportion to premium  revenues over the  premium-paying  period of
related  policies,  using  assumptions  consistent  with those used in computing
benefit reserves. Acquisition costs for interest sensitive and variable products
are  amortized  over a period not  exceeding 30 years in proportion to estimated
gross profits arising from interest spreads and charges for mortality,  expenses
and surrenders  that are expected to be realized over the term of the contracts.
The amortization is adjusted retrospectively when estimates of current or future
gross profits to be realized from a block of business are revised.

Value of Purchased  Insurance in Force

The value of purchased insurance in force arising from the acquisition of a life
insurance  subsidiary and, in 1997, the acquisition of a block of life insurance
business,  is being amortized in proportion to projected future premium revenues
or gross profits. Such amortization is included in insurance operating expenses.
If these projections should change, the amortization is adjusted  prospectively.
This  asset was  increased  $76,533,000  in 1997 for the  acquisition  of a life
insurance  block of business and $9,313,000  ($9,609,000 - 1998 and $8,856,000 -
1997) for accrual of interest and reduced  $18,008,000  ($17,194,000  - 1998 and
$14,962,000 - 1997) for  amortization.  The increase for accrual of interest for
the life insurance  subsidiary was calculated using a 13.0 percent interest rate
for the life block and a 7.0 percent rate for the accident and health block and,
on the acquired  block,  a 7.0 percent  interest  rate on the  traditional  life
portion  and a 5.4  percent  rate  on  the  interest  sensitive  portion.  Total
accumulated   accrual  of  interest  and  amortization   equal  $54,419,000  and
$81,615,000,  respectively.  Based upon current conditions and assumptions as to
future events, the Company expects that the amortization will be between 6 and 8
percent of the asset's current carrying amount in each of the next five years.

Separate Accounts

These  accounts  arise from the sale of  variable  life  insurance  and  annuity
products.  Their assets are legally segregated and are not subject to the claims
which may  arise  from any other  business  of the  Company.  These  assets  are
reported at fair value since the underlying  investment risks are assumed by the
policyholders.  Therefore the related  liabilities are recorded at amounts equal
to the  underlying  assets.  Investment  income and gains or losses arising from
separate accounts accrue directly to the policyholders and are,  therefore,  not
included  in  investment  earnings  in  the  accompanying   consolidated  income
statement. Revenues to the Company from separate accounts consist principally of
contract  maintenance  charges,  administrative  fees  and  mortality  and  risk
charges.

Participating  Policies

Participating  business at year end  approximates 12 percent of the consolidated
life  insurance  in force.  The  amount of  dividends  to be paid is  determined
annually by the Board of Directors. Provision has been made in the liability for
future policy benefits to allocate amounts to participating policyholders on the
basis of dividend  scales  contemplated  at the time the  policies  were issued.
Additional provisions have been made for policyholder dividends in excess of the
original scale which have been declared by the Board of Directors.

Investments

Securities  held to  maturity  and  short-term  investments  are  stated at cost
adjusted  for  amortization  of  premium  and  accrual of  discount.  Securities
available  for sale are  stated at fair  value.  Unrealized  gains and losses on
securities  available for sale are reduced by deferred  income taxes and related
adjustments in deferred acquisition costs, and are included in accumulated other
comprehensive income.

Mortgage  loans are stated at cost  adjusted  for  amortization  of premium  and
accrual of discount  less an allowance  for  possible  losses.  Foreclosed  real
estate  is  stated  at fair  value  at the  date of  foreclosure  (cost)  or net
realizable value,  whichever is lower. Other real estate investments are carried
at depreciated  cost. Real estate joint ventures are valued at cost adjusted for
the Company's equity in earnings since acquisition.  Policy loans are carried at
cost  less  payments  received.  Realized  gains  and  losses  on  disposals  of
investments,  determined by the specific  identification method, are included in
investment revenues.

Federal Income Taxes

Income taxes have been provided using the liability  method.  Under that method,
deferred tax assets and  liabilities  are  determined  based on the  differences
between their financial reporting and their tax bases and are measured using the
enacted tax rates.

Income Per Share

Due to the Company's capital  structure and lack of other  potentially  dilutive
securities, there is no difference between basic and diluted earnings per common
share for any of the years or periods  reported.  The weighted average number of
shares  outstanding  during the year was 12,316,220 shares  (12,394,104 shares -
1998 and 12,381,586 shares - 1997).

Statutory Information and
    Stockholder Dividends Restriction

The Company's earnings, unassigned surplus (retained earnings) and stockholders'
equity, on the statutory basis used to report to regulatory authorities, follow.

