Securities and Exchange Commission
                             Washington, D.C. 20549


                                    Form 10-Q


               Quarterly Report Under Section 13 or 15 (d) of the
                         Securities Exchange Act of 1934


                       For the Quarter ended June 30, 2001


                           Commission File No. 2-40764


                       Kansas City Life Insurance Company
                                  3520 Broadway
                        Kansas City, Missouri 64111-2565

                              Phone: (816) 753-7000

                             IRS Number: 44-0308260

                      Incorporated in the State of Missouri



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,
and (2) has been subject to such filing requirements for the past 90 days.

              Yes     X                           No______

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the most recent date available.

           Class                               Outstanding July 31, 2001
Common Stock, $1.25 par value                      12,018,888 shares




                       Kansas City Life Insurance Company
                           Quarter ended June 30, 2001

Part I
Item 1. Financial Statements

Incorporated  by reference from the Quarterly  Report to  Stockholders  (pages 4
through 7). See the attached exhibit.  These interim financial statements should
be read in conjunction with the Company's 2000 Annual Report to Stockholders.

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
     of Operations

This filing contains  forward-looking  statements and information that are based
on management's current expectations as of the date of this document.  The words
"anticipate",  "believe",  estimate" and "expect" and similar  expressions,  are
intended  to  identify  forward-looking  statements  which are subject to risks,
uncertainties,  assumptions  and other factors that may cause the actual results
of  the  Company  to be  materially  different  from  those  reflected  in  such
forward-looking  statements.  Factors  that  could  cause the  Company's  future
results to differ materially from expectations include: (1) general economic and
business  conditions;  (2) changes in interest rates; (3) the performance of the
stock market; (4) increased  competition in the sale of insurance and annuities;
(5) customer  response to new  products,  distribution  channels  and  marketing
initiatives;  (6) changes in the Federal income tax laws and  regulations  which
may affect the relative tax  advantages of some of the Company's  products;  (7)
insurance regulatory changes or actions; and (8) ratings assigned to the Company
and its  subsidiaries  by  independent  rating  organizations  such as A.M. Best
Company.  There can be no assurance that other factors not currently anticipated
by management  will not also  materially and adversely  affect the Company.  The
Company does not intend to update these forward-looking  statements prior to its
next required filing with the Securities and Exchange Commission.

Results of Operations

Kansas  City  Life's  net  income  per share  declined  17 percent in the second
quarter to equal  $.95.  For the first  half,  net income per share  declined 22
percent to equal  $1.74.  The effect of realized  gains and losses on net income
for both second quarter and six months was  negligible.  The decline in earnings
was due to three factors.  First,  overall mortality  experience continues to be
less  favorable  than prior  periods.  Second,  home office  operating  expenses
increased  in both the  quarter  and first half.  Third,  the  benefit  from the
unlocking of assumptions  related to the  amortization  of deferred  acquisition
costs declined $3.2 million for the six months as unlocking equaled $0.8 million
for the six months of 2001 versus $4.0 million for 2000.

Net investment  income declined 3 percent in the second quarter and 1 percent in
the first half as portfolio yields declined slightly. The investment portfolio's
book value was unchanged  over the past year.  Interest  margins on the interest
sensitive products were maintained. It is important to note that funds generated
by the  variable  products  are  segregated  into  separate  accounts and do not
generate investment income for the Company.

Home  office  operating  expenses  rose 10 percent in the second  quarter  and 8
percent in the first half.  This  increase is primarily  due to increased  legal
costs,  primarily due to a lawsuit  involving  Sunset Life, and increased  costs
associated with our banking and customer relationship management endeavors.

The  following  schedule  addresses  the  financial  performance  of each of the
Company's four reportable operating segments: Kansas City Life, which is divided
between its individual and group operations, and its two insurance affiliates.



