SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549


                                      FORM 10-K


[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934 [FEE REQUIRED]
    For the Fiscal Year ended December 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 [NO FEE REQUIRED]
      For the Transition Period from             to
Commission File Number 2-40764


                         KANSAS CITY LIFE INSURANCE COMPANY
               (Exact Name of Registrant as Specified in its Charter)


               Missouri                                        44-0308260
    (State or Other Jurisdiction of                         (I.R.S. Employer
     Incorporation or Organization)                      Identification Number)


  3520 Broadway, Kansas City, Missouri                         64111-2565
(Address of Principal Executive Offices)                       (Zip Code)


         Registrant's Telephone Number, including Area Code:   816-753-7000


             SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                              Name of Each Exchange on
             Title of Each Class                  Which Registered

                    None                                 None

             SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                                        None
                                  (Title of Class)


     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                           Yes    X             No

     As of February 27, 1998,  6,196,102  shares of the Company's  capital stock
par value $2.50 were  outstanding,  and the aggregate market value of the common
stock (based upon the average bid and asked price according to Company  records)
of Kansas City Life Insurance Company held by  non-affiliates  was approximately
$181,044,401.
Part II


                         Documents Incorporated by Reference

Item 5:  Market for Registrant's Common            Page 33 of Annual Report to
         Equity and Related Stockholder            Shareholders for the year
         Matters.                                  ended December 31, 1997.

Item 6:  Selected Financial Data.                  Page 14 of Annual Report to
                                                   Shareholders for the year
                                                   ended December 31, 1997.

Item 7:  Management's Discussion                   Pages 12 through 15 of Annual
         and Analysis of Financial                 Report to Shareholders for
         Condition and Results of                  the year ended December 31,
         Operations.                               1997.

Item 8:  Financial Statements and                  Pages 16 through 29 of Annual
         Supplementary Data.                       Report to Shareholders for 
                                                   the year ended December 31, 
                                                   997.



Part IV

Index to Exhibits                                  Page 15


<PAGE>


                                      PART I


Item 1.  BUSINESS

      Kansas  City  Life  Insurance  Company  (KCL) was  incorporated  under the
assessment  laws of Missouri in 1895 as the Bankers Life  Association.  In 1900,
its  present  corporate  title was  adopted  and it was  reorganized  as a legal
reserve company in 1903. The Company operates  nationwide,  being licensed in 48
states and the District of Columbia.

      The Company primarily  operates in a single business  segment:  individual
life insurance and annuity  products.  A general agency  distribution  system is
employed.  Nearly 86% of statutory  premiums are derived  from  individual  life
insurance and annuities on a consolidated  basis.  Interest sensitive  products,
universal  life and  flexible  annuities,  comprise  the vast  majority of these
premiums.  Individual  life  insurance  and  annuities  accounted for 90% of new
statutory  premiums in 1997. KCL  introduced its first variable  annuity in late
1995 and its first variable  universal life product in January,  1996.  Together
these products totaled 30% of new statutory premiums in 1997.

      KCL  has  two  wholly  owned  life  insurance  subsidiaries,  Sunset  Life
Insurance Company of America (Sunset) and Old American Insurance Company (OAIC).
Sunset was  acquired  in 1974.  Headquartered  in  Olympia,  Washington,  Sunset
operates in 21 states, principally west of the Mississippi.  California provides
one-third of its statutory  premiums.  The Company  offers  products  similar to
KCL's and sells through personal producing general agents.  OAIC was acquired in
1991 and its operations,  excluding marketing,  have been merged into KCL's home
office and  administrative and accounting  systems.  OAIC operates in 46 states,
primarily  selling  relatively  small  policies  to the  senior  market to cover
funeral and other final expenses.

      KCL and its subsidiaries are subject to state  regulations in their states
of domicile  and in the states in which they do  business.  Although the federal
government  generally  does not  regulate  the  business of  insurance,  federal
initiatives  often have an impact on the business in a variety of ways including
the taxation of insurance companies and the tax treatment of insurance products.

      KCL and OAIC  respectively  have 501 and 85 full  time  employees  who are
located in KCL's home  office.  Sunset  has 103 full time  employees  located in
Olympia, Washington.

      The Company is engaged in a crowded,  competitive industry, competing with
1,500 to 2,000 other life insurance companies in the United States. The industry
is highly competitive with respect to pricing, selection of products and quality
of service.  No single  competitor nor any small group of competitors  dominates
any of the markets in which the Company operates.


Item 2.  PROPERTIES

      Kansas City Life's home office is located at 3520 Broadway in Kansas City,
Missouri.  The Company owns and wholly  occupies two five story  buildings on an
eight acre site.

      Sunset  owns and  wholly  occupies  a two story  office  building  at 3200
Capitol Boulevard in Olympia, Washington. The building is situated on four acres
of land.

      Kansas City Life owns various other properties held for investment.


Item 3.  LEGAL PROCEEDINGS

      In January,  1998, the Oklahoma  Supreme Court refused to rehear its prior
decision  which  held that the  Company  was not  liable  for any  portion  of a
punitive  and  compensatory  damage  award  against  its agent.  The case,  Nita
Charlene Pelter Cox and Verna Leanne Pelter Graybill,  Personal  Representatives
of the Estate of Leora Pearl Pelter, Deceased,  Plaintiffs, vs. Kansas City Life
Insurance  Company  and Billy D.  Stearman,  Defendants,  arose  out of  certain
alleged actions by Stearman, a former agent. In January, 1996, a division of the
Oklahoma  Appellate  Court  reduced a prior $10.7 million  judgment  against the
Company to $1.3 million which the Company has accrued. Subsequently, an Oklahoma
District  Court  judge  ruled that the  Company  was also  responsible  for $2.5
million of a separate  judgment rendered against the agent in the same case. The
Oklahoma  Supreme Court reversed the $2.5 million  judgment  against the Company
and resolved all major issues in this matter.

