UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

|ý                             |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2007.                   
|----------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|o                             |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period
from             to             .
|Commission File No. 000-26781

INSURE.COM, INC.(Exact name of Registrant as specified in its charter)

|Delaware(State or other jurisdiction
of incorporation or organization)                                                                                                                       | 36-3299423(IRS Employer
Identification Number)
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------
|8205 South Cass Avenue, Suite 102
Darien, Illinois 60561
(630) 515-0170(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
|Securities registered pursuant to Section 12 (b) of the Act:None                                                                                                                            
|Securities registered pursuant to Section 12 (g) of the Act:                                                                                                                                
|Title of Each ClassCommon Stock, $.003 par value
Preferred Stock Purchase Rights                                                                                                            

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. o Yes ý No

Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. o Yes ý No

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. ý Yes o No

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 the 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. ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer o

Non-accelerated filer ý (Do not check if a smaller reporting company)

Smaller reporting company o


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). o Yes ý No

Aggregate market value of the Registrant's voting stock held by non-affiliates on February 26, 2008, based on the closing price of said stock on
the Nasdaq Capital Market on such date, was $9,181,085.

As
of February 26, 2008, 7,283,110 shares of the Registrant's Common Stock, $.003 par value of the Registrant were outstanding.

Documents Incorporated by Reference

Portions of the Registrant's definitive proxy statement for the annual meeting of stockholders to be held on May 15, 2008, to be filed pursuant to
Regulation 14(A) are incorporated by reference into Part III of this Form 10-K.



---





PART I  CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Because we want to provide you with more meaningful and useful information, this Annual Report on Form 10-K includes forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange
Act. These forward-looking statements reflect our current expectations and projections about our future results, performance, prospects and opportunities. We have attempted to identify these
forward-looking statements by using words such as "may," "will," "expects," "anticipates," "believes," "intends," "estimates," "could," or similar expressions. These forward-looking statements are
based on information currently available to us and are subject to a number of risks in 2008 and beyond. Actual events may differ materially from those expressed in, or implied by, these
forward-looking statements. These risks, uncertainties, and other factors include, without limitation, the following:



See
the section of this Annual Report on Form 10-K entitled "Risk Factors" for a description of these and other risks, uncertainties, and factors.

You
should not place undue reliance on any forward-looking statements. Except as required by the federal securities laws, we undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future events, changed circumstances, or any other reason after the date of this annual report. Unless otherwise expressly stated,
all references to "we," "us," "our," "Insure.com," and the "Company" refer to Insure.com, Inc. and its subsidiaries. The information contained on our Web sites, or Web sites that are linked to
our Web sites, is specifically not incorporated herein by reference.

1

---



ITEM 1.    BUSINESS

Overview

We are an insurance agency and brokerage headquartered in Darien, Illinois. We own and operate a comprehensive online consumer insurance information service,
accessible at www.Insure.com, which caters to the needs of self-directed insurance shoppers. Since our inception in 1984, we have been continuously developing a proprietary and
comprehensive insurance price comparison and order-entry system that provides instant quotes from about 30 life insurance companies. We use this database to provide customers with a large array of
comparative life insurance quotes online, over the phone or by mail, and we allow the customer to purchase insurance from the company of their choice either online or over the phone with our licensed
insurance customer service staff. Our website also provides insurance information and decision-making tools, along with access to other forms of personal insurance, such as auto, homeowners, renters,
long-term care, health and travel insurance through various third parties. We generate revenues from the receipt of commissions and fees paid by various sources that are tied directly to
the volume of insurance sales or traffic that we produce. We conduct our insurance agency and brokerage operations using licensed agents who are compensated, in part, based on the volume of business
sold and we generate prospective customer interest using traditional direct response advertising methods conducted primarily offline.

For
the ten-year period ended December 31, 2007, we have spent a total of $83 million in direct-to-consumer advertising and have sold
approximately 189,000 new policies.

Industry Background



The insurance market in the United States represents over $1 trillion in annual paid premiums. Insurance products are widely held by households and businesses.
The United States insurance market is broadly divided into two categories: life and health insurance and property and casualty insurance. Over 4,000 insurance companies distribute their products
through a network of agents and brokers or sell directly to consumers. There are approximately one million individuals licensed as agents and brokers to sell insurance in the United States. A variety
of distribution systems have evolved, including "captive" one-company agents and independent agents and brokers that typically represent only two to five insurance companies.



There are numerous challenges to the informed purchase and delivery of insurance products. Some of these challenges are due to the specialized nature of insurance
products and other challenges result from the way in which insurance has been traditionally distributed.

These
challenges include:



2

---





Distribution
of insurance through traditional agent and broker sales forces is expensive and inefficient for insurance companies. Traditional agency distribution methods have high fixed
costs associated with establishing and maintaining numerous branch and local offices, high commission structures, recurring training costs and high agent turnover. In addition, insurance companies
often do not target all segments of the population because of the inability to profitably serve these segments through traditional distribution channels.



The growing acceptance of the Internet and electronic commerce presents a significant opportunity for the insurance industry by allowing consumers to more
efficiently and effectively research and transact with insurance companies. The fragmentation of the insurance industry and the significant price and product variation has led consumers to seek
alternative means of purchase and insurance companies to seek alternative means of distribution. We believe that the vast information sharing and communications power of the Internet will
significantly improve the insurance industry for both consumers and insurance companies.

Characteristics
of the insurance product that make it particularly well suited for delivery over the Internet include:



Many
companies are trying to address the online insurance opportunity. Some companies have created "lead referral" websites for the purpose of capturing consumer name and address
information to be forwarded, as a prospective sales lead, to a specified insurance company or its traditional sales

3

---



force.
Many of these websites are paid up-front referral fees, are aligned with a limited number of insurance companies and often do not quote many of the lowest priced insurance policies.
Consumers are often still required to complete their purchase through a commissioned salesperson. Additionally, these companies typically do not offer any personalized customer service or insurance
fulfillment capabilities and, therefore, do not offer a complete quote-to-policy-delivery insurance solution.

Existing
insurance companies and their agents and brokers have created Web sites to sell their insurance products online as an alternative to their traditional sales activities. Some
companies have created Web sites with the primary purpose of creating an insurance sale online for a single insurance company or group of insurance companies with little or no comparative overview of
prices. These companies perpetuate the fragmentation in the industry by not offering a comprehensive database of pricing and coverage information.

As
a result of the shortcomings inherent in the online lead referral and single company approaches, we have developed a large-scale, comprehensive and unbiased Internet-based insurance
service. Self-directed consumers will likely be attracted to the broadest selection of insurance companies and a compelling value proposition based upon price, time and transaction
fulfillment.

The Insure.com Solution

We believe that Insure.com provides the most comprehensive Internet-based insurance service available. Our website enables consumers to obtain instant quotes from
about 30 life insurance companies and provides access to quotes for several different insurance products, including health, auto and home insurance, through third parties. Customers who prefer an
offline experience can receive comparative life insurance quotes from our licensed insurance professionals and can complete an insurance application over the phone. Our web site provides consumers
with insurance-related information and decision-making tools. Combining the reach and efficiency of the Internet with our proprietary database and industry expertise developed over the past
20 years, we provide a complete "quote-to-policy-delivery" insurance solution.

We
believe we have created a model that addresses the challenges faced by traditional insurance distribution methods in a manner that offers significant benefits to both consumers and
insurance companies. Our model allows consumers to:



Our
solution provides the following principal advantages to both consumers and insurance companies:

Comprehensive Source of Insurance Information and Products.Using our easy-to-navigate web site,
consumers can access insurance-related information and decision-making tools, as well as a library of thousands of insurance articles. Our Web site also provides insurance quotes from about 30 life
insurance companies, and access to quotes from third parties for several other types of insurance including private passenger automobile, dental, individual and family medical, long-term
care, disability and small group medical. We believe we offer consumers access to the largest, most complete repository of comparative information on insurance products, insurance pricing and
insurance providers. We empower consumers with relevant current pricing knowledge, coverage information and independent rating information so consumers can make informed buying decisions.

4

---



Guaranteed-Accurate Instant Quotes.Over the past 20 years, we have developed what we believe to be the most complete,
regularly updated database used to determine insurance quotes. This database serves both the Internet shopper as well as the customer receiving quotes over the phone from a licensed customer service
representative. The ability to obtain instant quotes on the Internet is the first priority for consumers purchasing insurance online, according to a recent survey by an independent research group. We
obtain and regularly update all of our pricing, underwriting and policy coverage information contained in our databases with information obtained directly from the insurance company to ensure
accuracy. We offer consumers a unique $500 cash reward guarantee that we will provide an accurate quote. In addition, we also offer a $500 cash reward guarantee that we will provide the lowest price
quote available with respect to term life insurance policies. We believe these Insure.com guarantees are unmatched by any competitor.

Consumer in Control.We put consumers in control of their insurance purchase decisions by providing them with the ability to
efficiently search, analyze and compare prices of insurance products from multiple insurance companies in complete privacy, on their own time and free from the pressure to buy associated with
traditional face-to-face sales. Consumers choose from what we believe is the largest selection of insurance companies using their own preferences regarding price and insurance
company rating. Consumers are able to purchase insurance directly through us without ever speaking to a salesperson if they so choose.

Convenience.Consumers who use our services no longer need to contact different insurance companies or salespeople, one by
one, in order to gather information to make educated decisions. Unlike traditional agents who only recommend and promote a limited number of insurance companies' policies, we provide real time access
to a large database of over 30 insurance companies' products. Our comparison service presents users with a comprehensive listing of insurance quotes, ranked by price. We believe that this large array
of available insurance providers in a single destination saves consumers time and effort in searching for and obtaining the most suitable coverage.

Quote to Policy Delivery Support.Consumers can purchase insurance directly through us. Unlike insurance lead referral
services, at Insure.com we do not abandon the consumer once the insurance company has been selected, but continue to provide value-added support and service throughout the insurance purchase process.
We facilitate this process by:



Focus on Customer Service.Customer service is both our foundation and a strategic priority. We provide a high level of
customer service throughout the application process and aim to eliminate consumer dissatisfaction and frustration. Our customer service staff has an average of approximately 10 years of
experience in the insurance industry.

We
implement our customer service objectives by:



5

---









Licensed National Insurance Agency.Unlike traditional insurance agents who are often only licensed in one or a limited
number of states, our Company and/or certain of its employees are licensed to distribute insurance throughout the United States. This allows us to process and offer insurance policies to consumers
nationwide.

User Friendly System.At our web site, www.Insure.com, consumers can access our Internet-based services, research policy
options and initiate purchase requests 24 hours a day, 7 days a week. Our easy to use web site is designed for fast viewing and general compatibility with all commonly used web browsers.
Callers can also receive quotes, discuss policy options with our licensed insurance agents and initiate purchase requests over the telephone.

Our Strategy

Our strategy is to be the leading service for all insurance needs of individuals. The key elements of our strategy include:

Continue to Build the Insure.com Brand.We will continue to pursue a cost-effective marketing strategy designed
to promote our Insure.com brand and consumer awareness of the benefits of researching and buying insurance through us.

Continue to provide the customer with the ability to receive life insurance quotes and buy either online or through a telephone based sales
staff.Our website features our proprietary online application technology for most of our term life insurance offerings. While providing a very efficient and cost
effective method of fulfillment, it is our belief many potential buyers are still uncomfortable buying insurance online. For that reason, we also provide a telephone-based complement to our online
sales model for term life insurance.

Continue to generate revenue from the sale of non-life insurance Internet leads.Our website attracts visitors
who are interested in information about lines of insurance other than life insurance. We provide this information through our library of articles and with various insurance tools. We also provide
these visitors with access to quotes for insurance other than life by directing them to the websites of various third parties, for which we receive fee revenue.

Leverage Customer Base.We have expanded our insurance product offerings and believe there is significant opportunity to
leverage our existing customer base and provide new products to them without significant customer acquisition costs. We plan to tailor our marketing efforts based on consumer profiles contained in our
database of existing customers. We also believe that the content acquired in the purchase of the Insure.com Web site will continue to provide us with a permanent new customer gateway, thereby allowing
us to reduce our future customer acquisition costs and our reliance on direct-to-consumer advertising as our primary source of new customers.

Strengthen and Pursue Strategic Relationships and Agreements.We believe that strategic joint ventures and licensing
arrangements are attractive methods of expansion, as they will enable us to combine our expertise in Internet-based insurance offerings with other brand names, complementary services or technology. We
plan to pursue additional relationships and agreements in the future. In addition, we may seek to acquire additional complementary technologies or businesses.

Continue to Focus on Customer Service.We provide insurance products and services for consumers from initial evaluation
through policy delivery. In order to provide the highest level of service

6

---



throughout
the insurance buying process, we will monitor feedback from consumers and add new features designed to increase customer usage and loyalty.