                       Kansas City Life Insurance Company
                               Segment Information

<TABLE>
<CAPTION>
                                         Kansas City Life      Sunset       Old
                                        Individual   Group      Life      American    Total

Revenues from external customers:
<S>                               <C>    <C>         <C>        <C>        <C>       <C>
           Six months:            2001   $54,652     30,231     12,257     36,566    133,706
                                  2000    54,535     28,393     14,578     37,608    135,114
           Second quarter:        2001    27,648     15,908      5,971     18,181     67,708
                                  2000    25,612     14,503      6,940     18,674     65,729

Investment revenues:
           Six months:            2001   $76,060        361     16,749      8,404    101,574
                                  2000    77,431        370     16,975      8,076    102,852
           Second quarter:        2001    37,859        165      8,354      4,160     50,538
                                  2000    39,312        183      8,636      4,079     52,210

Segment income:
           Six months:            2001   $13,682      1,248      2,713      3,341     20,984
                                  2000    17,107        597      5,588      3,548     26,840
           Second quarter:        2001     6,934      1,101      1,091      2,340     11,466
                                  2000     7,667        220      3,039      2,796     13,722
<FN>

Notes:
1.   Intersegment revenues are not material.
2.   The above totals agree to the consolidated financial statements.
3.   There has been no significant  change in segment assets from last year end,
     nor  has  there  been  any  change  in the  basis  of  segmentation  or the
     measurement of segment income.
</FN>
</TABLE>

Kansas City Life - Individual

Total new annualized  premiums  declined 7 percent in the second  quarter.  This
decline was largely due to a 16 percent decline in  non-variable  universal life
sales, a 49 percent decline in variable  universal life sales,  and a 23 percent
decline in variable annuity sales. However, partially offsetting these declines,
non-variable  flexible  annuity sales more than doubled during the quarter.  For
the six months,  new  annualized  premiums  declined  10  percent.  Non-variable
flexible annuity sales increased 64 percent over last year. Partially offsetting
this  increase,  non-variable  universal  life sales  decreased  18 percent  and
traditional life sales declined 20 percent.  Variable  universal life sales fell
36 percent and variable  annuity  sales  declined 20 percent.  Variable  product
sales accounted for two-thirds of this segment's total sales for the six months,
compared  to  78  percent  last  year.  This  segment  provided  78  percent  of
consolidated new annualized premiums for the six months, the same as last year.

Total insurance revenues, which include premium renewals and contract charges on
the  interest  sensitive  products,  rose 8 percent in the second  quarter and 2
percent in the first half.

Total  benefits  for this segment  declined 6 percent in the second  quarter but
rose 1 percent in the first half. Death benefits on non-interest  sensitive life
insurance  products fell 16 percent in the second  quarter but rose 2 percent in
the  first  half.  Mortality  experience  for the  universal  life line was less
favorable than a year earlier.  Traditional life surrenders  declined 14 percent
in the second  quarter and 19 percent in the first half.  Total  benefits,  as a
percent of total  revenue  excluding  realized  gains and losses,  equaled  60.2
percent in the first half, versus 58.9 percent a year ago.

Income on this segment  declined 10 percent in the second quarter and 20 percent
in the first  half.  In the six  months,  this  segment  provided  41 percent of
consolidated insurance revenues and 65 percent of consolidated income,  compared
with 40 percent and 64 percent, respectively, a year ago.

Kansas City Life - Group

In the first half, the group segment  contributed 6 percent of the  consolidated
income,  up from 2 percent a year ago.  This  segment  provided  23  percent  of
consolidated  insurance  revenues,  compared to 21 percent last year. The claims
ratio  increased from 67.5 percent to 70.0 percent,  primarily due to the dental
and life  lines.  Much of the  increase in  earnings  was due to a $1.6  million
pretax gain on the cession of a block of group life business.

Group sales,  in terms of new  annualized  premiums,  declined 19 percent in the
second  quarter and 12 percent in the first half.  The group segment  provided 9
percent of consolidated  annualized  premiums for the first half, compared to 10
percent last year. Group sales were lead by the dental line, which accounted for
77 percent of total group sales. However, dental sales declined 3 percent in the
second  quarter and 15 percent in the first half as premium rates were inceased.
Group  disability  sales declined 43 percent in the second quarter but increased
40 percent in the six months.

Sunset Life

Sunset Life's new annualized  premiums declined 25 percent in the second quarter
as  universal  life sales fell 48 percent and  non-variable  flexible  annuities
declined 17 percent.  For the first half,  new annualized  premiums  declined 15
percent as universal  life sales declined 24 percent and  non-variable  flexible
annuities  declined 9 percent.  This segment  contributed 5 percent of total new
annualized premiums during the first half, the same as a year ago.

Total  insurance  revenues  for  Sunset  Life  declined  7 percent in the second
quarter  and 14 percent  in the first  half.  Total  benefits  for this  segment
declined 8 percent in the second quarter and 3 percent in the first half.  Death
benefits  on  non-interest  sensitive  products  rose 35  percent  in the second
quarter and 25 percent in the first half, as mortality  experience was also less
favorable for this segment.  Traditional  life surrenders fell 11 percent in the
second  quarter  and 6  percent  in  the  six  months.  Largely  reflecting  the
deterioration  in mortality  experience,  total benefits,  as a percent of total
revenue  excluding  realized  gains and losses equaled 56.4 percent in the first
half, up from 53.6 percent last year.