      In recent years, life insurance companies have been named as defendants in
lawsuits  including class action lawsuits related to life insurance  pricing and
sales practices.  These so-called  "vanishing  premium" cases typically  contain
allegations  that an  interest-sensitive  policy was sold with a projection that
the policy would be paid up or become  self-sustaining  after a period of years.
In late December, 1997, the Company was served as a defendant in a lawsuit filed
in United  States  District  Court for the Middle  District  of  Florida,  Tampa
Division.  The case,  Patricia A. Adams,  Kevin J. Palamarchuck and Karolynne K.
Palamarchuck,  On Behalf of  Themselves  and All Others  Similarly  Situated vs.
Kansas City Life Insurance Company, claims unspecified compensatory and punitive
damages as a result of an alleged  nationwide  fraudulent  scheme by the Company
and its agents involving deceptive sales practices including "vanishing premium"
claims. The plaintiffs, former policyowners, purport to represent themselves and
all others who were induced by deceptive sales  practices to purchase  permanent
life insurance from the Company.  Management  denies the allegations,  including
the  existence of a  legitimate  class and  believes  that full and  appropriate
disclosure was made as a matter of practice.  Management  intends to defend this
suit  vigorously.  The litigation is in early  procedural  stages and plaintiffs
have not yet moved for class  certification.  The amount of any liability  which
may arise as a result  of this  case  cannot  be  reasonably  estimated,  and no
provision for loss has been made in the Company's financial statements. However,
there can be no assurance  that this case or any future  litigation  relating to
sales practices will not have a material effect on the Company.

      In addition to the above,  the Company and certain of its subsidiaries are
defendants in lawsuits  involving claims and disputes with policyowners that may
include  claims  seeking  punitive  damages.  Some of  these  lawsuits  arise in
jurisdictions   where   juries   sometime   award   punitive   damages   grossly
disproportionate to the actual damages.  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 the
opinion of  management,  the amounts that would  ultimately be paid, if any, are
not expected to have a material effect on the Company's  consolidated results of
operations and financial position.


Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      None.


                                       PART II


Item 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS

      Incorporated by Reference.

<PAGE>


Item 6.  SELECTED FINANCIAL DATA

      Incorporated by Reference.


Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

      Incorporated by Reference.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      Incorporated by Reference.


Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE

      Not Applicable.


                                      PART III


Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The  following  information,  as of December  31, 1997,  is provided  with
respect to each Director:

                                   Term as
                                   Director                            Served as
                                   Expires         Other Positions     Director
   Name of Director         Age    in April        with the Company      From

W. E. Bixby (1)(2)(3)        65      1998      Vice Chairman of the        1966
                                               Board and President

Jack D. Hayes (1)(3)         57      1998      Senior Vice President,      1995
                                               Marketing

Francis P. Lemery            58      1998      Senior Vice President       1985
(1)(2)(3)                                      and Actuary

Michael J. Ross              56      1998      None                        1972
(2)(3)(4)(5)(6)

Elizabeth T. Solberg         58      1998      None                        1997
(3)(6)

W. E. Bixby, III (6)         39      1999      None                        1996

Webb R. Gilmore              53      1999      None                        1990
(2)(4)(5)(6)

Nancy Bixby Hudson (6)       45      1999      None                        1996

Daryl D. Jensen (6)          58      1999      None                        1978

C. John Malacarne            56      1999      Vice President,             1991
(1)(2)                                         General Counsel
                                               and Secretary
                                   Term as
                                   Director                            Served as
                                   Expires         Other Positions     Director
   Name of Director         Age    in April        with the Company      From

J. R. Bixby (1)(2)           72      2000      Chairman of the Board       1957

R. Philip Bixby              44      2000      Executive Vice President    1985
(1)(2)

Richard L. Finn              56      2000      Senior Vice President,      1983
(1)(2)                                         Finance

Warren J. Hunzicker, M.D.    77      2000      None                        1989
(6)

Larry Winn, Jr.              78      2000      None                        1985
(2)(4)(5)(6)

(1)   See below with respect to the business experience of executive officers of
      the Company.

(2)   Member of Executive Committee.

(3)   Subject to the  approval  of the  shareholders  at the  annual  meeting of
      shareholders  to be held on April 23,  1998,  will be elected  for a three
      year term ending in 2001.

(4)   Member of Audit Committee.

(5)   Member of Compensation Committee.

(6)  W. E.  Bixby,  III was elected  Assistant  Vice  President  of the
     Company  in  1985,  Vice  President,  Marketing  in 1990,  Vice  President,
     Marketing  Operations in 1992, and President of Old American, a subsidiary,
     in  1996.   He  also   serves  as  a  Director   of  Sunset  Life  and  Old
     American,subsidiaries.  Mr. Gilmore is a partner in the law firm of Gilmore
     & Bell.  Nancy  Bixby  Hudson has served as a Director  of Sunset  Life,  a
     subsidiary, since 1986. Dr. Hunzicker was elected by the Board of Directors
     to an unexpired term in 1989. Dr. Hunzicker served as the Company's Medical
     Director from 1987 to 1989; he formerly served as a member of the Company's
     Board of  Directors  from 1977 to 1980.  Mr.  Jensen has been  President of
     Sunset Life Insurance Company of America, a subsidiary of Registrant, since
     1973. Mr. Ross has been President of Jefferson Bank and Trust Company,  St.
     Louis, Missouri,  since 1971 and was elected Chairman of the Board in 1983.
     Mrs.   Solberg  is  Executive   Vice   President  and  Senior   Partner  of
     Fleishman-Hillard,  Inc., a position  she has held since 1984.  Mr. Winn is
     retired as the Kansas Third District  Representative to the U.S.  Congress.
     