Our Business Model

Our model enables consumers to research, shop for and purchase insurance in a manner that we believe is simpler, faster and more convenient than traditional
methods. Even if the customer prefers to
transact this business by phone, we can provide instant quotes from our database of about 30 life insurance companies, and our online application technology provides an efficient order entry platform.
We provide a complete "quote-to-policy-delivery" insurance solution. Our model:



We
employ a team approach to customer service. If a customer wishes to initiate an insurance application request or obtain information concerning an application already in process, each
and every customer service representative is able to provide assistance.

Our
process is comprised of four primary stages.

Initial Information Evaluation.Consumers visit our user-friendly website or speak with a licensed insurance
professional to access our comprehensive database of insurance policy price rates, underwriting guidelines, policy coverage and exclusion information, and financial stability ratings of over 30 life
insurance companies. To help consumers understand the underwriting process, our website provides information and helpful tips on how the underwriting process works.

Search, Retrieval and Comparison.Online consumers can quickly obtain a customized cost comparison report in a single search
by completing a brief questionnaire at the start of the online session. Customers who call or request a quote by mail will receive the same information. Each consumer inquiry triggers a proprietary
cost search and comparison algorithm that sorts through a database of thousands of insurance options that is updated daily. The search result, delivered in seconds, is a comprehensive comparison of
insurance policies ranked by the lowest price that matches the consumer's criteria. Consumers can then click to view (or callers can discuss with a licensed insurance professional):



Application Processing.If a consumer desires to purchase a policy, the consumer selects an insurance company and policy, and
then fills out an application while online or on the phone with a licensed insurance professional. We offer online applications to accelerate the underwriting process for the most popular of the
insurance companies within our term life offerings. After the consumer

7

---



completes,
receives via download or mail and signs the completed online application, the consumer returns the application to us. We then submit the application to the insurance company for
underwriting on behalf of the consumer. We provide toll-free support during business hours to assist the consumer in completing the application.

Underwriting.During the underwriting process, we regularly track the progress of the consumer's outstanding items. We also
assist the insurance company by arranging for a paramedical examination and facilitating the collection of any other outside information needed. We obtain status reports from
the insurance company at least every ten days regarding the application and regularly communicate this information to the consumer. We review all policies for accuracy prior to delivery to the
consumer.

If
an insurance company declines to issue the policy or issues a counter offer at a higher premium, we send a letter to the consumer stating the reasons that the policy is not being
issued as applied for. In this instance, we also assist the consumer in finding suitable alternative coverage whenever asked and wherever possible.

Once
a policy has been issued and been paid for by the consumer, we receive a commission from the insurance company. We do not charge consumers for using our technology and do not
currently sell banner advertising at our Insure.com web site.

Insurance Products

Insure.com historically offered quote and policy-related information regarding term life insurance. We now also offer instant quotes and related information on
additional insurance products for both individuals and small businesses. Our current product offerings include:



8

---





We
constantly evaluate our offerings based on a number of factors, including market acceptance and profitability. We may decide to add or delete lines of coverage at any time.

Technology

Proprietary Insurance Information Database.We maintain a proprietary database of premium rates and policy coverage
information from about 30 life insurance companies. We do not rely upon state
insurance departments or any other regulatory agencies to obtain any insurance pricing information. Instead, we obtain and regularly update all of the pricing, underwriting and policy coverage
information contained in our databases directly from each quoted insurance company. We obtain financial stability ratings from A.M. Best, Fitch, Inc., Moody's, Standard & Poor's
and Weiss Ratings, Inc. and hold licenses to distribute the copyrighted rating from each of these ratings services. Our dedicated staff of full-time market reporters regularly
contacts the insurance companies quoted on our service and monitors and updates our databases as market conditions warrant. Each business day we make hundreds of changes to our insurance database.

Technology Systems.Our systems for processing quotes and purchase requests, application progress tracking, customer
notification and revenue recognition are highly automated and integrated. Agents and customer service representatives equipped with online computer terminals can access a customer's account
information from our database on demand. Our core technology systems use a combination of our own proprietary technologies and commercially available, licensed technologies. We have internally
developed and enhanced our proprietary programs over a period of 20 years using scalable tools and platforms to allow us to rapidly expand our network and computing capacity.

An
internal programming and system administration staff supports our technology. In addition to supporting the systems, our staff continually enhances our software and hardware and
develops new systems and services to better service our customers and business objectives.

Server Hosting and Backup.Our websites are hosted by a grade "A" telecommunications data center in Chicago, Illinois, which
provides redundant communications lines to the internet backbone, emergency power backup, and security, as well as 24-hour monitoring and engineering support. In addition, we have
implemented load balancing systems and our own redundant servers to provide for fault tolerance. These redundancies permit us to perform scheduled maintenance without taking our web sites offline.

Marketing

We attract new consumers and communicate the availability of new products and services primarily through direct response marketing methods. We have established
ourselves as a leading Internet-based insurance brand through an offline marketing campaign consisting primarily of magazine advertisements, radio and direct mail. We employ in-house
volume media buying and other strategies to minimize the expenses of broad-based advertising. Using our proprietary information processing systems and consumer database as well as other resources, we
employ statistical analyses to measure the effectiveness and efficiency of our marketing efforts.

We
intend to aggressively pursue a marketing strategy designed to promote our Insure.com brand and consumer awareness of the benefits of buying insurance through us.

Our
marketing strategy is to promote our brand and attract self-directed consumers to our websites. Our marketing initiatives include:



9

---





Material Strategic Relationships and Agreements

We selectively pursue strategic relationships and agreements to expand our access to online consumers, to build our brand name recognition and to expand our
products and services with a variety of companies. Revenue associated with our agreements with strategic partners comprised approximately 24% of total revenue for the year ended December 31,
2007, primarily from the sale of leads for insurance other than term life.

Competition

We compete with online and traditional providers of insurance products. The market for selling insurance products over the Internet is new, rapidly evolving and
intensely competitive. Current and new competitors may be able to launch new sites at a relatively low cost. There are a number of companies that either sell insurance online or provide lead referral
services online.

We
believe that we are the most comprehensive Internet-based insurance service because we provide consumers complete quote-to-policy-delivery insurance services,
instant quotes from about 30 life insurance companies and the ability to buy online or over the phone. Our Internet-based, lead-referral competitors generally capture consumer name and
address information to be forwarded, as a prospective sales lead, to a specified insurance company, without personalized customer service or fulfillment capabilities. Other Internet-based competitors
have created websites as alternatives to their traditional sales activities and offer products from a single insurance company or a relatively small group of insurance companies with little or no
comparative overview of prices. While we believe that our complete quote-to-policy-delivery service offers a more comprehensive Internet-based insurance service solution than
these competitors, we nonetheless expect to face intense competition from these other types of insurance services.

We
also face competition from the traditional distributors of insurance such as captive agents, independent brokers and agents and direct distributors of insurance. Insurance companies
and distributors of insurance products are increasingly competing with banks, securities firms and mutual fund companies that sell insurance or alternative products to similar consumers.

We
potentially face competition from unanticipated alternatives to our insurance service from a number of large Internet companies and services that have expertise in developing online
commerce and in facilitating Internet traffic. These potential competitors could choose to compete with us directly or indirectly through affiliations with other electronic commerce companies,
including direct competitors. Other large companies with strong brand recognition, technical expertise and experience in Internet commerce could also seek to compete with us. Competition from these
and other sources could harm our business, results of operations and financial condition.

We
believe that the principal competitive factors in our markets are price, brand recognition, web site useability, ability to fulfill customer purchase requests, customer service,
reliability of delivery, ease of use, and technical expertise and capabilities. Many of our current and potential competitors, including Internet directories and search engines and traditional
insurance agents and brokers, have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing, technical and other resources than us.
Several of these competitors may be able to secure products and services on more favorable terms than we can obtain. In addition, many of these competitors may be able to devote significantly greater
resources than we can for developing websites and systems, marketing and promotional campaigns, attracting traffic to their Web sites and attracting and retaining key employees.

10

---



Increased
competition may result in reduced operating margins, loss of market share and damage to our brand. We cannot assure you that we will be able to compete successfully against
current and
future competitors or that competition will not harm our business, results of operations and financial condition.

Regulation

The insurance industry and the marketers of insurance products are subject to extensive regulation by state governments and by the District of Columbia. This
regulation extends to the operations of insurance companies, insurance agents and to our service.

Our
products are sold throughout the United States through licenses held by us and/or one of our employees, as is required by each state's insurance department. In general, state
insurance laws establish supervisory agencies with broad administrative and supervisory powers to:



Moreover,
existing state insurance regulations require that a firm, or individual within that firm, must be licensed in order to quote an insurance premium. State insurance regulatory
authorities regularly make inquiries, hold investigations and administer market conduct examinations with respect to compliance with applicable insurance laws and regulations by insurance companies
and their agents. In recent years, a number of insurance agents and the life insurance companies they represent have been the subject of regulatory proceedings and litigation relating to alleged
improper life insurance pricing and sales practices. Some of these agents and insurance companies have incurred or paid substantial amounts in connection with the resolution of these matters. We do
not currently sell the types of life insuranceprimarily cash value life insurance policies such as universal lifethat are the subject of these actions.

In
addition, licensing laws applicable to insurance marketing activities and the receipt of commissions vary by jurisdiction and are subject to interpretation as to the application of
these requirements to specific activities or transactions. We and/or many of our employees are currently licensed to sell insurance in every state and the District of Columbia. All interaction with
customers is done through our licensed customer service staff. We do not permit any of our unlicensed personnel who occasionally have contact with customers to act as insurance agents. We monitor the
regulatory compliance of our sales, marketing and advertising practices and the related activities of our employees. We also provide continuing education and training to our staff in an effort to
ensure compliance with applicable insurance laws and regulations. However, we cannot assure you that a state insurance department will not make a determination that one or more of these activities
constitute the solicitation of insurance and that personnel must be licensed. Such a determination could harm our business.

11

---





We can give you no assurance that we would be deemed to be in compliance with all applicable insurance licensing requirements and marketing regulations of each jurisdiction in which we
operate. Nor can we assure you that we do not need to obtain any additional licenses.

The
federal government does not directly regulate the marketing of most insurance products. However, some products, such as variable life insurance, must be registered under federal
securities laws and therefore the entities selling these products must be registered with the National Association of Securities Dealers, Inc. We do not currently sell any federally regulated
insurance products. If we elect to sell these federally regulated products in the future, we would be required to qualify for and obtain the required licenses and registrations. We cannot assure you
that we would be able to obtain these licenses.

Further,
we are subject to various federal laws and regulations affecting matters such as pensions, age and sex discrimination, financial services, securities and taxation. Congress
recently passed legislation that provides for national licensing of insurance agents and brokers. The legislation provides an impetus for states to enact uniform laws and regulations governing
licensing of individuals and entities authorized to sell and solicit the purchase of insurance, as well as reciprocity laws and regulations governing the licensing of non-resident
individuals. This legislation and other future federal or state legislation could result in increased regulation of our business.

The
future regulation of insurance sales via the Internet as a part of the new and rapidly growing electronic commerce business sector is unclear. We believe that we are currently in
compliance with all current regulations. However, if additional state or federal regulations are adopted, they may have an adverse impact on us.

Employees

As of December 31, 2007, we had 107 employees. We have never had a work stoppage. Our employees are not represented by a collective bargaining unit. We
consider our relations with our employees to be good. Our future success will depend, in part, on our ability to continue to attract, integrate, retain and motivate highly qualified technical and
managerial personnel, for whom competition is intense.

Item 1A.    Risk Factors

Risks Related to Our Business

Our insurance brokerage business has not been profitable and may not become profitable in the future

Our first complete year of focusing on our Internet based insurance service was 1997. We incurred operating losses each year subsequent to 1997 through the year
ended December 31, 2007. Because of our overhead structure, including the ongoing costs of employing highly-skilled technical personnel, we will need to generate higher revenues than we did in
2007 in order to achieve profitability. Even though we achieved profitability in the third and fourth quarters of 2007, we may not be able to maintain profitability in the future.

If the term life insurance industry declines, our business will suffer because approximately 75% of our 2007 revenues were derived from the sale of term life insurance

For the year ended December 31, 2007, approximately 75% of our revenue was derived from the sale of individual term life insurance. Because of this high
concentration of revenue from one line of insurance, our current financial condition is largely dependent on the economic health of the term life insurance industry. If sales of term life insurance
decline, for any reason, our business would be substantially harmed. In addition, in recent years, term life insurance premiums have been declining. If

12

---



term
life insurance premiums continue to decline, it will become even more difficult for us to become profitable.

We expect to continue to experience significant fluctuations in our quarterly results, which makes it difficult for investors to make reliable
period-to-period comparisons and may contribute to volatility in our stock price

Our quarterly revenues and operating results have fluctuated widely in the past and may continue to fluctuate widely in the future. Causes of these fluctuations
could or have included, among other factors:



In
addition, we have a very long revenue cycle for term life insurance. The time from the date the application is requested by the customer until revenue is recorded averages
approximately three months. As a result, substantial portions of our expenses, including selling and marketing expenses, are incurred and recorded in the financial statements well in advance of
potential matching revenue generation. If revenues do not meet our expectations as a result of these selling and marketing expenses, our results of operations will be negatively affected.