                                          1999      1998        1997
Net gain (loss) from operations
    for the year                       $ 41 902    35 185     (21 214)
Net income (loss) for the year           42 012    36 152     (18 681)
Unassigned surplus
    at December 31                      281 254   257 853     246 717
Stockholders' equity
    at December 31                      219 875   209 246     197 147

The  statutory  loss reported in 1997 arose from the  acquisition  of a block of
business  as  discussed  in a  following  Note.  In  accordance  with  statutory
accounting  guidelines for coinsurance  transactions,  the  acquisition  reduced
statutory  earnings and  stockholders'  equity at the date of acquisition  $51.4
million, the purchase price paid less related tax benefits.

Stockholder dividends may not exceed statutory unassigned surplus. Additionally,
under  Missouri  law, the Company  must have the prior  approval of the Missouri
Director  of  Insurance  in order to pay a  dividend  exceeding  the  greater of
statutory  net gain from  operations  for the  preceding  year or 10  percent of
statutory  stockholders'  equity at the end of the preceding  year.  The maximum
payable in 2000 without prior approval is $41,902,000.

The  Company   believes  these   statutory   limitations   impose  no  practical
restrictions on its dividend payment plans.

The  Company  is  required  to  deposit a defined  amount of assets  with  state
regulatory  authorities.   Such  assets  had  an  aggregate  carrying  value  of
$21,000,000 ($18,000,000 - 1998 and $36,000,000 - 1997).

Comprehensive Income

Comprehensive  income is comprised of net income and other comprehensive  income
which includes  unrealized gains or losses on securities  available for sale and
unfunded pension liabilities as shown below.

                                    Unrealized        Unfunded
                                    Gain (Loss)        Pension
                                  on Securities       Liability         Total

1999:
Unrealized holding losses
  arising during the year          $(172 801)                         (172 801)
Less:  Realized losses included
            in net income             (2 527)                           (2 527)
Net unrealized losses               (170 274)                         (170 274)
Decrease in unfunded
  pension liability                        -             554               554
Effect on deferred
  acquisition costs                    8 858                             8 858
Deferred income taxes                 56 495            (194)           56 301
Other comprehensive income         $(104 921)            360          (104 561)

1998:
Unrealized holding gains
  arising during the year            $33 261                            33 261
Less:  Realized gains included
            in net income              9 360                             9 360
Net unrealized gains                  23 901                            23 901
Increase in unfunded
  pension liability                        -          (9 348)           (9 348)
Effect on deferred
  acquisition costs                     (680)                             (680)
Deferred income taxes                 (8 127)          3 272            (4 855)
Other comprehensive income           $15 094          (6 076)            9 018

1997:
Unrealized holding gains
  arising during the year            $63 486                            63 486
Less:  Realized gains included
            in net income              8 318                             8 318
Net unrealized gains                  55 168                            55 168
Effect on deferred
  acquisition costs                   (3 652)                           (3 652)
Deferred income taxes                (18 031)                          (18 031)
Other comprehensive income           $33 485                            33 485


The  accumulated  balances  related  to  each  component  of  accumulated  other
comprehensive income follow.

                                                      Change in
                                        Unrealized     Unfunded
                                        Gain (Loss)    Pension
                                      on Securities   Liability      Total

End of 1997                             $  36 448            -       36 448
Other comprehensive income
  (loss) for 1998                          15 094       (6 076)       9 018
End of 1998                                51 542       (6 076)      45 466
Other comprehensive income
  (loss) for 1999                       (104 921)          360     (104 561)
End of 1999                            $ (53 379)       (5 716)     (59 095)



REINSURANCE

                                  1999      1998      1997

Life insurance in force (in millions):
    Direct                     $ 23 616    23 261    22 800
    Ceded                        (5 483)   (4 488)   (3 375)
    Assumed                       3 131     3 380     3 796

        Net                    $ 21 264    22 153    23 221


Premiums:
Life insurance:
    Direct                     $127 805   128 584   128 491
    Ceded                       (29 255)  (26 748)  (26 262)
    Assumed                       5 536     6 674     3 822
        Net                    $104 086   108 510   106 051

 Accident and health:
    Direct                     $ 56 723    54 022    55 022
    Ceded                       (14 087)  (11 581)  (10 091)
    Assumed                           -         -         -

        Net                    $ 42 636    42 441    44 931


Contract charges arise generally from directly issued business. However contract
charges  also arise from a block of business  assumed  during 1997 as  described
below.  Ceded  benefit  recoveries  were  $49,687,000  ($57,048,000  - 1998  and
$39,483,000 - 1997).

Old American has two coinsurance  agreements.  One agreement  reinsures  certain
whole life  policies  issued by Old  American  prior to December 1, 1986.  These
policies had a face value of  $114,062,000  as of this year end. The reserve for
future policy benefits ceded under this agreement was $46,741,000 ($49,041,000 -
1998).  The second agreement ceded $10.4 million of home health care reserves in
October 1998.