Name, Age and Business Experience Position During Past 5 Years

J. R. Bixby, 72              Chairman since 1972; President from 1964 until he
Chairman of the Board        retired in April, 1990.  Responsible for overall
                             corporate policy.  Director of Sunset Life and Old
                             American, subsidiaries.

W. E. Bixby, 65              Vice Chairman of the Board since 1974; elected 
Vice Chairman of the         Executive Vice President in January, 1987; and 
Board                        President, President and CEO and CEO in 
                             April, 1990.  Primarily responsible for
                             the operation of the Company. Chairman of the Board
                             of Sunset Life and Old American, subsidiaries.

<PAGE>


    Name, Age and                           Business Experience
      Position                              During Past 5 Years

R. Philip Bixby, 44          Elected Assistant Secretary in 1979; Assistant Vice
Executive Vice President     President in 1982; Vice President in 1984; Senior
                             Vice President, Operations in 1990; and to present
                             position in 1996.  Director of Sunset Life and Old
                             American, subsidiaries.

Richard L. Finn, 56          Elected Vice President in 1976; Financial Vice 
Senior Vice President,       President in 1983; and to present position in 1984.
Finance                      Chief financial officer and responsible for 
                             investment of the Company's funds, accounting and 
                             taxes.  Director and Treasurer of Sunset Life and 
                             Director, Vice President and Chief Financial 
                             Officer and Assistant Treasurer of Old American,
                             subsidiaries.

Jack D. Hayes, 57            Elected Senior Vice President, Marketing in 
Senior Vice President,       February 1994.  Responsible for Marketing, 
Marketing                    Marketing Administration, Communications and Public
                             Relations.  Served as Executive Vice President and 
                             Chief Marketing Officer of Fidelity Union Life, 
                             Dallas, Texas, from June, 1981 to January, 1994.

Francis P. Lemery, 58        Elected Vice President in 1979; Vice President and
Senior Vice President        Actuary in 1980; and to present position in 1984.
Actuary                      Responsible for Group Insurance Department, 
                             Actuarial Services, State Compliance, New Business
                             and Underwriting.  Director of Sunset Life and Old
                             American, subsidiaries.

Robert C. Miller, 51         Elected Assistant Auditor in 1972; Auditor in 1973;
Senior Vice President,       Vice President and Auditor in 1987; and to present
Administrative Services      position in 1991.  Responsible for Human Resources
                             and Home Office building and maintenance.

Charles R. Duffy, Jr., 50    Elected Vice President, Computer Information 
Senior Vice President,       Services in 1989; Vice President, Insurance Admini-
Operations                   stration in 1992; and to present position in 1996.
                             Responsible for the Company's Computer Operations, 
                             Customer Services, Claims, Premium Collection and 
                             Agency Administration. Director of Sunset Life and
                             Old American, subsidiaries.

John K. Koetting, 52         Elected Assistant Controller in 1975; and to 
Vice President and           present position in 1980.  Chief accounting officer
Controller                   responsible for all corporate accounting reports.  
                             Director of Old American, a subsidiary.

C. John Malacarne, 56        Elected Associate General Counsel in 1976; General
Vice President, General      Counsel in 1980; Vice President and General Counsel
Counsel and Secretary        in 1981; and to present position in 1991.  
                             Responsible for Legal Department, Office of the 
                             Secretary, Stock Transfer Department and Market 
                             Compliance.  Director and Secretary of Sunset Life 
                             and Old American, subsidiaries.

     (d) J. R. Bixby,  Chairman of the Board, and W. E. Bixby,  Vice Chairman of
the Board and President,  are brothers. Nancy Bixby Hudson is the daughter of J.
R. Bixby; R. Philip Bixby and W. E. Bixby, III are the sons of W. E. Bixby.

      (e)  See Business Experience During Past 5 Years above.

      (f) There  have  been no events  under any  bankruptcy  act,  no  criminal
proceedings  and no judgments or  injunctions  material to the evaluation of the
ability and integrity of any Director,  nominee or executive  officer during the
past five years.


Item 11.  EXECUTIVE COMPENSATION

      (a)  Compensation

      The following table sets forth  information  concerning cash  compensation
paid or accrued  by the  Company  and its  subsidiaries  to the Chief  Executive
Officer and the other four most highly  paid  executive  officers as of December
31, 1997 for the fiscal years ending December 31, 1997, 1996 and 1995.

                            SUMMARY COMPENSATION TABLE

                                                    Long Term    Other     All
                          Annual Compensation       Incentive    Annual   Other
                                                   Compensa-    Compen-  Compen-
      Name and                  Salary    Bonus    tion Payouts  sation   sation
 Principal Position     Year      $         $           $           $        $

W. E. Bixby, Vice      1997   445,800       400     374,976      7,000    61,575
Chairman of the        1996   416,640    58,042           0      7,000    55,586
Board, President and   1995   396,780   143,344           0      7,000    52,903
CEO,  Kansas City Life; 
Chairman of the Board 
of Sunset Life and Old  
American, subsidiaries.

R. L. Finn, Senior     1997    212,160      400     151,560      7,000    25,540
Vice President,        1996    202,080   28,336           0      5,500    24,305
Finance and Director,  1995    193,380   52,231           0      5,000    21,835
Kansas City Life;
Director of Sunset
Life and Old American,
subsidiaries.

F. P. Lemery, Senior   1997    212,160      400     151,560      7,000    25,540
Vice President and     1996    202,080   28,336           0      7,000    24,305
Actuary and Director,  1995    193,380   52,232           0      7,000    23,239
Kansas City Life;
Director of Sunset
Life and Old American,
subsidiaries.