Any
one or more of the above-mentioned factors could harm our business and results of operations, which makes quarterly predictions difficult and often unreliable. As a result, we
believe that quarter-to-quarter comparisons of our operating results are not necessarily meaningful and not good indicators of our future performance. Due to the
above-mentioned and other factors, it is possible that in one or more future quarters our operating results will fall below the expectations of securities analysts and investors. If this happens, the
trading price of our common stock would likely decrease.

We must further develop our brand recognition in order to remain competitive

There are many other insurance brokers, insurance carriers and websites that offer services that are competitive with our services. Therefore, we believe that
broader recognition and a favorable consumer perception of the Insure.com brand is essential to our future success. Accordingly, we intend to continue to pursue an aggressive brand-enhancement
strategy consisting of advertising, online marketing, and promotional efforts. If these expenditures do not result in a sufficient increase in revenues to cover these additional selling and marketing
expenses, our business, results of operations and financial condition would be harmed.

13

---



The sale of internet leads may not generate a material amount of revenues for us

As part of our marketing strategy, we sell internet traffic that comes to our website and indicates an interest in an insurance product other than life insurance
as well as excess life insurance leads to third party Web sites and others in order to increase the realized revenue from visitors to our website. We generated fee revenues totaling $4.3, $5.5 and
$2.0 million from the sale of leads during 2007, 2006 and
2005, respectively. Most of the agreements with these third parties permit either party to terminate the agreement with short notice. As a result, we cannot assure you that any of these relationships
or agreements will be profitable or generate any material amount of revenues in the future or not be renegotiated. If our sales of non-life insurance traffic do not meet our expectations
regarding revenues and earnings, our business could be harmed.

If we lose any of our key executive officers our business may suffer because we rely on their knowledge of our business

We believe that our success is significantly dependent upon the continued employment and collective skills of our executive officers, including founder and Chief
Executive Officer, Robert S. Bland, and Executive Vice President and Chief Operating Officer, William V. Thoms. We maintain key man life insurance policies on Messrs. Bland and Thoms and both
of these officers have entered into employment contracts with us. The loss of either of these two executives or any of our other key executive officers could harm us.

The former owner of Life Quotes has a limited non-competition agreement with us.

Kenneth Manley, the former owner of Life Quotes, has a non-competition agreement with us that prevents him from competing with us for up to six years.
However, the agreement allows Manley to form a life insurance agency with members of his family provided that he acts only as a general agent placing business through Insure.com as managing
general agent. He is limited to being able to produce a maximum of $2 million per year in commissionable premium, subject to annual inflationary adjustments. This arrangement could result in
Manley obtaining business that we might otherwise have obtained directly.

Risks Related to the Insurance Industry

Our bonus commission revenues are highly unpredictable and may cause fluctuations in our operating results

Our bonus commission revenues relate to the amount of premiums paid for new insurance policies to a single insurance company. In other words, if consumers
purchase policies from a fewer number of
insurance companies our bonus commissions may be higher than if the same policies were purchased from a larger number of insurance companies. The decision to purchase a policy from a particular
insurance company typically relates to, among other factors, price of the policy and rating of the insurance company, both of which are factors over which we have no control. Insurance companies often
change their prices in the middle of the year for competitive reasons. This may reduce the number of policies placed with that insurance company which may then reduce our potential bonus commissions.
In addition, we have no control over the bonus commission rates that are set by each individual insurance company. As a result of these factors, we are unable to control the amount and timing of bonus
commission revenues we receive in any particular quarter or year and these amounts may fluctuate significantly. Bonus commission revenues were $2.1 million for the year ended
December 31, 2007, $1.7 million for the year ended December 31, 2006, and $2.3 million for the year ended December 31, 2005.

14

---



The insurance sales industry is intensely competitive, and if we fail to successfully compete in this industry our market share and business will be harmed

The markets for the products and services we offer are intensely competitive and characterized by rapidly changing technology, evolving regulatory requirements
and changing consumer demands. We compete with traditional insurance distribution channels, including insurance agents and brokers, new non-traditional channels such as commercial banks
and savings and loan associations, and a growing number of direct distributors including other online services, such as InsWeb Corporation and SelectQuote.

We
also potentially face competition from a number of large online services that have expertise in developing online commerce and in facilitating a high volume of Internet traffic for or
on behalf of our competitors. For instance, some of our competitors have relationships with major electronic commerce companies. Other large companies with strong brand recognition, technical
expertise and experience in online commerce and direct marketing could also seek to compete in the online insurance market.

There
can be no assurance that we will be able to successfully compete with any of these current or potential insurance providers.

Insurance companies that have appointed us as agents may cancel those appointments

Most of our agency contracts allow the insurance company to cancel our agency appointment at any time. Should any of the companies with which we place significant
amounts of business decide to cancel our appointments, our business could be harmed.

Risks Related to Regulation

Our compliance with the strict regulatory environment applicable to the insurance industry is costly, and if we fail to comply with the numerous laws and regulations that
govern the industry we could be subject to penalties

We must comply with the complex rules and regulations of each jurisdiction's insurance department which impose strict and burdensome guidelines on us regarding
our operations. Compliance with these rules and regulations imposes significant costs on our business. Each jurisdiction's insurance department typically has the power, among other things, to:



Due
to the complexity, periodic modification and differing statutory interpretations of these laws, we may not have always been and we may not always be in compliance with all these
laws. In addition, we have at times been subject to regulatory action for failing to comply with these laws. Failure to comply with these numerous laws in the future could result in fines, additional
licensing requirements or the revocation of our license in the particular jurisdiction. These penalties could significantly increase our general operating expenses and harm our business. In addition,
even if the allegations in any regulatory action against us turn out to be false, negative publicity relating to any allegations could result in a loss of consumer confidence and significant damage to
our brand. We believe that because many consumers and insurance companies are not yet comfortable with the concept of purchasing insurance online, the publicity relating to any such regulatory or
legal issues could harm our business.

15

---



If we become subject to legal liability for the information we distribute on our website or communicate to our customers, our business could be harmed

Our customers rely upon information we provide regarding insurance quotes, coverage, exclusions, limitations and ratings. To the extent that the information we
provide is not accurate, we could be liable for damages from both consumers and insurance companies. These types of claims have been brought, sometimes successfully, against agents, online services
and print publications in the past. These types of claims could be time-consuming and expensive to defend, divert management's attention, and could cause consumers to lose confidence in
our service. As a result, these types of claims, whether or not successful, could harm our business, financial condition and results of operations.

In
addition, because we have not been appointed as an agent for all of the life insurance companies quoted on our website, we do not have contractual authorization to publish information
regarding the policies from insurance companies for whom we are not appointed. Several of these insurance companies have in the past demanded that we cease publishing their policy information and
others may do so in the future. In some cases we have published information despite these demands. If we are required to stop publishing information regarding some of the insurance policies that we
track in our database, it could harm us.

Risks Related to the Internet and Electronic Commerce

Any failures of, or capacity constraints in, our systems or the systems of third parties on which we rely could reduce or limit visitors to our Web site and harm our ability to
generate revenue

We use both internally developed and third-party systems to operate our service. If the number of users of our service increases substantially, we will need to
significantly expand and upgrade our technology, transaction processing systems and network infrastructure. We do not know whether we will be able to accurately project the rate or timing of any of
these increases, or expand and upgrade our systems and infrastructure to accommodate these increases in a timely manner. Our ability to facilitate transactions successfully and provide high quality
customer service also depends on the efficient and uninterrupted operation of our computer and communications hardware systems. Our service has experienced periodic system interruptions, and it is
likely that these interruptions will continue to occur from time to time. Additionally, our systems and operations are vulnerable to damage or interruption from human error, natural disasters, power
loss, telecommunication failures, break-ins, sabotage, computer viruses, acts of vandalism and similar events. We may not carry sufficient business interruption insurance to compensate for
losses that could occur. Any system failure that causes an interruption in service or decreases the responsiveness of our service would impair our revenue-generating capabilities, and could damage our
reputation and our brand name.

Our success depends, in part, on our ability to protect our proprietary technology

We believe that our success depends, in part, on protecting our intellectual property. Other than our trademarks, most of our intellectual property consists of
proprietary or confidential information that is not subject to patent or similar protection. Competitors may independently develop similar or superior products, software or business models.

We
cannot guarantee that we will be able to protect our intellectual property. Unauthorized third parties may try to copy our products or business model or use our confidential
information to develop competing products. Legal standards relating to the validity, enforceability and scope of protection of proprietary rights in Internet-related businesses are uncertain and still
evolving. As a result, we cannot predict the future viability or value of our proprietary rights and those of other companies within the industry.

16

---





We may be subject to claims of infringement that may be costly to resolve and, if successful, could harm our business

Our business activities and products may infringe upon the proprietary rights of others. Parties may assert valid or invalid infringement claims against us. Any
infringement claims and resulting litigation, should it occur, could subject us to significant liability for damages and could result in invalidation of our proprietary rights. Even if we eventually
won, any resulting litigation could be time-consuming and expensive to defend and could divert our management's attention.

If we are unable to adapt to the rapid technological change in our industry, we will not remain competitive and our business will suffer

Our market is characterized by rapidly changing technologies, frequent new product and service introductions, and evolving industry standards. The recent growth
of the Internet and intense competition in our industry exacerbate these market characteristics. Our future success will depend on our ability to adapt to rapidly changing technologies by continually
improving the features and reliability of our database and service. We may experience difficulties that could delay or prevent the successful introduction or marketing of new products and services. In
addition, new enhancements must meet the requirements of our current and prospective customers and must achieve significant market acceptance. We could also incur substantial costs if we need to
modify our service or infrastructures or adapt our technology to respond to these changes.

Demand for our services may be reduced if we are unable to safeguard the security and privacy of our customer's information

A significant barrier to electronic commerce and online communications has been the need for secure transmission of confidential information over the Internet.
Our ability to secure the transmission of confidential information over the Internet is essential in maintaining consumer and insurance company confidence in our service. In addition, because we
handle confidential and sensitive information about our customers, any security breaches would damage our reputation and could expose us to litigation and liability. We cannot guarantee that our
systems will prevent security breaches.

Risks Related to the Ownership of Our Common Stock

Zions Bancorporation, together with two of our officers and directors, own a significant portion of our stock and control Insure.com and their interests may not be the same as
our public stockholders

As of February 26, 2008, Robert Bland, our chairman, President and Chief Executive Officer, directly or indirectly controlled approximately 29% of our
outstanding common stock, William Thoms, our Executive Vice President and Chief Operating Officer, directly controlled approximately 7% of our outstanding common stock, and Zions Bancorporation
controlled approximately 32% of our common stock. As a result, if Zions and Messrs. Bland and Thoms act together, or if Zions and Mr. Bland act together, they will be able to take any of
the following actions without the approval of additional public stockholders:



17

---





If
these persons act together and take any of the actions described above, the interests of our other stockholders may be harmed. For example, these persons could discourage or prevent
potential mergers, takeovers or other change of control transactions that could be beneficial to our public stockholders, which could adversely affect the market price of our common stock. They may
also be able to prevent or frustrate attempts to replace or remove incumbent management through their ability to elect directors. Furthermore, they may choose to advance their own interests at the
expense of other stockholders, such as by acting to entrench themselves in a management position or electing themselves as directors.

The investor rights agreement we signed with Zions contains supermajority board voting provisions that could make it more difficult for stockholders to change the policies of
our Board of Directors and elect new members to our Board of Directors

So long as Zions holds 40% of the shares issued to them, the investor rights agreement we signed with Zions gives Zions the right to nominate or appoint one
member of our Board of Directors. We must also receive a vote of 75% of our directors for us to:



The
supermajority provision, combined with Zions' right to nominate or appoint one member of our Board of Directors, could discourage others from initiating a potential merger, takeover
or another change of control transaction that could be beneficial to our public stockholders. In addition this

18

---



supermajority
provision could make it more difficult for stockholders to change the members and policies of the Board of Directors because any of the actions described above would require the approval
of six of our seven directors. As a result, the market price of our stock could be harmed.

If Zions chooses to sell its stock, the market price of our stock could decrease and our ability to raise capital in the public markets may be adversely affected

Zions currently owns 2,363,636 shares of our common stock. Sales of significant amounts of these shares, or the perception that such sales will occur, could
adversely affect the market price of our common stock or our future ability to raise capital through an offering of equity securities or debt securities convertible into debt securities.