In 1997,  Kansas City Life  acquired a block of  traditional  life and universal
life-type  products.  As of this year end,  the block had $3.1  billion  of life
insurance in force ($3.4 billion - 1998).  The block  generated  life  insurance
premiums of $5,788,000 ($6,656,000 - 1998). Additionally,  in November 1999, the
Company ceded its group long-term disability reserves, totaling $5.2 million.

The maximum  retention on any one life is $350,000  for ordinary  life plans and
$100,000  for group  coverage.  A  contingent  liability  exists with respect to
reinsurance,  which may become a liability of the Company in the unlikely  event
that  the  reinsurers  should  be  unable  to  meet  obligations  assumed  under
reinsurance contracts.


PROPERTY AND EQUIPMENT

                                         1999        1998

Land                                 $    766        1 029
Home office complex                    21 404       22 995
Furniture and equipment                32 258       30 238

                                       54 428       54 262
Less accumulated depreciation         (32 418)     (31 826)

                                      $22 010       22 436

Property  and   equipment  are  stated  at  cost  and   depreciated   using  the
straight-line  method.  The home office is  depreciated  over 25 to 50 years and
furniture and equipment over 3 to 10 years, their estimated useful lives.

NOTES PAYABLE

                                          1999         1998
Federal Home Loan Bank loan with
  various maturities and a weighted
  average variable interest rate,
  currently 5.62 percent, secured
  by specified securities                $55 000         -

Commerce Bank unsecured revolving
  credit loan agreement providing a
  $20,000,000 line of credit with a
  variable interest rate, currently
  4.755 percent                            2 500         -

UMB Bank unsecured revolving credit
  loan agreements providing a
  $40,000,000 line of credit with a
  variable interest rate, currently
  4.95 percent                            12 000         -

                                         $69 500         -


As a  member  of the  Federal  Home  Loan  Bank  with a  capital  investment  of
$23,400,000,  the Company has the ability to borrow up to  $55,000,000  from the
bank. The Company earns 6.35 percent on the capital  investment in the bank. All
borrowing  is  used  to  enhance  investment  strategies.  Interest  paid on all
borrowings equaled $1,135,000 ($717,000 - 1998 and $515,000 - 1997).



FAIR VALUE OF FINANCIAL INSTRUMENTS

The  carrying  amounts  for cash,  short-term  investments  and policy  loans as
reported in the accompanying  balance sheet approximate  their fair values.  The
fair values for securities are based on quoted market prices,  where  available.
For those securities not actively traded, fair values are estimated using values
obtained  from  independent   pricing  services  or,  in  the  case  of  private
placements,  are  estimated by  discounting  expected  future cash flows using a
current market rate applicable to the yield,  credit quality and maturity of the
investments.  Fair values for mortgage loans are based upon discounted cash flow
analyses using an interest rate  assumption 2 percent above the comparable  U.S.
Treasury rate.

Fair  values  for the  Company's  liabilities  under  investment-type  insurance
contracts,  included with accumulated contract values for flexible annuities and
with  other  policyholder   funds  for  supplementary   contracts  without  life
contingencies, are estimated to be their cash surrender values.

Fair  values  for  the  Company's  insurance  contracts  other  than  investment
contracts  are not  required  to be  disclosed.  However,  the  fair  values  of
liabilities  under all insurance  contracts are taken into  consideration in the
Company's overall  management of interest rate risk, which minimizes exposure to
changing  interest  rates  through the matching of  investment  maturities  with
amounts due under insurance contracts.

The carrying amounts and fair values of the financial instruments follow.

                                    1999                           1998
                            Carrying         Fair      Carrying         Fair
                             Amount         Value       Amount         Value
Investments:
  Securities available
    for sale              $2 115 183     2 115 183    2 195 111      2 195 111
  Securities held
    to maturity              107 606       107 570      115 504        123 515
  Mortgage loans             340 704       328 973      315 705        332 419

Liabilities:
  Individual and
    group annuities         $743 438       724 908      793 068        767 537
  Supplementary
    contracts without
    life contingencies        21 216        21 216       21 899         21 899

The  following   Investments  Note  provides   further  details   regarding  the
investments above.


INVESTMENTS

Investment Revenues
Major categories of investment revenues are summarized as follows.

