Indexed universal life was sold on a story about upside with a floor, and for many owners the story and the statement have since parted company. The floor generally held. The upside, governed by caps and participation rates the carrier can reset, frequently did not match the illustration used at the point of sale. That gap is why so many IUL owners eventually ask whether the contract can be sold.
Kansas City Life offers two indexed universal life products, Compass Elite and EquiFlex. This page explains how their indexed accounts work, why illustrated and credited rates diverge, and how to compare your annual statement against the original illustration. Pine Lake Life Solutions is not affiliated with or endorsed by Kansas City Life and does not purchase policies; this page is educational only.
In This Article
- How Compass Elite and EquiFlex Credit Interest
- Why the Illustrated Rate and the Credited Rate Diverge
- Reading the Annual Statement Against the Original Illustration
- The Cost of Insurance Question Applies Here Too
- Ordering the In-Force Illustration That Matters
- Options Before a Sale, and How Ownership Transfers
- Frequently Asked Questions
How Compass Elite and EquiFlex Credit Interest
Kansas City Life’s indexed universal life products, Compass Elite and EquiFlex, calculate indexed credits by reference to the S&P 500. The company describes four indexed account choices, each crediting differently.
- Indexed Account A uses a growth cap that varies and is reset at the beginning of each segment term.
- Indexed Account B uses a participation rate that determines how much of an increase in the index value applies.
- Indexed Account C offers a higher minimum growth cap than Account A, with an associated account charge of up to 1 percent.
- Indexed Account E applies a guaranteed 50 percent multiplier to capped gains, with an account charge of up to 4 percent.
Kansas City Life states that cash value is always protected from negative market performance regardless of which account is selected. That protection is real, and it is also the reason the credited rate in a strong market year is often well below the index return: the floor is paid for with caps, participation rates and account charges.
Why the Illustrated Rate and the Credited Rate Diverge
A sales illustration projects decades forward using a single assumed crediting rate. Reality delivers a different rate every segment. Three mechanisms drive the gap, and all of them are contractual rather than improper.
First, the growth cap on Account A is reset at the beginning of each segment term, so the cap in force when you bought the policy is not a promise about the cap ten years later. Second, a participation rate applies only part of an index increase, so a strong index year does not translate into a proportional credit. Third, the account charges attached to accounts C and E, up to 1 percent and up to 4 percent respectively, are deducted whether or not the index cooperates.
Compounded over twenty or thirty years, a modest annual shortfall against the illustrated rate produces an account value dramatically below the projection. That is usually what an owner is actually looking at when the premium notices start increasing.
Reading the Annual Statement Against the Original Illustration
Put the two documents side by side. If you no longer have the original illustration, ask whether the carrier can supply the version delivered at issue.
- Compare the account value the illustration projected for this policy year against the account value on the statement.
- Compare the illustrated crediting rate against the rate actually credited each of the past several years.
- Note which indexed account or accounts your value is allocated to, and the caps, participation rates or account charges applied.
- Find the total cost of insurance deducted for the year and compare it to three and five years earlier.
- Check for any policy loan and accrued loan interest.
The size of the gap between projection and reality, not the gap’s existence, is what should drive the next step. Small divergences are normal. A shortfall of thirty or forty percent against projection changes what the contract can realistically do.
| Kansas City Life indexed account | Crediting method | Account charge |
|---|---|---|
| Indexed Account A | Growth cap, reset at the start of each segment term | None stated |
| Indexed Account B | Participation rate applied to index increase | None stated |
| Indexed Account C | Higher minimum growth cap than Account A | Up to 1 percent |
| Indexed Account E | Guaranteed 50 percent multiplier on capped gains | Up to 4 percent |
The Cost of Insurance Question Applies Here Too
An indexed universal life policy is still a universal life chassis, which means monthly cost of insurance deductions rise with the insured’s age and come out of the same account value the indexed credits go into. Weak crediting and rising charges compound each other.
That charge has been litigated at this carrier. In Meek v. Kansas City Life, a federal court in Missouri certified a class of roughly 6,000 Kansas universal life policyholders and held that the cost of insurance should not include profits and expenses; a jury awarded more than $5 million, reduced to $908,075 on statute of limitations grounds, and the Eighth Circuit affirmed on January 10, 2025. On December 4, 2025, AM Best affirmed Kansas City Life’s A- (Excellent) financial strength rating while revising the outlooks to negative, citing pending litigation exposures associated with universal life cost-of-insurance policyowner charges.