Sunset Life's income declined 64 percent in the second quarter and 51 percent in
the first half due to the claims experience noted above and increased legal fees
as discussed  earlier.  In the first half,  Sunset Life contributed 9 percent of
consolidated insurance revenues and 13 percent of consolidated income, versus 11
percent and 21 percent, respectively, last year.

Old American

Old  American's  new  annualized  premiums  increased  11  percent in the second
quarter and 8 percent in the first half.  This segment  contributed 8 percent of
total new annualized premiums in the first half, versus 7 percent a year ago.

Total insurance revenues declined 3 percent in both the second quarter and first
half.  Total benefits rose 5 percent in the second quarter but fell 2 percent in
the first half. Death benefits  increased 14 percent in the second quarter and 2
percent in the six months as this segment's  mortality  experience improved from
last year. Surrenders increased 5 percent in the second quarter and 6 percent in
the first  half.  For the first  half,  total  benefits  as a percent of revenue
excluding  realized  gains and losses  equaled 59.1 percent,  versus 59.3 a year
ago.

Income for this segment  declined 16 percent in the second quarter and 6 percent
in the first half. This segment  provided 16 percent of consolidated  income and
27 percent of consolidated insurance revenues for the first half, compared to 13
percent and 28 percent, respectively, last year.

Liquidity and Capital Resources

Statements made in the Company's Annual Report to Stockholders remain pertinent.
Liquidity is not a concern for the Company.  For the six months,  cash  provided
from  operating  activities  rose 12  percent to $37.1  million.  Funds from all
sources  totaled $661.1 million,  a 63 percent  increase over last year. At June
30, 2001 the  Company  had $105.0  million of  short-term  borrowings,  up $63.5
million  from year end.  The Company  uses these  borrowings  in order to pursue
interest  spread  strategies.  At June 30,  2001,  separate  accounts  and other
investments  generated by the variable line totaled $345.8 million,  a 1 percent
annualized decrease from year end. This decrease is the result of the volatility
associated with market-based investments.

Assets  totaled $3.7  billion,  up from $3.6 billion at year end.  Excluding the
effects of unrealized  investment gains and losses, assets totaled $3.8 million,
versus $3.7 million at year end.  Consolidated  insurance in force totaled $26.5
billion,  a 3 percent  decline  on an  annualized  basis.  Book  value per share
totaled $46.34, an increase of 9 percent on an annualized basis.

During the first half,  the Company did not purchase any of its shares under the
stock repurchase program. Under this program, the Company may purchase up to one
million shares during 2001.

The Board of  Directors  declared a quarterly  dividend of $.27 per share,  an 8
percent increase over last year's dividend of $.25 per share.

Resently Issued Accounting Pronouncements

In  July  2001,  the  Financial  Accounting  Standards  Board  issued  Financial
Accounting  Standards (FAS) No. 141,  "Business  Combinations"  and FAS No. 142,
"Goodwill and Other  Intangible  Assets" which provide guidance on how companies
account for  business  combinations  and for the  purchased  goodwill  and other
intangible assets that arise from those combinations or are acquired  otherwise.
These  standards  are  effective for Kansas City Life on January 1, 2002 and are
being  evaluated for their effect on the Kansas City Life financial  statements.
The Company presently has no goodwill recorded and as a result,  the adoption of
the new  pronouncements  is not  expected  to have a  significant  impact on the
Kansas City Life financial statements.

Market and Interest Rate Risk Analysis

Statements  made in the 2000 Annual  Report to  Stockholders  pertaining  to the
market and interest rate risk  analysis  remain  pertinent.  As mentioned in the
Annual  Report,  the primary  market risk  affecting  Kansas City Life  concerns
interest  rates.  As market  interest  rates  fluctuate,  so will the  Company's
investment portfolio and its stockholders' equity. At June 30, 2001, the Company
had an unrealized  investment  loss of $32.5  million,  net of related taxes and
deferred policy  acquisition  costs, down from the $43.8 million unrealized loss
reported at year end 2000.  This  decrease is primarily  the result of decreased
interest  rates in the  corporate  bond market  during the first half.  Part II:
Other Information

Item 1: Legal Proceedings

In recent  years,  the life  insurance  industry,  including the Company and its
subsidiaries, has been subject to an increase in litigation pursued on behalf of
purported classes of insurance  purchasers,  questioning the conduct of insurers
in the  marketing  of their  products.  The  Company  believes  that the actions
described  below are part of this trend.  The Company denies all  allegations of
wrongdoing in these lawsuits and has been defending them vigorously.