                                    1999            1998             1997
Investment income:
    Fixed maturities             $157 766         154 213          154 393
    Equity securities               9 378           6 583            7 288
    Mortgage loans                 27 608          26 024           23 984
    Real estate                     9 907           9 587           10 350
    Policy loans                    7 959           8 098            7 296
    Short-term                      3 639           4 832            3 612
    Other                           3 709           3 948            3 132
                                  219 966         213 285          210 055
Less investment expenses          (17 963)        (15 983)         (16 991)

                                 $202 003         197 302          193 064


Realized gains (losses):
    Fixed maturities             $ (2 714)          8 052            4 778
    Equity securities                 126           1 360            3 702
    Mortgage loans                  1 500               -                -
    Real estate                     3 684           2 014            6 025
    Other                             264               -                -

                                 $  2 860          11 426           14 505

Unrealized Gains and Losses
Unrealized gains (losses) on the Company's securities
 follow.
                               1999       1998        1997

Available for sale:
  End of year              $ (86 647)    83 627      59 726
  Effect on deferred
    acquisition costs          4 526     (4 332)     (3 652)
  Deferred income taxes       28 742    (27 753)    (19 626)

                           $ (53 379)    51 542      36 448

  Increase (decrease) in
    net unrealized gains
    during the year:
      Fixed maturities     $ (99 595)    18 701      33 209
      Equity securities       (5 326)    (3 607)        276

                           $(104 921)    15 094      33 485

Held to maturity:
  End of year              $     (36)     8 011       5 834

  Increase (decrease) in
    net unrealized gains
    during the year        $  (8 047)      2 177     (1 775)


Securities

The amortized  cost and fair value of investments in securities at this year end
follow.

                                                 Gross
                               Amortized       Unrealized         Fair
                                  Cost      Gains     Losses      Value
Available for sale:
Bonds:
  U.S.government              $   47 264      170        607      46 827
  Public utility                 270 618    1 938     11 098     261 458
  Corporate                    1 405 241    7 119     78 468   1 333 892
  Mortgage-backed                299 933    5 522      3 480     301 975
  Other                           55 537      217      1 556      54 198
Redeemable
   preferred stocks                  865       12         12         865

Fixed maturities               2 079 458   14 978     95 221   1 999 215
Equity securities                122 371    1 916      8 319     115 968

                              $2 201 829   16 894    103 540   2 115 183


Bonds held to maturity:
Public utility                $   18 101      743         45      18 799
Corporate                         83 429    1 282      2 127      82 584
Other                              6 076      117          6       6 187

                                 107 606    2 142      2 178     107 570

                              $2 309 435   19 036    105 718   2 222 753


The amortized  cost and fair value of investments in securities at last year end
follow.


                                      Gross
                     Amortized     Unrealized         Fair
                        Cost     Gains    Losses      Value
Available for sale:
Bonds:
  U.S. government   $   45 079    1 747      381     46 445
  Public utility       294 016   15 850    1 946    307 920
  Corporate          1 321 368   66 176   13 151  1 374 393
  Mortgage-backed      278 657   10 942      618    288 981
  Other                 70 224    3 216      441     72 999
Redeemable
  preferred stocks       3 631      121      128      3 624

Fixed maturities     2 012 975   98 052   16 665  2 094 362
Equity securities       98 509    6 184    3 944    100 749

                     2 111 484  104 236   20 609  2 195 111

Bonds held to maturity:
Public utility      $   25 325    1 934        7     27 252
Corporate               87 302    6 267      511     93 058
Other                    2 877      328        -      3 205

                       115 504    8 529      518    123 515

                    $2 226 988  112 765   21 127  2 318 626


The Company does not hold any non-income producing fixed maturity securities.

The  distribution of the fixed maturity  securities'  contractual  maturities at
this year end  follows.  However,  expected  maturities  may  differ  from these
contractual maturities since borrowers may have the right to call or
prepay obligations.

                                     Amortized       Fair
                                       Cost          Value
Available for sale:
Due in one year or less              $   54 611      53 865
Due after one year through five years   439 949     426 273
Due after five years through ten years  516 096     497 165
Due after ten years                     768 869     719 937
Mortgage-backed bonds                   299 933     301 975

                                     $2 079 458   1 999 215


Held to maturity:
Due in one year or less              $   13 053      13 143
Due after one year through five years    41 025      42 071
Due after five years through ten years   44 057      42 584
Due after ten years                       9 471       9 772

                                     $  107 606     107 570

Sales  of  investments  in  securities  available  for  sale,  excluding  normal
maturities and calls, follow.

                                 1999      1998      1997

Proceeds                       $428 425   422 241   509 502
Gross realized gains              9 455    12 512    11 597
Gross realized losses            10 371     5 234     2 349

The Company does not hold securities of any corporation and its affiliates which
exceeded 10 percent of stockholders' equity.

No derivative financial instruments are employed.


Mortgage Loans

The Company  holds  non-income  producing  mortgage  loans  equaling  $1,528,000
($1,004,000 - 1998).  Mortgage  loans are carried net of a valuation  reserve of
$7,000,000 ($8,500,000 - 1998).

The mortgage  portfolio is  diversified  geographically  and by property type as
follows.