The matter has since moved toward resolution. Kansas City Life disclosed a legal settlement accrual of $35.5 million, net of tax, in its second quarter 2025 results, described in the company’s own words as relating to a potential settlement of class action lawsuits. Publicly, that agreement has been reported as $45 million covering approximately 88,000 policyholders with cost-of-insurance claims on certain universal life and variable universal life policies, receiving preliminary court approval on July 14, 2025 with a final approval hearing set for December 12, 2025. Whether final approval was granted could not be confirmed as of July 2026.
Pine Lake has no connection to this litigation, cannot advise on it, and cannot determine whether you fall within any class. Confirm your class membership, the current status, and any deadline with the court-appointed settlement administrator or your own attorney.
Ordering the In-Force Illustration That Matters
The document that resolves the question is an in-force illustration run at current charges and current assumptions, not at the rate used when you bought the policy. Request it from Kansas City Life policy service at 800-821-6164 or P.O. Box 219139, Kansas City, MO 64121-9139.
Ask for three scenarios. The premium required to carry the policy to maturity. The premium required to carry it to a defined age such as 90 or 95. And how long the policy remains in force if you pay nothing further from today. Where an illustration allows an assumed crediting rate to be selected, ask for a conservative assumption as well as the current one, since an indexed contract projected at an optimistic rate reproduces the original problem.
Order these before comparing any options. Illustrations take time, and a policy approaching lapse does not.
Options Before a Sale, and How Ownership Transfers
Reducing the face amount lowers the monthly cost of insurance directly and is often the cheapest fix available. Dropping riders no longer needed does the same. Reallocating among indexed accounts changes future crediting but does not undo past shortfalls, and moving into an account with a higher charge to chase a higher cap is a trade rather than a solution. Repaying an outstanding loan stops one drain immediately.
If a life settlement is the eventual path, it concludes with an absolute assignment transferring ownership rights and beneficiary control to a licensed institutional buyer, who then pays the premiums. Ask the carrier for its current change of ownership form and its signature, witness and notarization requirements before signing anything.
Pine Lake Life Solutions offers a free, no-obligation policy review to help you read the statement and the illustration together. Pine Lake does not purchase policies, is not affiliated with Kansas City Life, and does not provide legal, tax or investment advice. No eligibility or value can be guaranteed.
Frequently Asked Questions
Can Kansas City Life lower the cap on my indexed universal life policy?
The company describes the growth cap on Indexed Account A as varying and being reset at the beginning of each segment term, so the cap in force at issue is not fixed for the life of the contract. Indexed Account B uses a participation rate instead, which determines how much of an index increase applies. Ask the carrier for the caps and participation rates applied in each of the past several years.
Why is my account value so far below the original illustration?
Usually a combination of three things: caps and participation rates that reset lower than the illustrated assumption, account charges of up to 1 percent on Account C or up to 4 percent on Account E, and cost of insurance deductions that rise with age. Each is contractual, and compounded over decades a modest annual shortfall produces a large gap against projection.
Does the floor mean my policy cannot lose value?
The floor protects indexed credits from negative market performance, and Kansas City Life states cash value is always protected from negative market performance. It does not protect the account from monthly deductions. Cost of insurance and account charges come out regardless of index performance, so an account value can fall in a flat year even though no market loss was credited.
What should I request from the carrier?
An in-force illustration run at current charges and current assumptions, in three versions: premium to carry the policy to maturity, premium to carry it to age 90 or 95, and how long it lasts with no further premium. Also request the past three annual statements and, if possible, the illustration delivered at issue so you can compare projection to reality.
Will Pine Lake buy my indexed universal life policy?
No. Pine Lake Life Solutions does not purchase life insurance policies and has no affiliation with, or endorsement from, Kansas City Life. Pine Lake offers a free, no-obligation review to help you understand what your statement and illustration are showing. Nothing here is legal, tax or investment advice, and no eligibility or value is guaranteed.
Find out what your policy is worth — free, confidential, no obligation.
A 15-minute educational review covers your eligibility, every alternative, and a realistic view of what each path would net you.
Related Reading
- Sell My Kansas City Life Universal Life Policy
- Sell My Kansas City Life Guaranteed Universal Policy
- Sell My Kansas City Life Whole Life Policy
- How To Read In Force Illustration
- How Life Settlement Value Is Calculated
- How To Compare Life Settlement Offers
- Sell My Nationwide Universal Life Policy
Pine Lake Life Solutions does not purchase life insurance policies and does not provide legal, tax, or investment advice. Information provided is for educational purposes only. Eligibility for any option, including life settlements, is not guaranteed and depends on individual circumstances, policy terms, underwriting, and market conditions. Consult independent legal, tax, or financial professionals before making decisions regarding a life insurance policy.