If our remaining goodwill becomes impaired, we will be required to write off some or all of it against earnings, which may negatively impact the price of our common stock

Our balance sheet contains goodwill in the amount of $3.1 million as a result of our 2004 purchase of certain of the assets of Life Quotes, Inc.
While goodwill is not amortized, it is subject to periodic reviews for impairment (at least annually, or more frequently if impairment indicators arise). We review goodwill for impairment periodically
and whenever events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. Such impairment reviews are performed at the entity level with respect
to goodwill, as we have one reporting unit. Under those circumstances, if the fair value were less than the carrying amount of the entity, an indicator of impairment would exist and further analysis
would be required to determine whether or not a loss would need to be charged against current period earnings. No indicators of impairment were noticed in our December 31, 2007 impairment
review. The determination of fair value and the impairment are based on a combination of a market valuation based on a comparison with similar public companies (guideline company method) and a
discounted cash flow analysis, which includes making various judgmental assumptions, including assumptions about future cash flows, growth rates and discount rates. The use of different estimates or
assumptions could produce different results.

During
2008, and for as long as we have goodwill on our balance sheet, we will continue to review for indicators of goodwill impairment. If it were determined that the fair value of the
entity were less than the carrying amount of the entity, an additional impairment charge could be recorded. Recording such a charge would decrease earnings and could lead to a decline in the price of
our common stock.

As a relatively small company with a history of operating losses, the future trading market for our stock may not be active on a consistent basis, which may make it difficult
for you to sell your shares

The trading volume of our stock depends in part on our ability to increase our revenue and reduce or eliminate our operating losses, which may increase the
attractiveness of our stock as an investment, thereby leading to a more liquid market for our stock on a consistent basis. If we are unable to achieve these goals, or an active market does not
develop, the trading market for our stock may be negatively affected, which may make it difficult for you to sell your shares. If an active and liquid trading market does not exist for our common
stock, you may have difficulty selling your shares.

Our common stock is currently trading at low prices, which could further reduce the liquidity of the market for, and the price of, our common stock

We believe that the current per share price level of our common stock has reduced the effective marketability of our shares of common stock because of the
reluctance of many leading brokerage firms to recommend low-priced stock to their clients. Certain investors view low-priced stock as speculative and unattractive, although
certain other investors may be attracted to low-priced stock because of the greater trading volatility sometimes associated with such securities. In addition, a variety

19

---



of
brokerage house policies and practices tend to discourage individual brokers within those firms from dealing in low-priced stock. Such policies and practices pertain to the payment of
brokers' commissions and to time-consuming procedures that function to make the handling of low-priced stocks unattractive to brokers from an economic standpoint.

In
addition, because brokerage commissions on low-priced stock generally represent a higher percentage of the stock price than commissions on higher-priced stock, the current
share price of the common stock can result in individual stockholders paying transaction costs (commissions, markups or markdowns) that represent a higher percentage of their total share value than
would be the case if the share price were substantially higher. This factor also may limit the willingness of institutions to purchase the common stock at its current low share price.

We
believe that the current price of our common stock may have a negative impact on the liquidity and price of our common stock and investors may find it more difficult to purchase or
dispose of, or to obtain accurate quotations as to the market value of, our common stock.

Certain provisions in our charter documents and Delaware law, together with our concentration of stock ownership in a few persons, could discourage takeover attempts and lead
to management entrenchment

Our certificate of incorporation and bylaws and Delaware law contain anti-takeover provisions that could have the effect of delaying or preventing
changes in control that a stockholder may consider favorable. The provisions in our charter documents include the following:



Our
preferred stock purchase rights could cause substantial dilution to any person or group who attempts to acquire a significant interest in Insure.com without advance approval of our
Board of Directors. We have amended our rights plan to exempt acquisitions of shares of our common stock by Zions from the operation of the rights plan. In addition, our executive officers have
employment agreements that may entitle them to substantial payments in the event of a change of control. We entered into amendments to our employment agreements with Messrs. Bland and Thoms
that exempted the issuance of stock to Zions from constituting a change of control under these employment agreements.

Furthermore,
as of February 26, 2008 Messrs. Bland and Thoms, together with Zions, directly or indirectly controlled approximately 69% of our outstanding common stock. This
high concentration of stock ownership, together with the anti-takeover measures described above, could prevent or frustrate attempts to remove or replace incumbent management, including
Messrs. Bland and
Thoms. These persons may act to further their interests as management rather than the interests of the public stockholders.

The
foregoing could have the effect of delaying, deferring or preventing a change in control of Insure.com, discourage bids for our common stock at a premium over the market price, or
harm the market price of, and the voting and other rights of the holders of, our common stock. We also are subject to Delaware laws that could have similar effects. One of these laws prohibits us from
engaging

20

---



in
a business combination with any significant stockholder for a period of three years from the date the person became a significant stockholder unless specific conditions are met.

Item 1B.    Unresolved Staff Comments

Not applicable.

ITEM 2.    Properties

Our executive, administrative and operating offices are located in approximately 19,000 square feet of leased office space in Darien, Illinois under a lease that
expires on December 31, 2013.

ITEM 3.    Legal Proceedings

From time to time we have been, and expect to continue to be, subject to legal and regulatory proceedings and claims in the ordinary course of business. Legal and
regulatory proceedings and claims may include claims of alleged infringement of third party intellectual property rights, notices from state regulators that we may have violated state regulations, and
litigation instituted by dissatisfied policy holders. These claims, even if without merit, could result in the significant expenditure of our financial
and managerial resources. We are not aware of any such claims that we believe will, individually or in the aggregate, materially affect our business, financial condition or results of operations.

ITEM 4.    Submission of Matters to a Vote of Security Holders.

There were no matters submitted to a vote of our stockholders during the quarter ended December 31, 2007.

21

---





PART II

ITEM 5.    Market for Registrant's Common Equity and Related Stockholder Matters.

Market Information.Our common stock began trading on the Nasdaq National Market under the symbol "QUOT" on August 3,
1999, the date of our initial public offering. Prior to this date, no established public trading market for our common equity existed. Effective the opening of business on July 20, 2001, our
stock listing was transferred from the Nasdaq National Market to the Nasdaq SmallCap Market, which is now known as the Nasdaq Capital Market, retaining its existing symbol, QUOT. On January 8,
2007, the ticker symbol for our common stock was changed to NSUR. As of February 26, 2008 the approximate number of record holders of our common stock was 1,200. The last sale price of our
common stock on February 29, 2008 was $4.10. The following table sets forth, for the period indicated, the high and low last sale price of our common stock as reported on the Nasdaq Capital
Market, as applicable.

|      |                | High |   | Low 
|----- | -------------- | ---- | - | ----
|2007: |                |      |   |     
|      | First Quarter  |      | $ | 4.53
|      | Second Quarter |      |   | 5.49
|      | Third Quarter  |      |   | 4.42
|      | Fourth Quarter |      |   | 5.24
|2006: |                |      |   |     
|      | First Quarter  |      | $ | 3.14
|      | Second Quarter |      |   | 3.34
|      | Third Quarter  |      |   | 3.35
|      | Fourth Quarter |      |   | 3.90

Dividends.We have never declared or paid any cash dividends on our common stock and do not anticipate paying cash dividends
on our common stock in the foreseeable future. The investor rights agreement we have entered into with Zions Bancorporation, or Zions, prohibits us from paying cash dividends on our common stock
unless certain conditions are met. We currently intend to retain all future earnings to finance the growth and development of our business. Any future determination as to the payment of dividends will
be made by our board of directors and will depend on our results of operations, financial condition, capital requirements, and any other factors our board of directors considers relevant, including
the restrictions contained in the investor rights agreement.

Issuer purchases of equity securities.On October 31, 2005, we announced that our Board of Directors had authorized
the repurchase of up to 650,000 shares of its common stock. Following is information concerning the results of that program during the fourth quarter of 2007:

ISSUER PURCHASES OF EQUITY SECURITIES

|Period                               |  | Total Number of Shares |  | Average Price Paid Per Share |      | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |       | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
|------------------------------------ |  | ---------------------- |  | ---------------------------- | ---- | -------------------------------------------------------------------------------- | ----- | ------------------------------------------------------------------------------
|October 1 through October 31,
2007   |  | 3,442                  |  | $                            | 4.00 |                                                                                  | 3,442 |                                                                               
|November 1 through November 30, 2007 |  | 0                      |  | $                            |     |                                                                                  | 3,442 |                                                                               
|December 1 through December 31, 2007 |  | 0                      |  | $                            |     |                                                                                  | 3,442 |                                                                               
|Total                                |  | 3,442                  |  | $                            | 4.00 |                                                                                  | 3,442 |                                                                               

22

---





ITEM 6.    Selected Financial Data.

The historical statement of operations data and balance sheet data in the table below is derived from our financial statements, which are included elsewhere in
this annual report. This data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and with the financial statements, related
notes, and other financial information included elsewhere in this annual report. The historical results presented below are not necessarily indicative of the results to be expected for any future
period.

|                                                                              |                                 | Year Ended December 31, |       
|----------------------------------------------------------------------------- | ------------------------------- | ----------------------- | ------
|
|
|Statement of Operations Data:                                                 |                                 |                         |       
|Revenues                                                                      |                                 | $                       | 18,020
|Expenses:                                                                     |                                 |                         |       
|                                                                              | Selling and marketing           |                         |       
|                                                                              | Operations                      |                         |       
|                                                                              | General and administrative      |                         |       
|                                                                              | Depreciation and amortization   |                         |       
|                                                                              | Impairment of land and building |                         |       
|                                                                              | Impairment of goodwill          |                         |       
|                                                                              |                                 |                         |       
|Total expenses                                                                |                                 |                         | 18,637
|Operating loss                                                                |                                 |                         | (617  
|Interest income, net                                                          |                                 |                         | 442   
|Realized gain (loss) on sale of securities                                    |                                 |                         |      
|                                                                              |                                 |                         |       
|Net loss                                                                      |                                 | $                       | (175  
|                                                                              |                                 |                         |       
|Basic and diluted net loss per share                                          |                                 | $                       | (0.02 
|                                                                              |                                 |                         |       
|Weighted average common shares and equivalents outstanding, basic and diluted |                                 |                         | 7,294 

|
|

|                           |  | December 31,
|-------------------------- |  | ------------
|
|
|Balance Sheet Data:        |  |             
|Cash and equivalents       |  | $           
|Working capital            |  |             
|Total assets               |  |             
|Total liabilities          |  |             
|Total stockholders' equity |  |             

|
|

|                               |                  | Year Ended December 31,
|------------------------------ | ---------------- | -----------------------
|
|Selected Operating Statistics: |                  |                        
|Policies sold                  |                  |                        
|                               | Term life        |                        
|                               | Health and other |                        
|                               |                  |                        
|                               |                  | Total policies sold    

23

---



Selected Quarterly Operating Results

The following tables set forth unaudited quarterly statements of operations data for 2007 and 2006. The information for each of these quarters has been prepared
on substantially the same basis as the audited financial statements included elsewhere in this annual report, and, in our opinion, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results of operations for these periods. Historical results are not necessarily indicative of the results to be expected in the future, and
results of interim periods are not necessarily indicative of results for the entire year.

|                                              |                               | Quarter Ended 
|--------------------------------------------- | ----------------------------- | --------------
|
|
|2007                                          |                               |               
|Revenues                                      |                               | $             
|Expenses:                                     |                               |               
|                                              | Selling and marketing         |               
|                                              | Operations                    |               
|                                              | General and administrative    |               
|                                              | Depreciation and amortization |               
|                                              |                               |               
|                                              |                               | Total expenses
|                                              |                               |               
|Operating income (loss)                       |                               |               
|Interest income                               |                               |               
|                                              |                               |               
|Net income (loss)                             |                               | $             
|                                              |                               |               
|Net income (loss) per share basic and diluted |                               | $             

|
|

|                                              |                                 | Mar. 31,       |       | June 30, |       | Sept. 30, |       | Dec. 31, |       
|--------------------------------------------- | ------------------------------- | -------------- | ----- | -------- | ----- | --------- | ----- | -------- | ------
|
|2006                                          |                                 |                |       |          |       |           |       |          |       
|Revenues                                      |                                 | $              | 4,870 |          | $     | 3,941     |       | $        | 3,766 
|Expenses:                                     |                                 |                |       |          |       |           |       |          |       
|                                              | Selling and marketing           |                |       | 2,505    |       |           | 2,446 |          |       
|                                              | Operations                      |                |       | 1,579    |       |           | 1,380 |          |       
|                                              | General and administrative      |                |       | 919      |       |           | 888   |          |       
|                                              | Depreciation and amortization   |                |       | 236      |       |           | 228   |          |       
|                                              | Impairment of land and building |                |       |         |       |           |      |          |       
|                                              |                                 |                |       |          |       |           |       |          |       
|                                              |                                 | Total expenses |       |          | 5,239 |           |       | 4,942    |       
|                                              |                                 |                |       |          |       |           |       |          |       
|Operating income (loss)                       |                                 |                | (369  | )        |       | (1,001    | )     |          | (2,151
|Interest income                               |                                 |                | 81    |          |       | 84        |       |          | 84    
|                                              |                                 |                |       |          |       |           |       |          |       
|Net income (loss)                             |                                 | $              | (288  | )        | $     | (917      | )     | $        | (2,067
|                                              |                                 |                |       |          |       |           |       |          |       
|Net income (loss) per share basic and diluted |                                 | $              | (0.04 | )        | $     | (0.13     | )     | $        | (0.28 

24

---





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

Overview and Critical Accounting Policies

We generate revenues primarily from the receipt of commissions paid to us by insurance companies based upon the insurance policies sold to consumers through our
service. These revenues come in the form of first year, bonus and renewal commissions that vary by company and product. We recognize the full first year commission revenues on term life insurance
after the insurance company approves the policy and accepts the initial premium payment. At the time revenue is recognized, an allowance is recorded based on historical information for estimated
commissions that will not be received due to the non-payment of installment first year premiums and any premium refunds made by the insurance carriers. We recognize commission revenue on
other lines of insurance, primarily health insurance, after we receive notice that the insurance company has received payment of the related premium. First year commission revenues per policy can
fluctuate due to changing premiums, commission rates, and types or amount of insurance sold. We receive bonuses based upon individual criteria set by insurance companies. We recognize bonus revenue in
the period in which it is earned. Bonus revenues are typically higher in the fourth quarter of our fiscal year due to the bonus system used by many life insurance companies, which pay greater amounts
based upon the achievement of certain levels of annual production. Revenues for renewal commissions are recognized after we receive notice that the insurance company has received payment for a renewal
premium. Renewal commission rates are significantly less than first year commission rates and may not be offered by every insurance company. We also generate revenue from the sale of leads for various
lines of insurance to third parties. Such revenues are recognized when we receive notification from those sources of the revenue due to us. Our revenue recognition accounting policy has been applied
to all periods presented in this report.