Edgar W.  Howard,  Sr.,  Individually  and on  Behalf  of All  Others  Similarly
Situated v. Sunset Life Insurance  Company of America,  District Court of Burnet
County,  Texas, 33rd Judicial District,  Case No. 20451.  Plaintiff alleged that
Sunset Life  breached his  universal  life  insurance  contract when it sent him
letters  advising that his  universal  life policy was  underfunded  and that he
needed to pay  additional  premiums  in order to maintain  the current  level of
death benefit.  Plaintiff sought  unspecified  compensatory  damages,  interest,
costs,  and attorney  fees;  and alleged as causes of action breach of contract,
unjust enrichment,  breach of duty of good faith, and fair dealing. In addition,
the petition  included a claim for injunctive and declarative  relief and sought
certification as a class action on behalf of all persons who purchased universal
life  insurance  policies from Sunset Life on or after January 1, 1986,  and who
had been  forced to  increase  their  premium  payments  or reduce  their  death
benefits. On June 14, 2001, the trial court entered a summary judgment on behalf
of Sunset Life on all of  plaintiff's  claims.  Plaintiff  has filed a notice of
appeal.

In the previously reported case of Bette Schwager,  On Behalf of Herself and All
Others Similarly Situated, v. Kansas City Life Insurance Company,  United States
District  Court for the Western  District of Texas,  Austin  Division,  Case No.
A-00-CA424-JN.  This case was originally  filed in the 345th  Judicial  District
Court for Travis County, Texas on June 8, 2000 as Case No. GN-001652.  The trial
court has  entered a summary  judgment  on behalf of the  Company  on all of the
plaintiff's   claims   alleging   fraud,    fraudulent    concealment,    unfair
discrimination, breach of contract, breach of fiduciary duty/constructive fraud,
and negligent  misrepresentation  in connection  with the sale of life insurance
policies to the plaintiff and to her husband.

In the previously reported case of Wilner v. Sunset Life Insurance Company, Dean
Delevie,  et al, California  Superior Court,  Case No. SC051573,  filed March 9,
1998 in Los Angeles  Superior Court,  the Trial Court on July 31, 2001 issued an
order denying plaintiff's request for certification of a class on her common law
constructive  fraud claims.  The Court did,  however,  rule that the plaintiff's
Section 17200 claims may be pursued on behalf of a class of California residents
who purchased  Universal Life policies  between January 1, 1985 and December 31,
1999.  Section  17200  claims are tried to the Court and not to any jury and the
relief in such cases is limited to restitution or injunctive relief. A Court may
not award compensatory or punitive damages on a Section 17200 claim. The Court's
order  states  that it has not made any ruling on or  decided  the merits of the
plaintiff's Section 17200 claims.  Sunset will be required to give notice of the
certification  of the  Section  17200  claims to all  California  residents  who
purchased  UL policies  between  January 1, 1985 and December 31, 2001 and it is
anticipated  that this notice may prompt other cases to be filed against Sunset.
Management denies the allegations, including the existence of a legitimate class
and the existence of a uniform unfair  business  practice  capable of resolution
under Section 17200 and intends to defend this matter  vigorously.  However,  no
assurances can be given regarding the outcome of this lawsuit.


In addition to the above, the Company and its subsidiaries are defendants in, or
subject to, other claims and legal actions that may arise in the ordinary course
of business.  Some of these claims and legal actions are in jurisdictions  where
juries  sometimes  award punitive  damages  grossly  disproportionate  to actual
damages.  Although no assurances can be given and no determinations  can be made
at this time,  management  believes  that the ultimate  liability,  if any, with
respect to these other claims and legal actions,  would have no material  effect
on the  Company's  business,  results of  operations,  and  financial  position.
SIGNATURES

Pursuant  to the  requirements  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




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



/s/John K.Koetting
John K. Koetting
Vice President and Controller



/s/C. John Malacarne
C. John Malacarne
Vice President, General Counsel and Secretary

Date:  August 6, 2001

                                  Consolidated
                                 Balance Sheet
                                 (in thousands)