D. D. Jensen, Director,1997    193,200   18,097     138,000      6,000    23,217
Kansas City Life; Vice 1996    184,000   29,515           0      6,000    22,090
Chairman of the Board  1995    176,190   35,275           0      6,000    21,133
and President, Sunset
Life, subsidiary.

R. P. Bixby, Execu-    1997    284,700      400     132,660      4,750    29,820
tive Vice President    1996    176,880   12,081           0      4,000    18,488
and Director, Kansas   1995    169,260   34,400           0      4,000    17,687
City Life; Director of
Sunset Life and Old
American, subsidiaries.

                              LONG TERM INCENTIVE PLAN

      The amounts shown above reflect  payouts in 1997 under the Company's  Long
Term  Incentive  Plan for the  performance  period of  January  1, 1994  through
December 31, 1996.  The plan covers eight  senior  executives,  including  those
named  above.  For plan  participants  to  receive  an award,  Kansas  City Life
statutory  capital and surplus had to be maintained at a minimum of 9% of assets
over the three year period.  The award is a percent of salary based on achieving
specified  levels of return on equity with  certain  adjustments  over the three
year period.

                   ALL OTHER COMPENSATION INCLUDES THE FOLLOWING:

      The  Company has a  contributory  Internal  Revenue  Code  Section  401(k)
savings and investment plan.  Directors and officers who are full time employees
of the Registrant or its subsidiaries  participate in the plan on the same basis
as all other employees. Employees may contribute from 1% to 10% of their monthly
base salary.  Highly  compensated  employees are limited to contributions of 6%.
The Company  contributes  an amount equal to the employee  contributions  in the
form of capital stock of the Company. The Company contributed $9,000 to the plan
for the accounts of the named individuals in 1995 and 1996 and $9,500 in 1997.

      The Company has adopted a nonqualified deferred compensation plan for
approximately 58 highly compensated officers and employees.  It is similar to
the Company's 401(k) plan.  Participants contribute amounts to this plan that
they cannot contribute to the 401(k) plan up to a total of 10% of their monthly
salary and the Company contributes an equal amount.  The amount contributed to
the plan for fiscal years 1995, 1996 and 1997 respectively for the accounts of
the named individuals are as follows:  W. E. Bixby, $30,678, $32,664, $35,080;
R. L. Finn, $10,338, $11,208, $11,716; F. P. Lemery, $10,338, $11,208, $11,716;
D. D. Jensen, $8,619, $9,400, $9,820; R. P. Bixby, $7,926, $8,688, $18,970.

      The Company provides yearly renewable term insurance to its employees in
the amount of 2 1/2 times their annual salary.  Directors and officers who are
full time employees participate in the program on the same basis as all other
employees.  Premiums paid for the named individuals for fiscal years 1995, 1996
and 1997 respectively are as follows:  W. E. Bixby, $13,225, $13,922, $16,995;
R. L. Finn, $2,497, $4,097, $4,324; F. P. Lemery, $3,901, $4,097, $4,324; D. D.
Jensen, $3,514, $3,690, $3,897; R. P. Bixby, $761, $800, $1,350.

      (f)  Defined Benefit or Actuarial Plan Disclosure

      The following table  illustrates the possible annual pension benefits upon
completion of the indicated  years of service with the five year average  salary
for all  officers and  employees.  Benefits are  calculated  on a straight  life
annuity basis. The Social Security offset and benefit has been estimated.

                                   PENSION PLAN TABLE

Compensation                        Years of Service                        SS**

                      10           20           30           40

 $ 75,000         $ 18,750     $ 37,500     $ 51,948*    $ 51,948*       $16,104
  100,000           25,000       50,000       70,000       71,948*        16,104
  125,000           31,250       62,500       87,500       91,948*        16,104
  150,000           37,500       75,000      105,000      111,948*        16,104
  200,000           50,000      100,000      140,000      151,948*        16,104
  250,000           62,500      125,000      175,000      191,948*        16,104
  300,000           75,000      150,000      210,000      231,948*        16,104
  350,000           87,500      175,000      245,000      271,948*        16,104
  400,000          100,000      200,000      280,000      311,948*        16,104
  450,000          112,500      225,000      315,000      351,948*        16,104
  500,000          125,000      250,000      350,000      391,948*        16,104

  *Maximum pension based on an estimate of Social Security.
 **Estimated annual Social Security benefit at age 65.

     The Company has a noncontributory defined benefit pension plan which covers
all full time employees age 21 and over. A participant's  retirement  benefit is
determined  by  multiplying  his or her highest  average  annual salary for five
consecutive  years,  from  the last ten  years  of his or her  employment,  by a
percentage  determined from the  participant's  total years of service from that
participant's  21st  birthdate.  The  participant's  percentage is determined by
multiplying  2 1/2% for each of the  participant's  years of  service  up to the
first twenty years,  2% for each year of service for the next ten years,  and 1%
for each year of the next ten.  A  participant's  benefit  may not exceed 80% of
such average salary reduced by 1/2 of his or her Social Security benefit.  Early
retirement  benefits are available after age 55, depending upon years of service
and age.  Benefits  are fully  vested  after five years of service  following  a
participant's 18th birthdate.

      Effective  January 1,  1998,  the  pension  plan was  converted  to a cash
balance plan. Benefits under the plan will no longer be determined  primarily by
final average compensation and years of service. Participants who were age 55 or
older with 15 or more years of service on  December  31,  1997 can  receive  the
greater of the cash balance  benefit or the benefit the  participant  would have
accrued had the prior plan remained in effect.

     A participant's base salary not to exceed $150,000 (as adjusted for cost of
living) commencing January 1, 1994, was used to determine compensation under the
plan. For the individuals  named in the Cash  Compensation  Table,  the years of
service  covered by the plan for the year ended  December 31, 1997,  were: W. E.
Bixby, 40 years; R. L. Finn, 23 years; F. P. Lemery,  37 years; D. D. Jensen, 31
years; R. P. Bixby, 20 years.