The
timing between when we submit a consumer's application for insurance to the insurance company and when we generate revenues has varied over time. The type of insurance product and
the insurance company's backlog are the primary factors that impact the length of time between submitted applications and revenue recognition. Over the past three years, the time between application
submission and revenue recognition has averaged approximately three months. Any changes in the amount of time between submitted application and revenue recognition, which will be influenced by many
factors not under our control, will create fluctuations in our operating results and could affect our business, operating results and financial condition.

Operations
expenses are comprised of both variable and semi-variable expenses, including wages, commissions, benefits and expenses associated with processing insurance
applications and maintaining our database and web sites. The historical lag between the time an application is submitted to the insurance companies and when we recognize revenues significantly impacts
our operating results as most of our variable expenses are incurred prior to application submission.

Selling
and marketing expenses consist primarily of direct advertising costs. The costs of communicating the advertising are expensed in the period the advertising is communicated.

We
have established the 1997 Stock Option Plan and the 2004 Non-Qualified Stock Option Plan, or the plans, to provide additional incentives to our employees, officers, and
directors. Under the plans, an aggregate of 800,000 shares of Insure.com common stock may be granted to participants in the plans. In 2004, the Financial Accounting Standards Board (FASB) issued FASB
Statement No. 123 (revised 2004),Share-Based Payments, which is a revision of FASB Statement No. 123,Accounting
for Stock-Based Compensation.Statement 123 (R) supersedes APB Opinion 25 and amends FASB Statement No. 95,Statement of Cash
Flows.Generally, the approach in Statement 123 (R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the
income statement based on their fair values.

25

---



Intangible
assets acquired in 2004 in the acquisition of certain assets of Life Quotes, Inc. consist of the following:

Intangible asset balance

Estimated useful life

Amortization methodInsurance contract renewals

$
3,538,000

10 years

AcceleratedNon-compete agreement


589,000

6 years

Straight lineTotal

$
4,127,000


The
fair value of insurance contract renewals was estimated based on the actual policies in force as of the acquisition date, and the renewal commission rates paid by each insurance
carrier. These commissions were estimated to have a useful life of ten years, based on the terms of the contracts with the insurance carriers, and an annual lapse rate was applied to the expected
renewals for each carrier based on historical trends. Amortization is on an accelerated basis, as renewal commissions will decline each year due to lapses. The ultimate realization of the value of the
contract renewals is dependant on a number of factors, including actual lapse ratios, which can be affected by factors not under our control, such as death rates and the pricing level of insurance
policies that could be purchased to replace the policies in the renewal stream. As a result, the actual amount realized from the contract renewals acquired may differ significantly from the estimated
amount, causing impairment.

The
Company classifies its fixed maturity investments as available-for-sale and, accordingly, such investments are carried at fair value. The cost of fixed
maturity investments is adjusted for amortization of premiums and discounts and for declines in value that are other than temporary. Temporary changes in the fair values of investments are reflected
directly in stockholders' equity as accumulated other comprehensive income or loss net of income taxes with no effect on net income or loss. Realized gains or losses are calculated using the specific
identification method.

Goodwill
is not subject to amortization. Allocation of intangible assets between goodwill and other intangible assets and the determination of estimated useful lives are based on
valuations that we receive from independent appraisers. The calculations of these amounts are based on estimates and assumptions using historical and pro forma data and recognized valuation methods.
The use of different estimates or assumptions could produce different results.

While
goodwill is not amortized, it is subject to periodic reviews for impairment (at least annually, or more frequently if impairment indicators arise). We review goodwill for
impairment periodically and whenever events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. Such impairment reviews are performed at the
entity level with respect to goodwill, as we have one reporting unit. Under those circumstances, if the fair value were less than the carrying amount of the entity, further analysis would be required
to determine whether or not a loss would need to be charged against current period earnings. No indicators of impairment were noticed in our December 31, 2007 impairment review as the
calculated fair value of the reporting unit exceeded the carrying value by approximately 8%. The determination of fair value and the impairment are based on a combination of a market valuation based
on a comparison with similar public companies (guideline
company method) and a discounted cash flow analysis, which includes making various judgmental assumptions, including assumptions about future cash flows, growth rates and discount rates. The use of
different estimates or assumptions could produce different results. If the Company is unable to achieve the anticipated projected operating results utilized in the discounted cash flow analysis, there
may be future goodwill impairment charges. During the fourth quarter of 2005, the Company experienced declining revenues from life insurance sales and a drop in the market price of its common stock.
Our annual impairment review was conducted as of December 31, 2005, and it was determined that an impairment existed. As a result of this determination, the Company recorded an impairment
charge against earnings in the fourth quarter of 2005 amounting to $3.75 million.

26

---



No
income tax credits have been recognized relating to our tax loss carryforwards due to uncertainties relating to future taxable income.

Results of Operations

Comparison of Years Ended December 31, 2007 and 2006

Revenues

Revenues increased $801,000 or 4.6%, to $18.0 million in 2007 from $17.2 million in 2006. The components of revenue are as follows:

Year ended December 31,2007

2006Revenues:Commissions -Life

$
13,378,856

$
11,349,454Commissions-Health


291,915


372,270Sales of insurance leads


4,349,098


5,497,590Total revenue

$
18,019,870

$
17,219,314


Life
insurance commissions increased $2.0 million, or 18%. This resulted from an increase in the number of paid polices from 12,080 in 2006 to 15,291 in 2007. Increased sales of
life insurance by telephone, primarily due to the rebuilding of our call center subsequent to the closing of our Colorado call center on January 31, 2006, provided the increase. Commission from
health insurance decreased 22% in 2007, as we discontinued brokerage sales for health insurance during the first quarter of 2005, and are now outsourcing this business to third parties. As a result,
there were no new health insurance policies sold during 2006 or 2007. All of the commissions result from previously-sold policies that continue in force. Fees from the sale of internet
insurance leads decreased 21% to $4.3 million in 2007, compared to $5.5 million in 2006. This decrease results primarily from a decrease in the number of internet leads being sold, which
resulted primarily from a decrease in advertising.

Expenses

Selling and Marketing.Selling and marketing expenses decreased $3.1 million, or 35%, in 2007 when compared with 2006,
to a total of $5.7 million in 2007 compared to $8.8 million in 2006. We intentionally decreased our advertising spending in 2007 as we were generating more leads than were required for
our growing call center. As a result, selling and marketing expenses decreased to 32% of revenue, compared to 51% of revenue in 2006.

Operations.Operations expenses increased 44% to $8.9 million in 2007 from $6.2 million in 2006. Compensation
costs increased as a result of hiring agents to staff the call center, as well as from hiring support staff to handle the increase in business. Other operating costs, such as postage and telephone
expenses, also increased as a result of there being more business to process.

General and Administrative.General and administrative expenses decreased 6%, or $225,000, in 2007 to a total of
$3.3 million. Lower rent expense from a new lease on our headquarters facility, lower property taxes resulting from the sale of our Colorado land and building, and lower stock option expense
resulting from fewer unvested options, all helped to lower general and administrative expenses in 2007.

Depreciation and amortization.Depreciation and amortization decreased $69,000 in 2007 when compared to 2006. Amortization
costs related to the life insurance renewals acquired in 2004 declines each year in anticipation of policy lapses that will result in steadily declining revenue from these renewal contracts.

27

---



Interest Income, Net

Interest income was $442,000 in 2007 compared to $327,000 in 2006. There was no interest expense in 2007 or 2006. Interest income increased due to higher interest
rates in 2007, as well as an increase in invested assets, which increased due to positive operating cash flow and the sale of our Colorado land and building in April 2007.

Income Taxes (Benefit)

We had no income tax benefit for 2007 and 2006 due to valuation allowances provided against net deferred tax assets as a result of the uncertainty of the future
utilization of our net operating loss carryforward assets.

Comparison of Years Ended December 31, 2006 and 2005

Revenues

Revenues increased $118,000 or less than 1%, to $17.2 million in 2006 from $17.1 million in 2005. The components of revenue are as follows:

Year ended December 31,2006

2005Revenues:Commissions -Life

$
11,349,454

$
14,456,897Commissions-Health


372,270


614,648Sales of non-life insurance leads


5,497,590


2,022,787Other revenue





6,976Total revenue

$
17,219,314

$
17,101,308


Life
insurance commissions decreased $3.1 million, or 21%. Sales of life insurance by telephone decreased $3.2 million, primarily due to the closing of our Colorado call
center on January 31, 2006. The call center was closed in favor of consolidating all of our call center operations in our Darien, Illinois home office. This was done to reduce the overhead
expense of having a second location as well as to improve the efficiency of the call center. This resulted in a significant decrease in the number of phone
agents during most of 2006, as we rebuilt the staff in Illinois under a new sales management team. As a result of this change, the number of life insurance policies sold declined to 12,080 in 2006
from 16,845 in 2005, a decrease of 28%. Commission from health insurance decreased 39% in 2006, as we discontinued brokerage sales for health insurance during the first quarter of 2005, and are now
outsourcing this business to third parties. As a result, there were no new health insurance policies sold during 2006. All of the commissions result from previously-sold policies that
continue in force. Fees from the sale of internet leads for lines of insurance other than life increased 172% to $5.5 million in 2006, compared to $2 million in 2005. This increase
results primarily from an increase in the price received for insurance leads that we sell, along with an increase in the number of leads being sold.

Expenses

Selling and Marketing.Selling and marketing expenses increased $2.2 million, or 34%, in 2006 when compared with 2005,
to a total of $8.8 million. We intentionally increased our advertising spending in 2006 in order to take advantage of the higher rates being paid for insurance leads. This resulted in higher
revenue from lead sales, which helped to offset the lower life commission revenue that resulted from the closing of the Colorado call center. Selling and marketing expenses increased to 51% of
revenue, compared to 38% of revenue in 2005.

28

---





Operations.Operations expenses decreased 15% to $6.2 million in 2006 from $7.3 million in 2005, primarily as a
result of closing the Colorado call center, as mentioned above. We had fewer agents and less overhead as a result of having only one location after January 31, 2006.

General and Administrative.General and administrative expenses decreased 6%, or $234,000, in 2006 to a total of
$3.5 million. Lower legal fees and insurance costs more than offset the new expense for stock option compensation.

Depreciation and amortization.Depreciation and amortization decreased $120,000 in 2006 when compared to 2005. Amortization
costs related to the life insurance renewals acquired in 2004 declines each year in anticipation of policy lapses that will result in steadily declining revenue from these renewal contracts.

Impairment of land and building

The land and building that formerly housed our Colorado call center was placed on the market for sale. During the third quarter of 2006, the Company recognized
that the potential net value that could be realized in a sale of the property was lower than the carrying value and accordingly recognized an impairment charge of $1.3 million. This
determination was made based on an offer that had been received and accepted by the Company. During the fourth quarter of 2006, that offer to purchase the building was cancelled by the purchaser. In
March 2007, the Company received and accepted a lower offer for the property and, accordingly, has recognized an additional impairment charge of $480,000 in the fourth quarter of 2006.

Impairment of goodwill

We recorded goodwill in the amount of $6.9 million in connection with our May 2004 acquisition of certain assets of Life Quotes, Inc. While goodwill
is not amortized, it is subject to periodic reviews for impairment (at least annually, or more frequently if impairment indicators arise). The Company
recorded an impairment charge against earnings in the fourth quarter of 2005 amounting to $3.75 million. There was no impairment charge in 2006.