                                      June 30     December 31
                                        2001         2000
                                   -------------  -------------
Assets
Investments:
  Fixed maturities:
    Securities available for sale,
      at market                      $ 2,033,102      1,934,156
    Securities held to maturity,
      at amortized cost                        -         80,572
  Equity securities available
    for sale, at market                   94,408         94,270
  Mortgage loans                         405,586        396,731
  Short-term                             108,800         54,171
  Other                                  217,649        194,652
                                   -------------  -------------
                                       2,859,545      2,754,552

Cash                                       7,424         13,391
Deferred acquisition costs               242,701        244,960
Other assets                             299,413        308,210
Separate account assets                  318,907        325,148
                                   -------------  -------------

                                     $ 3,727,990      3,646,261
                                   =============  =============

Liabilities and equity
Future policy benefits               $   816,165        821,286
Accumulated contract values            1,619,185      1,619,887
Notes Payable                            104,996         41,520
Other liabilities                        311,626        306,166
Separate account liabilities             318,907        325,148
                                   -------------  -------------
  Total liabilities                    3,170,879      3,114,007

Stockholders' equity:
  Capital stock                           23,121         23,121
  Paid in capital                         21,255         20,109
  Accumulated other
    comprehensive loss                   (44,013)       (55,280)
  Retained earnings                      665,068        651,324
  Less treasury stock                   (108,320)      (107,020)
                                   -------------  -------------
                                         557,111        532,254
                                   -------------  -------------

                                     $ 3,727,990      3,646,261
                                   =============  =============

Notes:
*  Comprehensive income equals $32,251,000 and $22,761,000,
   for 2001 and 2000, respectively, and $2,220,000 and $7,852,000
   for the second quarter of 2001 and 2000.  This varies from net
   income due to unrealized gains or losses on securities.

*  These financial statements are unaudited but, in management's
   opinion, include all adjustments necessary for a fair
   presentation of the results.

*  Income per common share is based upon the weighted
   average number of shares outstanding during the six months,
   12,028,148 shares (12,036,642 shares - 2000).

*  These interim financial statements should be read in
   conjunction with the Company's 2000 Annual Report to
   Stockholders.  The results of operations for any
   interim period are not necessarily indicative of
   the Company's operating results for a full year.

*  Certain amounts from the prior year's financial statements
   have been reclassified to conform with the current year's
   presentation.




                                  Consolidated
                                Income Statement
                     (in thousands, except per share data)
                                        Quarter ended   Six Months ended
                                            June 30          June 30
                                         2001    2000     2001     2000
                                        ------  ------   ------   ------
Revenues
Insurance revenues:
  Premiums:
    Life insurance                   $ 24,551   23,869   48,532   49,502
    Accident and health                11,222   11,300   22,808   22,352
  Contract charges                     26,579   26,742   53,734   55,268
Investment revenues:
  Investment income, net               50,538   52,210  101,574  102,852
  Realized gains                            9      (64)    (192)     422
Other                                   5,356    3,818    8,632    7,992
                                      -------  -------  -------  -------
    Total revenues                    118,255  117,875  235,088  238,388
                                      -------  -------  -------  -------
Benefits and expenses
Policy benefits:
  Death benefits                       29,333   30,008   60,735   58,779
  Surrenders of life insurance          3,759    4,147    7,574    8,618
  Other benefits                       18,130   18,366   36,486   35,731
  Increase in benefit and
    contract reserve                   17,574   18,923   34,967   36,640
Amortization of policy
  acquisition costs                     7,727    2,694   15,475   11,282
Insurance operating expenses           26,286   24,198   51,376   48,837
                                      -------  -------  -------  -------
    Total benefits and expenses       102,809   98,336  206,613  199,887
                                      -------  -------  -------  -------

Pretax income                          15,446   19,539   28,475   38,501
                                      -------  -------  -------  -------
Federal income taxes:
  Current                               3,682    5,130    6,039   11,317
  Deferred                                298      687    1,452      344
                                      -------  -------  -------  -------
                                        3,980    5,817    7,491   11,661
                                      -------  -------  -------  -------

Net income                          $  11,466   13,722   20,984   26,840
                                      =======  =======  =======  =======

Per common share:

  Net income                           $ 0.95     1.14     1.74     2.23

  Cash dividends                       $ 0.27     0.25     0.54     0.50



                                  CONSOLIDATED
                            STATEMENT OF CASH FLOWS
                                 (in thousands)
                                                    Six Months ended
                                                         June 30
                                                     2001        2000
 Operating activities
   Net cash provided                               $37,097       33,103