                              1999                 1998
                       Carrying    Fair    Carrying     Fair
                        Amount    Value      Amount    Value
Geographic region:
  East north central   $ 29 470   28 250     31 068    32 373
  Mountain               69 522   67 325     67 530    71 397
  Pacific               123 581  119 375    106 982   112 461
  West south central     30 708   30 071     33 044    34 813
  West north central     71 030   68 703     69 594    73 157
  Other                  23 393   22 249     15 987    16 718
  Valuation reserve      (7 000)  (7 000)    (8 500)   (8 500)

                       $340 704  328 973    315 705   332 419



                            1999                 1998
                     Carrying   Fair      Carrying    Fair
                      Amount    Value      Amount     Value
Property type:
 Industrial         $229 103   221 036     209 752   220 474
 Retail               19 510    19 515      22 847    24 301
 Office               81 540    78 310      74 633    78 291
 Other                17 551    17 112      16 973    17 853
 Valuation reserve    (7 000)   (7 000)     (8 500)   (8 500)

                    $340 704   328 973     315 705   332 419

The Company has commitments which expire in 2000 to originate  mortgage loans of
$3,440,000.

No  mortgage  loans  were   foreclosed  upon  and  transferred  to  real  estate
investments during the year ($1,181,000 - 1998 and $3,189,000 - 1997).

No mortgage  loans were  acquired in the sale of real estate  assets  during the
year ($2,025,000 - 1998 and $4,299,000 - 1997).

Real Estate

Detail concerning the Company's real estate investments follows.

                                          1999       1998
Penntower office building, at cost:
    Land                               $  1 106      1 106
    Building                             18 582     18 244
    Less accumulated depreciation       (10 881)   (10 340)
Foreclosed real estate, at lower of
    cost or net realizable value          4 655     10 946
Other investment properties, at cost:
    Land                                  6 110      4 493
    Buildings                            36 710     32 848
    Less accumulated depreciation       (14 271)   (13 457)

                                       $ 42 011     43 840

Investment real estate,  other than foreclosed  properties,  is depreciated on a
straight-line basis.  Penntower office building is depreciated over 60 years and
all other properties from 10 to 35 years.  Foreclosed real estate is carried net
of a  valuation  allowance  of  $1,519,000  ($2,877,000  - 1998) to reflect  net
realizable value.

The  Company  held  non-income   producing  real  estate   equaling   $3,483,000
($6,099,000 - 1998).


PENSIONS AND OTHER
POSTRETIREMENT BENEFITS

The  Company  has  pension  and  other  postretirement  benefit  plans  covering
substantially  all its  employees.  The  defined  benefits  pension  plan covers
employees  who were age 55 or over with at least 15 years of vested  service  at
December  31, 1997.  This plan's  benefits are based on years of service and the
employee's compensation during the last five years of employment. Employees have
a cash  balance  account  consisting  of  credits to the  account  based upon an
employee's years of service and compensation and interest credits.  As disclosed
in the tables at right,  the amendment to change the plan to a cash balance plan
in 1998 decreased the projected benefit obligation  $10,038,000.  The closure of
Sunset Life's  office in 1999 and  significant  retirements  at Kansas City Life
resulted in the recognition of settlement and  curtailment  costs of $3,562,000.
The postretirement medical plans for the employees,  full-time agents, and their
dependents are contributory with contributions  adjusted  annually.  The Company
pays these medical costs as due and the plan incorporates cost-sharing features.
The  postretirement  life  insurance plan is  noncontributory  with level annual
payments over the participants'  expected service periods.  The plan covers only
those  employees  with at least one year of service as of December 31, 1997. The
benefits  in this plan are frozen  using the  employees'  years of  service  and
compensation as of December 31, 1997. The tables at the right outline the plans'
funded status and their impact on the Company's financial statements.

Non-contributory  defined  contribution  retirement plans for general agents and
eligible  sales agents  provide  supplemental  payments based upon earned agency
first-year individual life and annuity commissions. Contributions to these plans
were $143,000 ($134,000 - 1998 and $133,000 - 1997). A non-contributory deferred
compensation plan for eligible agents based upon earned  first-year  commissions
is also offered.  Contributions to this plan were $609,000  ($724,000 - 1998 and
$265,000 - 1997).

Savings plans for eligible employees and agents match employee  contributions up
to 6 percent of salary and agent  contributions  up to 2.5 percent of prior year
paid commissions.  Contributions to the plan were $1,468,000  ($1,485,000 - 1998
and  $2,102,000  - 1997).  Effective  in 1998,  the  Company may  contribute  an
additional  profit  sharing  amount up to 4 percent  of  salary  depending  upon
corporate profits. No profit sharing contribution was made in 1998 or 1999.

A non-contributory  trusteed employee stock ownership plan covers  substantially
all salaried employees. The Company has made no contributions to this plan since
1992.