      The Company has adopted an unfunded  excess  benefit plan which covers any
employee who is an active  participant in the  noncontributory  defined  benefit
pension plan and whose pension  benefit under that plan would exceed the maximum
benefit  limited under  Internal  Revenue Code Section 415. A participant  under
this plan is entitled to a monthly benefit of the difference between the maximum
monthly normal,  early, or deferred vested retirement benefit determined without
regard to the  Internal  Revenue  Code  Section 415  limitation  and the monthly
equivalent  of the maximum  benefit  permitted by Internal  Revenue Code Section
415.

      (g)  Compensation of Directors

      Outside Directors are paid $4,000 quarterly; $2,000 if they attend Special
Board Meetings; $1,000 if they attend Executive Committee Meetings; $500 if they
attend all other Committee Meetings.  Inside Directors are paid $1,000 quarterly
and $400 if they attend  Special Board  Meetings.  J. R. Bixby,  Chairman of the
Board, is paid $30,000  quarterly.  Directors of Sunset Life, a subsidiary,  are
paid $500 quarterly and Directors of Old American are paid $250 quarterly.
Director fees are included in the Compensation Table.

      (h)  Employment Contracts and Termination of Employment and Change in
           Control Arrangements

      There are no  employment  contracts  between the Company and its executive
officers.  The Company's benefit plans contain typical provisions  applicable to
all employees for termination of employment.

      (j)  Additional Information with Respect to Compensation Committee

      The members of the Compensation Committee:  Webb R. Gilmore, Michael J.
Ross and Larry Winn, Jr.

<PAGE>


Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
          AND MANAGEMENT

      (a)  Security Ownership of Certain Beneficial Owners

      The following sets forth  information as of February 27, 1998,  concerning
holding of voting  securities  of the Company's  $2.50 par value capital  stock,
which is the Company's only class of voting stock.

      Name and Address of Beneficial Owners:

      John K. Koetting, Robert C. Miller
      and Ronald E. Hiatt, Trustees of the
      Kansas City Life Insurance Company
      Savings and Investment Plan
      3520 Broadway, Kansas City, MO  64111-2565

      Amount and Nature of Ownership*                  Percent of Class

              446,892 shares                                  7.2

      John K. Koetting, Robert C. Miller
      and Ronald E. Hiatt, Trustees of the
      Kansas City Life Employee Stock Plan
      3520 Broadway, Kansas City, MO  64111-2565

      Amount and Nature of Ownership*                  Percent of Class

               38,342 shares                                   .6

     *Trustees have the power to sell plan assets. Participants may instruct the
      Trustees how to vote their shares.

      Angeline I. O'Connor
      c/o William A. Hirsch, Esq.
      Morrison & Hecker
      2600 Grand Avenue, Kansas City, MO  64108

      Amount and Nature of Ownership**                 Percent of Class

              351,224 shares                                  5.7

     **Includes  174,500  shares  in the  Walter  E.  Bixby  Descendants  Trust.
     Angeline I. O'Connor, R. Philip Bixby and W. E. Bixby, III are Co-Trustees.
     The Trustees  share  voting and  investment  power.  The terms of the Trust
     restrict the transfer of the shares.

     Angeline I. O'Connor (then known as Angeline I. Oxler); J. R. Bixby; Margie
Morris Bixby; Kathryn A. Bixby-Haddad;  Kathryn A. Bixby-Haddad as Custodian for
Kellie S. Curtis;  Sorouch  Haddad;  Nancy Bixby Hudson;  R. Philip Bixby; W. E.
Bixby,  III; James R. Gammon as Trustee of the Walter E. Bixby Family Trust;  R.
Philip Bixby,  Angeline I. O'Connor and W. E. Bixby,  III as  Co-Trustees of the
Walter E. Bixby Descendants Trust; W. E. Bixby; W. E. Bixby as Trustee for Trust
B created  pursuant to the Will of Edwin  Bixby and Trust B created  pursuant to
the Will of Angeline  Reynolds  Bixby were members of a group that agreed to act
together for the purpose of holding common stock, and the common stock ownership
of such group was  reflected  in a Schedule  13D filed  with the  Commission  on
November 23, 1988 and  subsequently  amended.  The agreement that documented the
various  rights and  obligations  among all of the members of that group expired
May 20, 1990.

      Nonetheless,  Mrs. O'Connor and other former members of the Bixby Group in
subsequent  filings with the Commission have indicated that they currently share
the  expectation of many members of their extended family that a majority of the
common stock will continue to be  beneficially  owned by such  individuals or be
under the control of Trustees under certain  testamentary  or inter vivos Trusts
for the benefit of such individuals.

      (b)  Security Ownership of Management

      The names of the  nominees  proposed by  management  for election to three
year  terms at the annual  meeting  to be held  April 23,  1998 are set forth as
follows:

                                                Served    Shares of
                                                 as a     Record and
                             Principal         Director  Beneficially   Percent
     Nominee                 Occupation         Since       Owned       of Class

W. E. Bixby                Vice Chairman of        1966    1,153,909        19.0
3520 Broadway              the Board and                      26,373(2)
Kansas City, MO            President

Jack D. Hayes              Senior Vice Presi-      1995          600          *
3520 Broadway              dent, Marketing                       521(2)
Kansas City, MO

Francis P. Lemery          Senior Vice Presi-      1985        1,713          *
3520 Broadway              dent and Actuary                    7,688(2)
Kansas City, MO

Michael J. Ross            Chairman of the         1972          300          *
12826 Dubon Lane           Board and President,
St. Louis, MO              Jefferson Bank and
                           Trust Company,
                           St. Louis, MO