 Investing activities
   Purchases of fixed maturities
     available for sale                           (466,768)    (173,486)
   Sales of fixed maturities
     available for sale                            374,249      156,830
   Sales of equity securities
     available for sale                              3,873       28,926
   Maturities and principal paydowns
     of fixed maturity investments:
       Available for sale                           87,795       47,220
       Held to maturity                                  -       19,855
   Purchases of other investments                  (54,140)     (59,554)
   Sales, maturities and principal
     paydowns of other investments                  21,930       21,814
   Net purchase (sale) of
     short-term investments                        (54,629)       2,296
   Disposition of group life block:
      Cash paid net of ceding
        commission received                         (4,000)           -

   Net cash provided (used)                        (91,690)      43,901

 Financing activities
 Policyowner contract deposits                      72,818       69,040
 Withdrawals of policyowner
   contract deposits                               (74,460)    (108,525)
 Dividends paid to stockholders                     (7,239)      (6,024)
 Proceeds from borrowings                           63,325       25,400
 Repayment of borrowings                                 -      (60,400)
 Other, net                                         (5,818)      (1,837)

   Net cash provided (used)                         48,626      (82,346)

 Decrease in cash                                   (5,967)      (5,342)
 Cash at beginning of year                          13,391       22,355

   Cash at end of period                            $7,424       17,013



Message  from the President and CEO

     Our  earnings  continue to trail last year's  record  pace.  Net income per
share declined 22 percent in the first half to $1.74 and decreased 17 percent in
the second quarter to $.95. A portion of the decline was due to incurring  small
investment  losses this year  compared with small  investment  gains a year ago.
Operating  earnings,  which exclude these realized  investment gains and losses,
equaled $1.75 a share for the six months, 21 percent below a year ago. Operating
earnings declined 17 percent in the second quarter to $.95 a share.

     Adverse mortality  fluctuations  continue to restrain earnings comparisons,
but two unusual  items also  impacted  earnings  results in the second  quarter.
Unlocking, or modifying, deferred acquisition cost assumptions based upon actual
emerging  experience  benefited second quarter  earnings in both years.  However
this benefited  pretax  earnings $4.0 million last year versus $0.8 million this
year.  This reduced  benefit was partially  offset by a $1.6 million gain on the
reinsurance of a block of group business.

     The slowing economy and struggling stock market impacted sales.  Annualized
new premiums declined 9 percent as a 50 percent increase in new flexible annuity
premiums  was more than  offset by a 25  percent  decline  in sales of  variable
products.  Sales of final  expense  coverage  to the senior  market  increased 8
percent,  but  sales of group  insurance  declined  12  percent  largely  due to
increased dental premium rates.

     Operating  revenues were  relatively  unchanged in both the quarter and the
six months. Premiums from the traditional lines of business declined slightly in
the half but rose 2 percent for the quarter.  Contract charges  generated by the
interest  sensitive and variable products  decreased 3 percent in the first half
and 1 percent in the quarter.  Net investment  income declined  slightly in both
the quarter and six months but interest  margins were maintained in the interest
sensitive lines of business.

     Home office operating  expenses rose 8 percent largely due to costs related
to the new bank and customer relationship activities,  and legal fees associated
with a lawsuit involving Sunset Life.

     Stockholder  equity per share,  or book  value,  rose to $46.34.  Excluding
equity  fluctuations due to changes in the securities  portfolio's market value,
book value equaled  $49.05 a share,  a 5 percent  annualized  increase since the
first of the year.

     I am pleased to report that Bruce W.  Gordon  recently  joined  Kansas City
Life as Senior  Vice  President,  Marketing.  Bruce  assumes  the  duties of our
retiring head of marketing,  Jack D. Hays. Bruce has 28 years of broad marketing
experience in both the field and home office.  He was recently  Vice  President,
Independent  Distribution,  Individual  Insurance,  for Sun  Life  Assurance  of
Canada.

     Generations  Bank has completed its first year of  operations.  During this
period it has acquired over 3,000 customers and almost $40 million in assets.

     The Board of Directors has  authorized  the repurchase of up to one million
of the Company's shares in the open market during 2001.  However, no shares have
been acquired thus far.

     The Board also approved a quarterly dividend of $.27 a share payable August
20 to stockholders of record on August 6.