                                     Pension Benefits          Other Benefits
                                     1999        1998        1999         1998

Accumulated benefit obligation     $ 88 405     107 488          -            -

Change in plan assets:
Fair value of plan assets
  at beginning of year             $102 869      95 899      1 614        1 634
Return on plan assets                   934      10 988         82           86
Company contributions                 2 400       3 000          -            -
Benefits paid                       (20 963)     (7 018)      (293)        (106)

  Fair value of plan assets
    at end of year                 $ 85 240     102 869      1 403        1 614

Change in projected benefit obligation:
Benefit obligation
    at beginning of year           $110 547     119 651     18 808       15 485
Service cost                          2 760       2 746        626          615
Interest cost                         7 673       7 650      1 200        1 193
Plan amendments                           -     (10 038)         -            -
Curtailment                             469           -     (1 043)           -
Settlement                            5 375           -          -            -
Net (gain) loss from past experience (3 921)        637     (2 008)       1 991
Benefits paid                       (24 552)    (10 099)      (641)        (476)

  Benefit obligation
     at end of year                $ 98 351     110 547     16 942       18 808

Plan underfunding                  $(13 111)     (7 678)   (15 539)     (17 194)
Unrecognized net loss                26 404      22 488        557        3 653
Unrecognized prior service cost      (7 147)     (9 257)         -            -
Unrecognized net transition asset      (517)       (824)         -            -

  Prepaid (accrued) benefit cost   $  5 629       4 729    (14 982)     (13 541)

Amounts recognized in the
  consolidated balance sheet:
Accrued benefit liability          $ (3 165)     (4 619)   (14 982)     (13 541)
Accumulated other
   comprehensive income               8 794       9 348          -            -

  Net amount recognized             $ 5 629       4 729    (14 982)     (13 541)

Weighted average assumptions:
Discount rate                          7.75 %      7.00       7.75         7.00
Expected return on plan assets         8.75        9.00       5.50         5.50
Rate of compensation increase          4.50        4.50          -            -


The assumed  growth rate of health  care costs has a  significant  effect on the
amounts reported as the table below demonstrates.

                                               One Percentage Point
                                             Change in the Growth Rate
                                             Increase        Decrease

Service and interest cost components          $  367           (301)
Postretirement benefit obligation              2 845         (2 429)


The components of the net periodic benefits cost follow.

                                   Pension Benefits            Other Benefits
                                   1999    1998     1997   1999    1998   1997

Service cost                    $ 2 760    2 746    3 150    626     615    560
Interest cost                     7 673    7 650    7 823  1 200   1 194  1 014
Expected return on plan assets   (9 067)  (8 539)  (7 776)   (88)    (90)   (85)
Amortization of:
 Unrecognized net (gain) loss     1 014    1 152      582     52      76     (5)
 Unrecognized prior service cost   (647)    (769)       2      -       -      -
 Unrecognized net transition asset (206)    (206)    (206)     -       -      -

Net periodic benefits cost      $ 1 527    2 034    3 575  1 790   1 795  1 484


For measurement purposes, a 10 percent annual increase in the per capita cost of
covered  health care benefits was assumed to decrease  gradually to 6 percent in
2004.

SEGMENT INFORMATION

                                      Kansas City Life  Sunset   Old
                                     Individual  Group  Life  American    Total
1999:
Revenues from external customers    $  113 399 53 311  26 750  76 091    269 551
Investment revenues                    152 338  1 083  33 617  14 965    202 003
Segment income (loss)                   30 622   (898)  8 049   5 413     43 186
Other significant noncash items:
  Increase in policy reserves           60 072    681  16 411   8 042     85 206
  Amortization of deferred
    acquisition costs                   12 443      -   7 765  11 053     31 261
  Amortization of the value of
    purchased insurance in force         5 128      -       -   3 567      8 695
Interest expense                         1 148      -       -       -      1 148
Income tax expense                      12 931   (385)  3 898   2 574     19 018

Segment assets                       2 679 521 16 107 528 708 396 948  3 621 284
Expenditures for other
     long-lived assets                   3 742    214       3     298      4 257


1998:
Revenues from external customers    $  112 898 52 537  28 794  80 001    274 230
Investment revenues                    150 328  1 146  31 878  13 950    197 302
Segment income (loss)                   27 918   (985)  8 954   5 198     41 085
Other significant noncash items:
  Increase in policy reserves           57 581    535  16 269  10 042     84 427
  Amortization of deferred
    acquisition costs                   16 861      -   8 323  11 017     36 201
  Amortization of the value of
    purchased insurance in force         4 660      -       -   2 925      7 585
Interest expense                           717      -       -       -        717
Income tax expense                      12 997   (422)  4 314   2 548     19 437

Segment assets                       2 627 568 16 215 538 254 395 377  3 577 414
Expenditures for other
     long-lived assets                   2 658    259      97      69      3 083