Elizabeth T. Solberg       Executive Vice          1997          100          *
850 W. 52nd St.            President and Senior
Kansas City, MO            Partner, Fleishman-
                           Hillard, Inc.,
                           Kansas City, MO

      The following Directors were elected April 18, 1996 for a three year term:

W. E. Bixby, III           President, Old          1996      176,124         5.7
3520 Broadway              American Insur-                     2,217(2)
Kansas City, MO            ance Company,                     174,500(3)
                           Kansas City, MO                     4,376(4)

Webb R. Gilmore            Partner -               1990          500          *
Attorney at Law            Gilmore & Bell,
833 Westover Rd.           Kansas City, MO
Kansas City, MO

Nancy Bixby Hudson         Investor                1996      165,783         2.7
425 Baldwin Creek Rd.
Lander, WY

Daryl D. Jensen            Vice Chairman of the    1978           24
2143 Old Port Dr.          Board and President,                7,361(2)       *
Olympia, WA                Sunset Life Insurance
                           Company of America,
                           Olympia, WA

C. John Malacarne          Vice President,         1991           10
3520 Broadway              General Counsel                     6,085(2)       *
Kansas City, MO            and Secretary

                                                Served    Shares of
                                                 as a     Record and
                             Principal         Director  Beneficially   Percent
     Nominee                 Occupation         Since       Owned       of Class

     The following Directors were elected April 24, 1997 for a three year term:

J. R. Bixby                Chairman of the         1957    1,484,056(1)     24.0
3520 Broadway              Board
Kansas City, MO

R. Philip Bixby            Executive Vice          1985      174,599         5.9
3520 Broadway              President                           6,391(2)
Kansas City, MO                                              174,500(3)
                                                               9,882(5)

Richard L. Finn            Senior Vice Presi-      1983           12
3520 Broadway              dent, Finance                       6,664(2)       *
Kansas City, MO

Warren J. Hunzicker, M.D.  Director                1989          150          *
1248 Stratford Rd.
Kansas City, MO

Larry Winn, Jr.            Retired Represent-      1985          166          *
8420 Roe Ave.              ative, U.S. Congress
Prairie Village, KS

All  Directors,  executive  officers and their spouses (also includes all shares
held by Trustees of Company benefit plans and shares held by the
Bixby Family and related Trusts)                           4,205,181        67.9

     *Less than 1%.

(1)  Includes  900  shares  owned by the  spouse of J. R.  Bixby.
     Beneficial ownership of these shares is disclaimed.

(2)   Approximate  beneficial  interest in shares held by the Trustees of Kansas
      City Life Insurance  Company employee  benefit plans.  Participants in the
      plans may  instruct  the  Trustees  how to vote those shares held in their
      account.

(3)   Shares in the Walter E. Bixby Descendants Trust.  R. Philip Bixby, W. E.
      Bixby, III and Angeline I. O'Connor are Co-Trustees.  The Trustees share
      voting and investment power.  The terms of the Trust restrict transferring
      shares.

(4)   Shares as to which W. E. Bixby,  III is Custodian  for his minor niece and
      nephews under the Missouri Uniform Gifts to Minors law.

(5)   Shares as to which R. Philip  Bixby is  Custodian  for his minor niece and
      nephews under the Missouri Uniform Gifts to Minors law.


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      None.

<PAGE>


                           PART IV


Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
          REPORTS ON FORM 8-K

      (a)(1)  Financial Statements

      The following  financial  statements of Kansas City Life Insurance Company
are  incorporated by reference from the Company's  Annual Report to Shareholders
for the year ended December 31, 1997 at the following pages:

                                                                      Page

   Consolidated Income Statement - Years ended
      December 31, 1997, 1996 and 1995 . . . . . . . . . . . . . . .   16
   Consolidated Balance Sheet -
      December 31, 1997 and 1996 . . . . . . . . . . . . . . . . . .   17
   Consolidated Statement of Stockholders' Equity -
      Years ended December 31, 1997, 1996 and 1995 . . . . . . . . .   18
   Consolidated Statement of Cash Flows -
      Years ended December 31, 1997, 1996 and 1995 . . . . . . . . .   19
   Notes to Consolidated Financial Statements  . . . . . . . . . . . 20-28
   Report of Independent Auditors  . . . . . . . . . . . . . . . . .   29

      (a)(2)  Supplementary Data and Financial Statement Schedules

      Schedules are attached hereto at the following pages:

                                                                      Page

   I   - Summary of Investments - Other than Investments
            in Related Parties, December 31, 1997  . . . . . . . . .   17
   II  - Condensed Financial Information of Registrant,
            Years ended December 31, 1997, 1996 and 1995 . . . . . . 18-20
   III - Supplementary Insurance Information, Years ended
            December 31, 1997, 1996 and 1995 . . . . . . . . . . . .   21
   V   - Valuation and Qualifying Accounts, Years ended
            December 31, 1997, 1996 and 1995 . . . . . . . . . . . .   21

<PAGE>


All other  schedules are omitted as the required  information is inapplicable or
the information is presented in the financial statements or related notes.

      (b)  Reports on Form 8-K

           None.