Interest Income, Net

Interest income was $327,000 in 2006 compared to $276,000 in 2005. There was no interest expense in 2006 or 2005. Interest income increased due to higher interest
rates in 2006.

In
2006, there were realized losses on the sale of securities of $559. During 2005, there were no sales of securities, so there were no realized gains or losses.

Income Taxes (Credit)

We had no income tax credit for 2006 and 2005 due to valuation allowances provided against net deferred tax assets.

Liquidity and Capital Resources

We currently expect that our cash and fixed maturity investments of $11 million at December 31, 2007 will be sufficient to meet our anticipated cash
requirements for at least the next 12 months. The timing and amounts of our working capital expenditures are difficult to predict, and if they vary materially, we may require additional
financing. If we require additional equity financing, it may be dilutive to our stockholders and the equity securities issued in a subsequent offering may have rights or privileges senior to our
common stock. If debt financing is available, it may require additional restrictive covenants with respect to dividends, raising capital and other financial and operational matters, which could impact
or restrict our operations. If we cannot obtain adequate financing on

29

---



acceptable
terms, we may be required to reduce the scope of our marketing or operations, which could harm our business, results of operations and our financial condition.

Our
sources of funds will consist primarily of commissions generated from the sale of life insurance products, fee revenue from the sale of insurance leads, investment income, and
maturity proceeds from
our fixed maturity portfolio. The principal uses of funds are selling and marketing expenses, operations, general and administrative expenses, and acquisitions of furniture, equipment and software.

Cash
used by operating activities was approximately $66,000 in 2007 and $814,000 in 2006, while operating activities provided cash of $171,000 in 2005, as shown in our statements of cash
flows included elsewhere in this annual report. The improvement in operating cash flow in 2007, as compared to 2006, resulted primarily from a decrease in the net loss. The decrease in cash flow in
2006, compared to the amount provided in 2005, was primarily the result of an increase in the net loss after adjustment for non-cash expenses, such as depreciation, amortization stock
option compensation and impairment charges.

Cash
provided by investment activities was $907,000 in 2007 and totaled $1.4 million in 2006, and resulted from the proceeds of investment maturities and the proceeds of the sale
of land and building exceeding amounts reinvested and spent on fixed asset purchases. During 2007, fixed asset purchases totaled $874,000, a significant increase over both 2006 and 2005, and resulted
primarily from investing in new computer hardware and software, both from life cycle replacements as well as the development of a new customer management system. Cash used for investing activities in
2005 totaled $759,000, consisting of the purchase of fixed income investments in excess of investment maturities and the purchase of fixed assets.

Cash
used for financing activities in 2007, 2006 and 2005 totaled $70,000, $63,000 and $21,000, respectively, and consisted of the repurchase of shares of our common stock. Our board of
directors has authorized the purchase of up to 600,000 additional shares of the our common stock.

We
have no significant off-balance sheet arrangements.

Cash Flow Obligations

In the normal course of business, we enter into financing transactions, lease agreements, or other commitments. These commitments may obligate us to certain cash
flows during future periods. The following table summarizes such obligations as of December 31, 2007.

Payments due by PeriodContractual Obligations

Total

Less than 1 Year

1-3 Years

3-5 Years

More than 5 YearsLong-term debt obligations

$


$


$


$


$
Capital lease obligations














Operating lease obligations


1,833,624


249,296


574,134


663,507


346,687Purchase obligations

















Recent Accounting Pronouncements

In June 2006, the FASB issued Interpretation No. 48 ("FIN 48"), "Accounting for Uncertainty in Income Taxesan Interpretation of SFAS
No. 109." FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with SFAS No. 109, "Accounting for
Income Taxes." FIN 48 prescribes a recognition threshold and measurement of a tax position taken or expected to be taken in an enterprise's tax return. In addition, FIN 48 provides
guidance on derecognition, classification, interest, penalties, accounting in interim periods and disclosure related to uncertain income tax positions. FIN 48 is effective for fiscal years
beginning after

30

---



December 15,
2006. Accordingly, the Company adopted FIN 48 on January 1, 2007. The adoption of FIN 48 did not have a material impact on the Company's financial statements.
No uncertain tax position reserves were recorded, reversed or settled during 2007.

We
file a U.S. income tax return and tax returns in various state and local jurisdictions. In the U.S., all tax years from 2004 through the present are open. Interest and
penalties related to tax positions taken in our tax returns are recorded in income tax expense in the statements of operations. We did not record interest and penalties during the years ended 2007,
2006, or 2005.

In
September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements," which defines fair value, establishes a framework for measuring fair value, and expands disclosures
about fair value measurements. The provisions of SFAS No. 157 are effective as of the beginning of the Company's 2008 fiscal year. We are currently evaluating the impact of adopting SFAS
No. 157 on its financial statements.

In
February 2007, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities-Including an
amendment of FASB Statement No. 115." SFAS No. 159 permits companies to choose to measure certain financial assets and liabilities at fair value (the "fair value option"). If the fair
value option is elected, any upfront costs and fees related to the item must be recognized in earnings and cannot be deferred, e.g. debt issue costs. The fair value election is irrevocable and
may generally be made on an instrument-by-instrument basis, even if a company has similar instruments that it elects not to fair value. At the adoption date, unrealized gains
and losses on existing items for which fair value has been elected are reported as a cumulative adjustment to beginning retained earnings. SFAS No. 159 is effective for fiscal years beginning
after November 15, 2007. We are currently evaluating the impact of adopting SFAS No. 159 on its financial statements.

In
December 2007, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 141(R), "Business Combinations." SFAS 141(R) establishes principles and
requirements for how the acquirer (a) recognizes and measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any non-controlling interest in the acquiree, (b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain
purchase, and (c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This Statement
will supersede SFAS 141, "Business Combinations", and applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. An entity may not apply it before that date. We are currently evaluating the impact of adopting SFAS 141 (R) on its financial
statements.

Item 7A.    Quantitative and Qualitative Disclosures about Market Risk

The primary objective of our investment activities is to preserve principal while at the same time maximizing yields without significantly increasing risk. To
achieve this objective, we maintain a portfolio of cash and equivalents and investments in a variety of marketable securities, including both government and corporate obligations.

Substantially
all of our investments are subject to interest rate risk. We consider all of our investments as available-for-sale. As of December 31, 2007,
there were net accumulated unrealized gains of $3,014 on those investments. There were net accumulated unrealized losses on those investments totaling $83,538 at December 31, 2006.

We
did not hold any derivative financial instruments as of December 31, 2007, and have never held such instruments in the past. Additionally, all our transactions have been
denoted in U.S. currency and do not have any risk associated with foreign currency transactions.

31

---



Due
to the short term nature of our investments, a 1% increase in interest rates would not decrease the fair market value of our investments by a material amount.

Item 8.    Financial Statements and Supplementary Data

The financial statements are indexed in the Index to Financial Statements, which appear on Pages F-1 through F-17 hereof, and are
incorporated in this Item by reference thereto.

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

On March 8, 2007, Insure.com, Inc. (the "Company") changed its registered public accounting firm. The Company dismissed Ernst &
Young LLP ("E&Y) as its independent registered public accounting firm. The decision to end the Company's relationship with E&Y was made and approved by the Audit Committee of the Company's
Board of Directors and the Board of Directors.

The
reports of E&Y on the Company's financial statements for the fiscal years ended December 31, 2006 and December 31, 2005 contained no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle.

During
the fiscal years ended December 31, 2006 and December 31, 2005, and the interim period from January 1, 2007 until March 8, 2007, there were no
disagreements with E&Y on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of
E&Y, would have caused E&Y to make reference to the subject matter of the disagreement in its reports. During the fiscal years ended December 31, 2006 and December 31, 2005, and the
interim period from January 1, 2007 until March 8, 2007, there were no "reportable events" within the meaning of Item 304(a)(1)(v) of Regulation S-K.

The
Company has provided E&Y with a copy of this disclosure and has requested that E&Y furnish it with a letter addressed to the Securities and Exchange Commission (the "SEC") stating
whether it agrees with the above statements, and if not, stating the respects in which it does not agree. A copy of the letter from E&Y addressed to the SEC, dated March 12, 2007 and relating
to the fiscal years ended December 31, 2006 and December 31, 2005 and the interim period from January 1, 2007 until March 8, 2007, was filed as Exhibit 16.1 the
Current Report on Form 8-K filed on March 12, 2007.

On
March 8, 2007, the Company approved the engagement of BDO Seidman, LLP ("BDO") as the Company's new independent registered public accounting firm for the fiscal year
ending December 31, 2007, subject to completion of BDO's client acceptance procedures. During the fiscal years ended
December 31, 2006 and December 31, 2005, and the interim period from January 1, 2007 until March 8, 2007, neither the Company nor anyone acting on its behalf consulted BDO
regarding either (1) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's
consolidated financial statements or (2) any matter that was (a) either the subject of a disagreement with E&Y on accounting principles or practices, financial statement disclosure, or
auditing scope or procedures, which, if not resolved to the satisfaction of E&Y, would have caused E&Y to make reference to the subject matter of the disagreement in its reports, or (b) a
"reportable event" as defined in Item 304(a)(1)(v) of Regulation S-K.

Item 9A.    Controls and Procedures

Evaluation of Disclosure Controls and Procedure

The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the
Company's disclosure controls and procedures as of December 31, 2007. Based on that evaluation, the Company's Chief Executive Officer

32

---



and
Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of December 31, 2007 in ensuring that all material information required to be filed
in this annual report have been made known to them in a timely fashion.

Management's Report on Internal Control Over Financial Reporting

Company management is responsible for establishing and maintaining adequate internal control over financial reporting; as such term is defined in
Rule 13a-15(f) under the Act. Under the supervision and with the participation of Company management, including the CEO and CFO, an evaluation was performed of the effectiveness of
the Company's internal control over financial reporting. The evaluation was based on the framework in "Internal ControlIntegrated Framework" issued by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO"). There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and the circumvention or
overriding of controls. Accordingly, even effective
internal controls over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of
internal control may vary over time. Based on the evaluation under the framework in "Internal ControlIntegrated Framework" issued by COSO, Company management concluded that the Company's
internal control over financial reporting was effective at the reasonable assurance level as of December 31, 2007.

This
annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting, pursuant to temporary
rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.

Changes in Internal Control Over Financial Reporting

In the fourth fiscal quarter ended December 31, 2007, there had been no change in the Company's internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

Item 9B.    Other Information

Not applicable

33

---





PART III

Item 10.    Directors, Executive Officers and Corporate Governance.

The sections entitled "Management" and "Section 16(a) Beneficial Ownership Reporting Compliance" are incorporated herein by reference from our proxy
statement to be filed with the Securities and Exchange Commission in connection with our 2008 annual meeting of stockholders scheduled for May 15, 2008.

The
following table sets forth information regarding our executive officers and certain other key employees.

|Name                |  | Age |  | Position                                                    
|------------------- |  | --- |  | ------------------------------------------------------------
|Robert S. Bland     |  | 54  |  | Chairman of the Board, President and Chief Executive Officer
|William V. Thoms    |  | 55  |  | Executive Vice President, Chief Operating Officer           
|Phillip A. Perillo  |  | 58  |  | Senior Vice President, Chief Financial Officer              
|Richard C. Claahsen |  | 43  |  | Vice President, Corporate Secretary                         
|Daniel A. Romito    |  | 54  |  | Vice President, Chief Information Officer                   

Robert S. Blandhas served as our Chairman of the Board, President and Chief Executive Officer since he founded Insure.com in 1984. From
1979 to 1984, Mr. Bland was president and sole stockholder of Security Funding Corporation, an insurance agency. In March 1984, Mr. Bland sold Security Funding Corporation in order to
raise capital to found Insure.com. Mr. Bland holds a B.S. in marketing from the University of Colorado.

William V. Thomshas served as our Executive Vice President since 1994. From 1988 to 1993, Mr. Thoms was responsible for our
operations and customer service departments. Mr. Thoms is a founding stockholder. Prior to joining us, Mr. Thoms was a sales manager for Western Dressing, Inc., a privately held
salad dressing manufacturing company, from 1972 to 1987.

Phillip A. Perillohas served as our Senior Vice President and Chief Financial Officer since May of 2002. Mr. Perillo has over
twenty years of insurance industry experience, with companies such as the Zurich American Insurance Group and Marsh & McLennan. Mr. Perillo holds an MBA in Finance from DePaul University
and a B.S. in Accounting from the University of Illinois at Chicago, and is a Certified Public Accountant.

Richard C. Claahsenhas served as our Vice President of Regulatory Affairs since May 1999. From June 1997 to May 1999, Mr. Claahsen
served as our director of regulatory affairs. From October 1996 to June 1997, he was a special agent with Northwestern Mutual Life Insurance Company. From 1993 to 1996, Mr. Claahsen was a
litigation paralegal at Templeton & Associates of Chicago, Illinois. In 1999, Mr. Claahsen received his Chartered Life Underwriter designation from The American College of Bryn Mawr,
Pennsylvania. Mr. Claahsen holds a B.A. and an M.A. in philosophy from the Catholic University of America and a J.D. from ITT Chicago Kent College of Law.