1997:
Revenues from external customers    $   90 759 53 698  28 269  81 967    254 693
Investment revenues                    146 610  1 216  32 171  13 067    193 064
Segment income (loss)                   24 704   (493)  8 259   2 963     35 433
Other significant noncash items:
  Increase in policy reserves           55 924    202  16 768  13 910     86 804
  Amortization of deferred
    acquisition costs                   15 138      -   8 026  12 548     35 712
  Amortization of the value of
    purchased insurance in force         2 211      -       -   2 683      4 894
Interest expense                           515      -       -       -        515
Income tax expense                      12 735   (212)  3 904   1 335     17 762

Segment assets                       2 533 546 16 828 517 423 371 655  3 439 452
Expenditures for other
     long-lived assets                   2 326    473      60      13      2 872


Enterprise-Wide Disclosures
                                                    1999        1998      1997
Revenues from external customers by line of business:
  Variable life insurance and annuities           $ 11 153      6 928      2 062
  Interest sensitive products                       97 720    101 680     91 651
  Traditional individual insurance products         97 616    103 171    101 332
  Group life and disability products                49 106     47 780     49 650
  Group ASO services                                 4 205      4 716      4 048
  Other                                              9 751      9 955      5 950
      Total                                       $269 551    274 230    254 693

Company  operations have been classified and summarized into the four reportable
segments at left. The segments,  while generally classified along Company lines,
are based upon distribution  method,  product  portfolio and target market.  The
Parent Company was divided into two segments.  The Kansas City Life - Individual
segment  consists of sales of variable life and  annuities,  interest  sensitive
products and  traditional  life  insurance  products by a career  general agency
sales force. The block of universal life and traditional life insurance acquired
in 1997 is  included  in this  segment.  The  Kansas  City Life - Group  segment
consists  of  sales  of  group  life,   disability   and  dental   products  and
administrative  services only (ASO) by the Company's career general agency sales
force and appointed group agents.  The Sunset Life segment  consists of sales of
interest  sensitive  and  traditional  products  by personal  producing  general
agents.  The Old American  segment markets whole life final expense  products to
seniors through a general agency sales force.

Separate  investment  portfolios  are  maintained  for  each  of the  companies.
However,  investments  are  allocated to the group  segment  based upon its cash
flows.  Its investment  revenue is modeled using the year of investment  method.
Home office  functions are fully  integrated for the three companies in order to
maximize economies of scale. Therefore,  operating expenses are allocated to the
segments  based upon internal cost studies  which are  consistent  with industry
cost methodologies.

The totals at left agree to the selected  financial data which reconciles to the
consolidated  financial statements.  Intersegment revenues are not material. The
Company operates solely in the United States and no individual customer accounts
for 10 percent or more of the Company's revenue.


FEDERAL INCOME TAXES

A  reconciliation  of the  Federal  income  tax  rate  and the  actual  tax rate
experienced is shown below.

                                         1999      1998     1997

Federal income tax rate                   35 %      35       35
Special tax credits                        (5)      (6)      (6)
Other permanent differences                 -        -       (1)

Actual income tax rate                     30 %     29       28


The tax effects of temporary  differences that give rise to significant portions
of the deferred tax assets and liabilities are presented below.

                                          1999        1998
Deferred tax assets:
  Basis differences between tax and
    GAAP accounting for investments     $26 774          -
  Future policy benefits                 49 133     51 205
  Employee retirement benefits           11 990     14 999
  Other                                   9 413      6 308

Gross deferred tax assets                97 310     72 512

Deferred tax liabilities:
  Capitalization of policy acquisition
    costs, net of amortization           44 809     42 487
  Basis differences between tax and
    GAAP accounting for investments           -     35 104
  Property and equipment, net             3 841      1 792
  Value of insurance in force            33 102     36 070
  Other                                     841        798

Gross deferred tax liabilities           82 593    116 251

  Net deferred tax asset (liability)    $14 717    (43 739)

A "valuation  allowance" must be established for any portion of the deferred tax
asset which is believed not to be realizable.  In  management's  opinion,  it is
more  likely  than not that the  Company  will  realize  the  benefit of the net
deferred tax asset and, therefore, no valuation allowance has been established.

Federal income taxes paid for the year were $17,884,000  ($20,164,000 - 1998 and
$14,335,000 - 1997).

Policyholders' surplus, which is frozen under the Deficit Reduction Act of 1984,
is $40,500,000 for Kansas City Life,  $2,800,000 for Sunset Life and $13,700,000
for Old American.  The Companies do not plan to distribute their  policyholders'
surplus.  Consequently,  the possibility of such surplus becoming subject to tax
is remote, and no provision has been made in the financial  statements for taxes
thereon.  Should the balance in policyholders'  surplus become taxable,  the tax
computed at current rates would approximate $20,000,000.