      (c)  Exhibits

           Exhibit
           Number:                           Basic Documents:

             3(a)     1986 Restatement of Articles of Incorporation.  [Filed as
                      Exhibit 3(a) to the Company's 10-K Report for 1986 and
                      incorporated herein by reference]

             3(b)     Bylaws as amended October 26, 1986. [Filed as Exhibit 3(b)
                      to the Company's 10-K Report for 1986 and incorporated
                      herein by reference]

             3(c)     Specimen  copies of Capital Stock  Certificates,  (a) less
                      than 100 shares; (b) 100 shares; and (c) unlimited. [Filed
                      as Exhibit 3(d) to the Company's  10-K Report for 1985 and
                      incorporated herein by reference]

            10(a)     Fourth  Amendment,  Kansas City Life Deferred  
                      Compensation Plan.  [Filed as Exhibit 10(a) to the  
                      Company's  10-K Report for 1993 and incorporated herein 
                      by reference]

            10(b)     Twenty-first Amendment, Kansas City Life Insurance Company
                      Savings and Investment Plan.  [Filed as Exhibit 10(b) to
                      the Company's 10-K Report for 1994 and incorporated herein
                      by reference]

            10(c)     Ninth Amendment, Kansas City Life Employee Stock Plan.
                      [Filed as Exhibit 10(c) to the Company's 10-K Report for
                      1994 and incorporated herein by reference]

            10(d)     Kansas City Life Excess Benefit Plan.  [Filed as Exhibit 
                      10(e) to the Company's 10-K Report for 1990 and 
                      incorporated herein by reference]

            10(e)     Kansas City Life Insurance Company Long-Term Incentive 
                      Plan for 1994-1996.

            13        Annual Report to Shareholders  for the year ended December
                      31, 1997.

            21        Subsidiaries.

            23(a)     Consent of Independent Auditors.

            23(b)     Consent of Independent Auditors.

            27        Financial Data Schedule.

            99(a)     Form  11-K for the  Kansas  City  Life  Insurance  Company
                      Savings and Investment Plan for the year 1997 and filed as
                      a part hereof and incorporated herein by reference.

            99(b)     Prospectus for Kansas City Life Insurance Company Savings
                      and Investment Plan.  [Filed as Exhibit 99(b) to the 
                      Company's 10-K Report for 1995 and incorporated herein by 
                      reference]

<PAGE>


SIGNATURES



      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.



KANSAS CITY LIFE INSURANCE COMPANY



By: /s/ John K. Koetting
    John K. Koetting
    Vice President and Controller
    (Principal Accounting Officer)
Date: March 25, 1998





      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.



By: /s/ W. E. Bixby                          By: /s/ Richard L. Finn
    W. E. Bixby                                  Richard L. Finn
    Director; Vice Chairman of the               Director; Senior Vice
    Board and President                          President, Finance
    (Principal Executive Officer)                (Principal Financial Officer)
Date: March 25, 1998                         Date: March 25, 1998



By: /s/ J. R. Bixby                          By: /s/ Francis P. Lemery
    J. R. Bixby                                  Francis P. Lemery
    Director; Chairman of                        Director; Senior Vice
    the Board                                    President and Actuary
Date: March 25, 1998                         Date: March 25, 1998



By: /s/ R. Philip Bixby                      By: /s/ C. John Malacarne
    R. Philip Bixby                              C. John Malacarne
    Director; Executive                          Director; Vice President,
    Vice President                               General Counsel and Secretary
Date: March 25, 1998                         Date: March 25, 1998



By: /s/ Warren J. Hunzicker                  By: /s/ Daryl D. Jensen
    Warren J. Hunzicker, M.D.                    Daryl D.Jensen
    Director                                     Director
Date: March 25, 1998                         Date: March 25, 1998

<PAGE>


                                                            Schedule I





                         KANSAS CITY LIFE INSURANCE COMPANY
                         SUMMARY OF INVESTMENTS - OTHER THAN
                           INVESTMENTS IN RELATED PARTIES
                                  December 31, 1997



                                                                      Amount at
                                                                     Which Shown
                                                           Fair      in Balance
         Type of Investment                   Cost         Value        Sheet

                                 (in thousands)

Fixed maturity securities, available for sale:
  Bonds:
   United States government and government
     agencies and authorities               $  135,182      138,051      138,051
   Mortgage-backed securities                  315,621      324,662      324,662
   States, municipalities and political
     subdivisions                               74,693       76,915       76,915
   Public utilities                            281,781      288,075      288,075
   All other bonds                           1,137,714    1,168,839    1,168,839
 Redeemable preferred stocks                     7,750        7,974        7,974
   Total                                     1,952,741    2,004,516    2,004,516

Equity securities, available for sale:
 Common stocks                                  20,187       20,085       20,085
 Perpetual preferred stocks                     86,847       94,901       94,901
   Total                                       107,034      114,986      114,986

Fixed maturity securities, held to maturity:
  Bonds:
    States, municipalities and political
     subdivisions                                1,549        1,696        1,549
   Public utilities                             50,291       52,729       50,291
   All other bonds                              93,821       97,070       93,821
     Total                                     145,661      151,495      145,661

Mortgage loans on real estate, net             270,054                   270,054
Real estate, net                                36,764                    36,764
Real estate joint ventures                      43,347                    43,347
Policy loans                                   123,186                   123,186
Short-term                                      74,341                    74,341
Other                                            7,500                     7,500
    Total investments                       $2,760,628                 2,820,355

<PAGE>


                                                           Schedule II




                         KANSAS CITY LIFE INSURANCE COMPANY
                    CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                    BALANCE SHEET



                                                                 December 31

                                                             1997           1996

                                                                (in thousands)

Assets
Investments:
 Fixed maturity securities:
   Available for sale, at fair value                   $1,546,655     1,322,965
   Held to maturity, at amortized cost                     90,688       162,502
 Equity securities available for sale, at fair value:
   Investments in affiliates                              218,128       197,424
   Other                                                   86,803        61,783
 Mortgage loans on real estate, net                       221,323       222,548
 Real estate, net                                          36,163        42,658
 Real estate joint ventures                                34,666        24,025
 Policy loans                                             102,106        74,070
 Short-term                                                46,203        10,912
   Total investments                                    2,382,735     2,118,887

Deferred acquisition costs                                 95,638        94,095
Value of purchased insurance in force                      73,217             -
Other                                                     157,686        85,385
Separate account assets                                    57,980        13,916