Daniel A. Romitohas served as our Vice President and Chief Information Officer since joining the Company in October 2006.
Mr. Romito spent twenty-seven years with Allstate Insurance Company, in a variety of technology roles, most recently as Senior Executive Director, prior to joining Insure.com. He holds an M.S.
in Information and Management Science from National Lewis University and a B.S. in Accounting and Finance from Augustana College.

Code of Ethics

We have adopted a Code of Ethics which applies to all financial officers, including our Chief Executive Officer and our Chief Financial Officer. We believe our
Code of Ethics is compliant with Item 406 of SEC Regulation S-K and the Nasdaq listing standards. Any waivers of the Code of Ethics

34

---



must
be approved by a committee of the Board of Directors comprised solely of independent directors. There have been no waivers to the Code of Ethics since its adoption.

Item 11.    Executive Compensation

The sections entitled "Executive Compensation," excluding the Compensation Committee Report and the stock price performance graph,
"ManagementDirector Compensation" and "ManagementCompensation Committee Interlocks and Insider Participation" are incorporated herein by reference from our proxy statement to
be filed with the Securities and Exchange Commission in connection with our 2008 annual meeting of stockholders scheduled for May 15, 2008.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The section entitled "Principal Shareholders" is incorporated herein by reference from our proxy statement to be filed with the Securities and Exchange Commission
in connection with our 2008 annual meeting of stockholders scheduled for May 15, 2008.

The
following table sets forth the following information as of December 31, 2007: (i) the number of shares of our common stock to be issued upon the exercise of outstanding
options, warrants and rights, (ii) the weighted-average exercise price of such options, warrants and rights and (iii) the number of shares of our common stock remaining available for
future issuance under our equity compensation plans, other than the outstanding options, warrants and rights described above.

Equity Compensation Plan Information

|Plan category                                              |  | Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a) |  | Weighted-average exercise price of outstanding options, warrants and rights
(b) |      | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
|---------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------- | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------
|Equity compensation plans approved by security holders     |  | 398,660                                                                                         |  | $                                                                               | 6.53 |                                                                                                                                                
|Equity compensation plans not approved by security holders |  |                                                                                                |  |                                                                                 |     |                                                                                                                                                
|                                                           |  |                                                                                                 |  |                                                                                 |      |                                                                                                                                                
|Total                                                      |  | 398,660                                                                                         |  | $                                                                               | 6.53 |                                                                                                                                                
|                                                           |  |                                                                                                 |  |                                                                                 |      |                                                                                                                                                

Please
see note 7 to the audited financial statements of Insure.com included elsewhere in this Annual Report on Form 10-K for a description of the material
features of the Insure.com, Inc. Stock Option Plans.

Item 13.    Certain Relationships and Related Transactions, and Director Independence

The section entitled "Certain Relationships and Related Transactions" is incorporated herein by reference from our proxy statement to be filed with the Securities
and Exchange Commission in connection with our 2008 annual meeting of stockholders scheduled for May 15, 2008.

Item 14.    Principal Accounting Fees and Services

Audit Fees

The aggregate fees for each of the last two fiscal years for professional services rendered by our registered independent public accounting firms for the audit of
our annual financial statements and

35

---



review
of quarterly financial statements included in our Forms 10-Q were $171,500 for BDO Seidman LLP ("BDO") in 2007 and $273,000 for Ernst & Young LLP ("E&Y")
in 2006.

Audit-Related Fees

The aggregate fees billed in each of the last two fiscal years for assurance and related services by BDO and E&Y that are reasonably related to the performance of
the audit or review of our financial statements and are not reported above under the caption "Audit Fees" were $0 in 2007 and $0 in 2006.

Tax Fees

For the last two years, there were no fees billed for professional services rendered by BDO or E&Y for tax compliance, tax advice and tax planning.

All Other Fees

The aggregate fees billed in each of the last two fiscal years for products and services provided BDO and E&Y, other than the services reported above, were $0 in
2007 and $1,500 in 2006. The fees were for use of the Ernst & Young online service.

Pre-Approval Policies and Procedures

The Audit Committee has adopted a policy that requires advance approval of all audit, audit-related, tax services, and other services performed by the independent
registered public accounting firm. The policy provides for pre-approval by the Audit Committee of specifically defined audit and non-audit services. Unless the specific service
has been pre-approved with respect to that year, the Audit Committee must approve the permitted service before the independent auditor is engaged to perform it. The Audit Committee has
delegated to the Chair of the Audit Committee the authority to approve permitted services provided that the Chair reports any decisions to the Committee at its next scheduled meeting.

All
of the above services for 2007 were approved in advance by our Audit Committee, as required by the Audit Committee Charter.

36

---



PART IV

Item 15.    Exhibits, Financial Statement Schedules and Reports on Form 8-K:

The
financial statements, which appear on Pages F-1 through F-17 hereof, are indexed in the Index to Financial Statements and are incorporated herein by
reference in this Item by reference thereto.



No
schedules are required due to the absence of conditions under which they are required or because the required information is provided in the financial statements or notes thereto.



The
following management contracts or compensatory plans or arrangements are listed as exhibits to this annual report.



See
Exhibit Index (immediately following the signature pages) for exhibits filed with this annual report.

See
Exhibits Index (immediately following the signature pages).

All
required schedules are included.

37

---





INSURE.COM, INC.        INDEX TO FINANCIAL STATEMENTS

|                                                                                         |  | Page
|---------------------------------------------------------------------------------------- |  | ----
|Audited Financial Statements                                                             |  |     
|Reports of Independent Registered Public Accounting Firms                                |  | F-2 
|Balance Sheets as of December 31, 2007 and 2006                                          |  | F-4 
|Statements of Operations for the Years Ended December 31, 2007, 2006, and 2005           |  | F-5 
|Statements of Stockholders' Equity for the Years Ended December 31, 2007, 2006, and 2005 |  | F-6 
|Statements of Cash Flows for the Years Ended December 31, 2007, 2006, and 2005           |  | F-7 
|Notes to Financial Statements                                                            |  | F-8 

F-1

---





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board
of Directors and Stockholders
Insure.com
Darien, Illinois

We
have audited the accompanying balance sheet of Insure.com as of December 31, 2007 and the related statements of operations, stockholders' equity and cash flows for the year
ended December 31, 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our
audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Insure.com at December 31, 2007, and the results of
its operations and its cash flows for the year ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.

|                                |  | /s/ BDO SEIDMAN,LLP
|------------------------------- |  | -------------------
|Chicago, Illinois
March 3, 2008 |  |                    

F-2

---





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board
of Directors
Insure.com, Inc.

We
have audited the accompanying balance sheet of Insure.com, Inc. as of December 31, 2006, and the related statements of operations, stockholders' equity, and cash flows
for each of the two years in the period ended December 31, 2006. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As
discussed in Note 2 to the financial statements, in 2006 the Company changed its method of accounting for stock based compensation.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Insure.com, Inc. at December 31, 2006, and
the results of its operations and its cash
flows for each of the two years in the period ended December 31, 2006 in conformity with U.S. generally accepted accounting principles.

|                                 |  | /s/ERNST & YOUNG LLP
|-------------------------------- |  | --------------------
|Chicago, Illinois
March 15, 2007 |  |                     

F-3

---





INSURE.COM, INC.        BALANCE SHEETS

|                                                                                                                      |                                                                                                                                                                 | December 31, |           
|--------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------ | ----------
|
|ASSETS                                                                                                                |                                                                                                                                                                 |              |           
|Cash and equivalents                                                                                                  |                                                                                                                                                                 | $            | 2,072,117 
|Fixed maturity investmentsavailable for sale at fair value(Note 3)                                                   |                                                                                                                                                                 |              | 8,941,110 
|Commissions receivable, less allowances (2007$395,000; 2006$331,000)                                                |                                                                                                                                                                 |              | 3,262,988 
|Land and building, held for sale(Note 8)                                                                              |                                                                                                                                                                 |              |          
|Other assets                                                                                                          |                                                                                                                                                                 |              | 351,868   
|                                                                                                                      |                                                                                                                                                                 |              |           
|Total current assets                                                                                                  |                                                                                                                                                                 |              | 14,628,083
|Fixed maturity investmentsavailable for sale at fair value(Note 3)                                                   |                                                                                                                                                                 |              |          
|Furniture, equipment, and computer software at cost, less accumulated depreciation (2007$3,853,000; 2006$3,578,000) |                                                                                                                                                                 |              | 1,162,620 
|Intangible assets at cost, less accumulated amortization (2007$2,096,000; 2006$1,587,000)(Note 2)                   |                                                                                                                                                                 |              | 2,030,796 
|Goodwill(Notes 2 and 5)                                                                                               |                                                                                                                                                                 |              | 3,117,470 
|                                                                                                                      |                                                                                                                                                                 |              |           
|Total assets                                                                                                          |                                                                                                                                                                 | $            | 20,938,969
|                                                                                                                      |                                                                                                                                                                 |              |           
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                  |                                                                                                                                                                 |              |           
|Accounts payable and accrued liabilitiescurrent                                                                      |                                                                                                                                                                 | $            | 1,695,113 
|                                                                                                                      |                                                                                                                                                                 |              |           
|Total liabilities                                                                                                     |                                                                                                                                                                 |              | 1,695,113 
|Stockholders' equity(Notes 6 and 7):                                                                                  |                                                                                                                                                                 |              |           
|                                                                                                                      | Preferred stock, $.001 par value; shares authorized: 5,000,000; shares issued and outstanding: 0                                                                |              |           
|                                                                                                                      | Common stock, $.003 par value; shares authorized: 60,000,000; shares issued: 20079,691,276: 20069,688,709; shares outstanding: 20077,283,110: 20067,300,569 |              |           
|                                                                                                                      | Additional paid-in capital                                                                                                                                      |              |           
|                                                                                                                      | Retained-earnings deficit                                                                                                                                       |              |           
|                                                                                                                      | Treasury stock at cost: 20072,408,166 shares; 20062,388,140 shares                                                                                            |              |           
|                                                                                                                      | Accumulated other comprehensive income (loss)                                                                                                                   |              |           
|                                                                                                                      |                                                                                                                                                                 |              |           
|Total stockholders' equity                                                                                            |                                                                                                                                                                 |              | 19,243,856
|                                                                                                                      |                                                                                                                                                                 |              |           
|Total liabilities and stockholders' equity                                                                            |                                                                                                                                                                 | $            | 20,938,969
|                                                                                                                      |                                                                                                                                                                 |              |           

See accompanying notes.

F-4

---





INSURE.COM, INC.        STATEMENTS OF OPERATIONS

|                                                                              |                                                | Years Ended December 31, |           
|----------------------------------------------------------------------------- | ---------------------------------------------- | ------------------------ | ----------
|
|Revenues:                                                                     |                                                |                          |           
|                                                                              | Commissions and fees                           |                          | $         
|                                                                              | Other                                          |                          |           
|                                                                              |                                                |                          |           
|Total revenues                                                                |                                                |                          | 18,019,870
|Expenses:                                                                     |                                                |                          |           
|                                                                              | Selling and marketing(Note 2)                  |                          |           
|                                                                              | Operations(Note 7)                             |                          |           
|                                                                              | General and administrative(Note 7)             |                          |           
|                                                                              | Depreciation                                   |                          |           
|                                                                              | Amortization                                   |                          |           
|                                                                              | Impairment of land and building(Notes 2 and 8) |                          |           
|                                                                              | Impairment of goodwill(Notes 2 and 5)          |                          |           
|                                                                              |                                                |                          |           
|Total expenses                                                                |                                                |                          | 18,636,288
|                                                                              |                                                |                          |           
|Operating loss                                                                |                                                |                          | (616,418  
|Interest income                                                               |                                                |                          | 441,777   
|Net realized loss on sale of securities                                       |                                                |                          |          
|                                                                              |                                                |                          |           
|Loss before income taxes                                                      |                                                |                          | (174,641  
|Income tax benefit(Note 4)                                                    |                                                |                          |          
|                                                                              |                                                |                          |           
|Net loss                                                                      |                                                | $                        | (174,641  
|                                                                              |                                                |                          |           
|Net loss per common share, basic and diluted                                  |                                                | $                        | (0.02     
|                                                                              |                                                |                          |           
|Weighted average common shares and equivalents outstanding, basic and diluted |                                                |                          | 7,294,441 

See accompanying notes.