Income taxed on a current basis is  accumulated in  "shareholders'  surplus" and
can be distributed  to  stockholders  without tax to the Company.  Shareholders'
surplus equals  $388,267,000  for Kansas City Life,  $85,411,000 for Sunset Life
and $57,668,000 for Old American.

                             QUARTERLY CONSOLIDATED
                           FINANCIAL DATA (unaudited)

                        First     Second    Third    Fourth
1999:
Total revenues         $118 777  115 690   122 137  117 810


Operating income       $ 12 241    7 256    12 225   11 464
Realized gains, net         201      239     1 197      222

Net income             $ 12 442    7 495    13 422   11 686
Per common share:
  Operating income     $    .99      .58       .99      .95
  Realized gains, net       .01      .03       .10      .01


   Net income          $   1.00      .61      1.09      .96

1998:
Total revenues         $117 615  124 799   125 667  114 877


Operating income       $  8 098   11 492    12 930    8 565
Realized gains net        1 643    1 582     2 679    1 523

Net income             $  9 741   13 074    15 609   10 088
Per common share:
  Operating income     $    .66      .93      1.04      .68
  Realized gains net        .13      .13       .22      .13


   Net income          $    .79     1.06      1.26      .81


CONTINGENT LIABILITIES

The Company and certain of its subsidiaries are defendants in lawsuits involving
claims and disputes with  policyholders.  It has become  increasingly common for
plaintiffs in these cases to seek class action status and punitive damages. Some
of  these  lawsuits  arise  in   jurisdictions   that  permit  punitive  damages
disproportionate  to the actual damages  alleged.  Although no assurances can be
given and no  determinations  can be made at this time as to the  outcome of any
particular lawsuit or proceeding,  the Company and its subsidiaries believe that
there  are  meritorious  defenses  for  these  claims  and  are  defending  them
vigorously.  In management's  opinion the amounts ultimately paid, if any, would
have no material effect on the Company's  consolidated results of operations and
financial position.



                                    REPORT OF
                              INDEPENDENT AUDITORS

                   To the Board of Directors and Stockholders
                      of Kansas City Life Insurance Company

We have audited the accompanying consolidated balance sheets of Kansas City Life
Insurance  Company and  subsidiaries  (the  Company) as of December 31, 1999 and
1998, and the related consolidated  statements of income,  stockholders' equity,
and cash flows for each of the three  years in the  period  ended  December  31,
1999.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated  financial position of Kansas City Life
Insurance  Company  and  subsidiaries  at December  31,  1999 and 1998,  and the
consolidated  results of their  operations  and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.



/s/ Ernst & Young LLP
Kansas City, Missouri January 24, 2000


                             STOCKHOLDER INFORMATION


CORPORATE HEADQUARTERS
     Kansas City Life Insurance Company
     3520 Broadway
     Post Office Box 219139
     Kansas City, Missouri 64121-9139
     Telephone:  (816) 753-7000
     Fax: (816) 753-4902
     Internet: http://www.kclife.com
     E-Mail: kclife@kclife.com


NOTICE OF ANNUAL MEETING
     The annual meeting of stockholders will be held at
     9 a.m. Thursday, April 20, 2000,
     at Kansas City Life's corporate headquarters.


TRANSFER AGENT
     Cheryl Keefer, Assistant Secretary
     Kansas City Life Insurance Company
     Post Office Box 219139
     Kansas City, Missouri 64121-9139


10-K  REQUEST

Stockholders  may request a free copy of Kansas City Life's Form 10-K,  as filed
with the Securities  and Exchange  Commission,  by writing to Secretary,  Kansas
City Life Insurance Company.


SECURITY HOLDERS

As of February 2, 2000, Kansas City Life had approximately 725 security holders,
including individual participants in security position listings.


                         STOCK AND DIVIDEND INFORMATION
                             Stock Quotation Symbol
                              Over-the-Counter--KCLI


                                    Bid             Dividend
                              High       Low          Paid
                                         (per share)
     1999:
     First Quarter           $43.82     39.25       $ .240
     Second Quarter           42.75     43.00         .240
     Third Quarter            52.25     34.50         .240
     Fourth Quarter           40.00     32.75         .240
                                                    $ .960

     1998:
     First Quarter           $48.75     41.00        $.225
     Second Quarter           47.44     41.63         .225
     Third Quarter            47.75     34.50         .225
     Fourth Quarter           42.75     39.00         .225
                                                     $.900

The above has been restated to reflect a two-for-one stock split in June 1999.

A quarterly dividend of $.25 per share was paid February 22, 2000.

Over-the-counter market quotations are compiled according to Company records and
may reflect inter-dealer prices, without markup,  markdown or commission and may
not necessarily represent actual transactions.