    Total assets                                       $2,767,256     2,312,283

Liabilities and stockholders' equity
Future policy benefits                                 $  538,361       452,126
Accumulated contract values                             1,427,769     1,224,377
Other                                                     212,552       159,000
Separate account liabilities                               57,980        13,916
    Total liabilities                                   2,236,662     1,849,419

Stockholders' equity:
  Common stock                                             23,121        23,121
  Paid-in capital                                          16,256        14,761
  Unrealized gains on securities
    available for sale, net                                36,448         2,963
  Retained earnings including $107,260,000 undis-
    tributed earnings of affiliates ($95,307,000 - 1996)  543,715       509,748
  Less treasury stock, at cost                            (88,946)      (87,729)
    Total stockholders' equity                            530,594       462,864

    Total liabilities and stockholders' equity         $2,767,256     2,312,283



The above condensed  financial  statement should be read in conjunction with the
consolidated  financial  statements  and  notes  thereto  of  Kansas  City  Life
Insurance Company.

<PAGE>


                                                            Schedule II
                                                            (continued)




                         KANSAS CITY LIFE INSURANCE COMPANY
                    CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                  INCOME STATEMENT



                             Years ended December 31

                                              1997          1996          1995

                                                         (in thousands)

Revenues
Insurance revenues:
  Premiums:
    Life insurance                         $ 28,145        26,186        23,927
    Accident and health                      39,435        31,264        22,324
  Contract charges                           68,431        55,123        52,932
Investment revenues:
  Investment income, net                    148,291       142,119       144,502
  Dividends from affiliates                     150         5,000         6,400
  Realized investment gains, net             13,175         3,089         4,581
Other                                         5,786         7,877         6,906
  Total revenues                            303,413       270,658       261,572

Benefits and expenses
Policy benefits:
  Death benefits                             51,762        46,033        42,217
  Surrenders of life insurance               11,280        11,737        12,491
  Other benefits                             62,997        56,239        44,066
  Increase in benefit and contract reserves  56,126        52,348        54,348
Amortization of policy acquisition costs     15,138        14,619        13,693
Insurance operating expenses                 66,891        53,338        52,328
Management fees from affiliates              (6,291)       (5,721)       (5,995)
  Total benefits and expenses               257,903       228,593       213,148

Income before federal income taxes           45,510        42,065        48,424

Federal income taxes                         12,602         9,844        12,404

Income before equity in undistributed
  net income of affiliates                   32,908        32,221        36,020

Equity in undistributed net income
  of affiliates                              11,953        10,094         5,718

Net income                                 $ 44,861        42,315        41,738


The above condensed  financial  statement should be read in conjunction with the
consolidated  financial  statements  and  notes  thereto  of  Kansas  City  Life
Insurance Company.

<PAGE>


                                                            Schedule II
                                                            (continued)





                         KANSAS CITY LIFE INSURANCE COMPANY
                    CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                 CASH FLOW STATEMENT



                             Years ended December 31

                                              1997          1996          1995

                                                         (in thousands)

Net cash provided by operating activities  $ 14,081        38,020        32,553

Investing activities
  Investments called, matured or repaid     215,239       225,957       232,966
  Decrease (increase) in short-term
    investments, net                        (35,291)       16,053        10,482
  Investments sold                          492,920       102,733       141,990
  Investments purchased or originated      (840,802)     (387,849)     (445,236)
  Other                                       3,685         1,056          (538)
  Acquisition of life block:
    Cash received net of purchase price paid213,092             -             -

  Net cash provided (used)                   48,843       (42,050)      (60,336)

Financing activities
  Proceeds from borrowings                  245,050         1,650        22,730
  Repayment of borrowings                  (245,050)       (1,650)      (22,730)
  Policyowner contract deposits             119,639       115,493       132,408
  Withdrawals of policyowner
    contract deposits                      (127,341)     (107,073)      (94,150)
  Cash dividends to stockholders            (10,894)      (10,393)      (10,061)
  Other                                         278           592           670

  Net cash provided (used)                  (18,318)       (1,381)       28,867

Increase (decrease) in cash                  44,606        (5,411)        1,084
Cash at beginning of year                       (87)        5,324         4,240

  Cash at end of year                      $ 44,519           (87)        5,324



The above condensed  financial  statement should be read in conjunction with the
consolidated  financial  statements  and  notes  thereto  of  Kansas  City  Life
Insurance Company.

<PAGE>


                                                            Schedule III



                         KANSAS CITY LIFE INSURANCE COMPANY
                         SUPPLEMENTARY INSURANCE INFORMATION



The Company believes it operates in a single industry segment, that of providing
life and  accident  and  health  insurance  coverage.  Therefore,  supplementary
information for this segment is limited to the following:

                                   December 31

                                                    1997           1996

                                 (in thousands)

      Unearned premiums (included in                $949            909
      other policyowners' funds in the
      accompanying Consolidated Balance
      Sheet)

All other  information  required by this  Schedule is shown in the  accompanying
Consolidated Income Statement and Consolidated Balance Sheet.





                                                            Schedule V



                          VALUATION AND QUALIFYING ACCOUNTS



                             Years ended December 31

                                               1997         1996        1995

                                 (in thousands)

Real estate valuation account
  Beginning of year                          $ 5,227        7,378       9,942
  Deductions                                  (1,541)      (2,151)     (2,564)
  End of year                                $ 3,686        5,227       7,378


Mortgage loan valuation account
  Beginning of year                          $ 8,500       10,500      10,500
  Deductions                                       -       (2,000)          -
  End of year                                $ 8,500        8,500      10,500


Allowance for uncollectible accounts
  Beginning of year                          $ 1,160        1,123       2,732
  Additions                                      230          845       1,258
  Deductions                                    (181)        (808)     (2,867)
  End of year                                $ 1,209        1,160       1,123

<PAGE>