F-5

---





INSURE.COM, INC.        STATEMENTS OF STOCKHOLDERS' EQUITY

|       |                                                             | Common Stock |           |  |   |        |  |   |            |  |   |             |  
|------ | ----------------------------------------------------------- | ------------ | --------- |  | - | ------ |  | - | ---------- |  | - | ----------- | -
|
|
|2005:: |                                                             |              |           |  |   |        |  |   |            |  |   |             |  
|       | Balance at January 1                                        |              | 9,688,709 |  |   | 29,066 |  |   | 76,814,067 |  |   | (45,290,292 | )
|       | Net loss                                                    |              |          |  |   |       |  |   |           |  |   | (4,926,190  | )
|       | Other comprehensive lossnet unrealized loss on investments |              |          |  |   |       |  |   |           |  |   |            |  
|       |                                                             |              |           |  |   |        |  |   |            |  |   |             |  
|       | Total comprehensive loss                                    |              |           |  |   |        |  |   |            |  |   |             |  
|       | Purchase of 7,475 shares of treasury stock                  |              |          |  |   |       |  |   |           |  |   |            |  
|       |                                                             |              |           |  |   |        |  |   |            |  |   |             |  
|       | Balance at December 31                                      |              | 9,688,709 |  |   | 29,066 |  |   | 76,814,067 |  |   | (50,216,482 | )
|2006:  |                                                             |              |           |  |   |        |  |   |            |  |   |             |  
|       | Net loss                                                    |              |          |  |   |       |  |   |           |  |   | (3,588,031  | )
|       | Other comprehensive gainnet unrealized gain on investments |              |          |  |   |       |  |   |           |  |   |            |  
|       |                                                             |              |           |  |   |        |  |   |            |  |   |             |  
|       | Total comprehensive loss                                    |              |           |  |   |        |  |   |            |  |   |             |  
|       | Stock option compensation                                   |              |          |  |   |       |  |   | 246,077    |  |   |            |  
|       | Purchase of 21,324 shares of treasury stock                 |              |          |  |   |       |  |   |           |  |   |            |  
|       |                                                             |              |           |  |   |        |  |   |            |  |   |             |  
|       | Balance at December 31                                      |              | 9,688,709 |  | $ | 29,066 |  | $ | 77,060,144 |  | $ | (53,804,513 | )
|2007:  |                                                             |              |           |  |   |        |  |   |            |  |   |             |  
|       | Net loss                                                    |              |          |  |   |       |  |   |           |  |   | (174,641    | )
|       | Other comprehensive gainnet unrealized gain on investments |              |          |  |   |       |  |   |           |  |   |            |  
|       |                                                             |              |           |  |   |        |  |   |            |  |   |             |  
|       | Total comprehensive loss                                    |              |           |  |   |        |  |   |            |  |   |             |  
|       | Proceeds of sale of common stockexercise of stock options  |              | 2,567     |  |   | 8      |  |   | 7,519      |  |   |            |  
|       | Stock option compensation                                   |              |          |  |   |       |  |   | 78,256     |  |   |            |  
|       | Purchase of 20,026 shares of treasury stock                 |              |          |  |   |       |  |   |           |  |   |            |  
|       |                                                             |              |           |  |   |        |  |   |            |  |   |             |  
|       | Balance at December 31                                      |              | 9,691,276 |  | $ | 29,074 |  | $ | 77,145,919 |  | $ | (53,979,154 | )
|       |                                                             |              |           |  |   |        |  |   |            |  |   |             |  

See accompanying notes.

F-6

---





INSURE.COM, INC.        STATEMENTS OF CASH FLOWS

|                                                |                                                                               | Years Ended December 31, |                                         
|----------------------------------------------- | ----------------------------------------------------------------------------- | ------------------------ | ----------------------------------------
|
|Cash flows from operating activities:           |                                                                               |                          |                                         
|Net loss                                        |                                                                               | $                        | (174,641                                
|                                                | Adjustments to reconcile to net cash provided (used) by operating activities: |                          |                                         
|                                                |                                                                               |                          | Depreciation expense                    
|                                                |                                                                               |                          | Amortization of intangible assets       
|                                                |                                                                               |                          | Amortization of investments             
|                                                |                                                                               |                          | Impairment of land and building         
|                                                |                                                                               |                          | Impairment of goodwill                  
|                                                |                                                                               |                          | Accounts payable and accrued liabilities
|                                                |                                                                               |                          | Stock option compensation               
|                                                |                                                                               |                          | Commissions receivable                  
|                                                |                                                                               |                          | Other                                   
|                                                |                                                                               |                          |                                         
|                                                | Net cash (used) provided by operating activities                              |                          |                                         
|Cash flows from investing activities:           |                                                                               |                          |                                         
|                                                | Purchase of investments                                                       |                          |                                         
|                                                | Proceeds from investment maturities                                           |                          |                                         
|                                                | Proceeds from sale of land and building                                       |                          |                                         
|                                                | Proceeds from sales of investments                                            |                          |                                         
|                                                | Purchase of furniture, equipment and software                                 |                          |                                         
|                                                |                                                                               |                          |                                         
|                                                | Net cash provided (used) by investing activities                              |                          |                                         
|Cash flows from financing activities:           |                                                                               |                          |                                         
|                                                | Proceeds from issuance of common stock                                        |                          |                                         
|                                                | Purchase of treasury stock                                                    |                          |                                         
|                                                |                                                                               |                          |                                         
|                                                | Net cash provided (used) by financing activities                              |                          |                                         
|                                                |                                                                               |                          |                                         
|Net increase (decrease) in cash and equivalents |                                                                               |                          | 771,874                                 
|Cash and equivalents at beginning of year       |                                                                               |                          | 1,300,243                               
|                                                |                                                                               |                          |                                         
|Cash and equivalents at end of year             |                                                                               | $                        | 2,072,117                               
|                                                |                                                                               |                          |                                         

See
accompanying notes.

F-7

---





INSURE.COM, INC.        NOTES TO FINANCIAL STATEMENTS

1.    Description of Business

Insure.com, Inc. (the Company) is an insurance agency and brokerage. Since its inception in 1984, the Company has been continuously developing a
proprietary and comprehensive insurance price comparison and order-entry system that provides instant quotes from about 30 life insurance companies for term life insurance products. The Company uses
this database to provide customers with a large array of comparative life insurance quotes online, over the phone or by mail, and allows the customer to purchase insurance from the insurance company
of their choice either online or over the phone with the Company's licensed insurance customer service staff. The Company's website also provides insurance information and decision-making tools, along
with access to other forms of personal insurance, such as auto, health, homeowners, renters, long-term care and travel insurance through various third party web sites and other sources.
The Company generates revenues from the receipt of commissions and fees paid by various sources, that are tied directly to the volume of insurance sales or traffic that is produced. The Company
conducts its insurance agency and brokerage operations using salaried personnel and generates prospective customer interest using traditional direct response advertising methods conducted primarily
offline.

In
the period covered in the accompanying financial statements, the Company's primary revenue source has been commissions derived from the sale of individual term life insurance.
Applications are underwritten and commissions are received from numerous life insurance companies. Revenues from some of these companies have exceeded ten percent of the Company's total revenues. In
2007 and 2006, one life insurance company accounted for $2.2 million and $1.9 million of our revenues, respectively. In 2005, three life insurance companies accounted for revenues of
$2.6 million, $2.0 million and $1.7 million The Company's business represents one reporting segment.

2.    Summary of Significant Accounting Policies

Use of Estimates

The preparation of the financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying notes. Such estimates and assumptions could change, as more information becomes known, which could impact the amounts
reported and disclosed herein.

Revenue Recognition

The Company recognizes annual first year commissions for life insurance business as revenues when the policy has been approved by the underwriter and an initial
premium payment (which may be annual, semi-annual, quarterly, or monthly) has been made by the customer. An allowance is provided for estimated commissions that will not be received due to
the nonpayment of installment first year premiums.

Revenues
on all other lines of business, as well as for renewal and bonus commissions and other revenues, are recognized when earned.

Advertising Costs

Selling and marketing expenses in the accompanying financial statements are comprised of advertising costs. The costs of producing advertising are expensed in the
first period that the advertising

F-8

---



INSURE.COM, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

takes
place. The costs of communicating the advertising are expensed in the period the advertising is communicated.

Investments

The Company classifies its fixed maturity investments as available-for-sale and, accordingly, such investments are carried at fair value.
The cost of fixed maturity investments is adjusted for amortization of premiums and discounts and for declines in value that are other than temporary. Temporary changes in the fair values of
investments are reflected directly in stockholders' equity as accumulated other comprehensive income or loss net of income taxes with no effect on net income or loss. Realized gains or losses are
calculated using the specific identification method.

Cash and Equivalents

Money market investments are included as part of cash and equivalents.

Land and Building

During 2006, the Company decided to sell its land and building and, accordingly, recorded the net book value as a current, held for sale asset, effective
June 30, 2006. Prior to that date, building costs were depreciated over an estimated useful life of 40 years. Land costs were not depreciated. Repair and maintenance costs are charged to
expense as incurred. While the land and building was classified as held for sale, it was subject to review for indicators of impairment. The land and building were sold during 2007.

Furniture, Equipment, and Computer Software

Furniture, equipment, and capitalized application development costs of internal-use computer software are depreciated over useful lives of three to
five years using principally the straight-line method of depreciation. Repair and maintenance costs are charged to expense as incurred.

Intangible Assets

As a result of the 2004 acquisition of selected assets of Life Quotes, Inc., the Company prepared an allocation of the cost of the acquisition to the
assets acquired.

Intangible
assets acquired in 2004 in the acquisition of certain assets of Life Quotes, Inc., consist of the following:

|                            |  | Intangible Asset Balance |           | Estimated Useful Life |          | Amortization Method
|--------------------------- |  | ------------------------ | --------- | --------------------- | -------- | -------------------
|Insurance contract renewals |  | $                        | 3,538,000 |                       | 10 years |                    
|Non-compete agreement       |  |                          | 589,000   |                       | 6 years  |                    
|                            |  |                          |           |                       |          |                    
|Total                       |  | $                        | 4,127,000 |                       |          |                    
|                            |  |                          |           |                       |          |                    

The
fair value of insurance contract renewals was estimated based on the actual policies in force as of the acquisition date, and the renewal commission rates paid by each insurance
carrier. These commissions were estimated to have a useful life of ten years, based on the terms of the contracts with the insurance carriers, and an annual lapse rate was applied to the expected
renewals for each carrier based on historical trends. Amortization is on an accelerated basis, as renewal commissions will decline

F-9

---



INSURE.COM, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

each
year due to lapses. The ultimate realization of the value of the contract renewals is dependant on a number of factors, including actual lapse ratios, which can be affected by factors not under
our control, such as death rates and the pricing level of insurance policies that could be purchased to replace the policies in the renewal stream. As a result, the actual amount realized from the
contract renewals acquired may differ significantly from the amount recorded in the financial statements, causing impairment. Amortization expense from these intangible assets totaled $509,000 in
2007, $554,000 in 2006 and $605,000 in 2005, and is expected to total $468,000 in 2008, $431,000 in 2009, $332,000 in 2010, $269,000 in 2011 and $242,000 in 2012.

Goodwill

The Company recorded goodwill in the amount of $6.9 million in connection with its May 2004 acquisition of certain assets of Life Quotes, Inc. While
goodwill is not amortized, FAS 142 requires that it be subject to periodic reviews for impairment (at least annually, or more frequently if impairment indicators arise) using a two step
process. Such impairment reviews are performed at the entity level, as the Company has one reporting unit. The first step of the goodwill impairment test is used to identify potential impairment by
comparing the fair value of the Company with its carrying amount, including goodwill. The fair value of the Company is determined using a combination of a market valuation based on a comparison with
similar public companies (guideline company method), and a discounted cash flow analysis, which includes making various judgmental assumptions, including assumptions about future cash flows, growth
rates and discount rates. The assumptions about future cash flows and growth rates are based on the Company's budget and long range plans. Discount rate assumptions are based on an assessment of risk
inherent in the Company. If the calculated fair value of the Company exceeds its carrying amount, goodwill is considered not impaired and the second step of the impairment test is unnecessary. If the
carrying amount of the entity exceeds the calculated fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the
goodwill impairment test compares the implied fair value of the Company's goodwill with the carrying amount of that goodwill. If the carrying amount exceeds the implied fair value of the goodwill, an
impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination.
That is, the fair value of the Company is allocated to all of the assets and liabilities of the Company (including any unrecognized intangible assets) as if the Company had been acquired in a business
combination and the fair value of the Company was the purchase price paid to acquire the Company.

Treasury Stock

The cost of reacquiring the Company's common stock is reported as a separate component of stockholders' equity.

Income Taxes

Deferred income taxes are determined based on the temporary differences between financial reporting and tax bases of assets and liabilities and the effect of net
operating loss carryforwards, and are measured using enacted tax rates. The Company records a valuation allowance to reduce the deferred income tax assets to the amount that is more likely than not to
be realized.

F-10

---



INSURE.COM, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Non-operating Income and Expense

In 2006, the Company realized losses of $559 on the sale of fixed maturity investments. There were no realized gains or losses in 2007 or 2005.

Net Loss Per Share

Basic and diluted net loss per share reflects net loss divided by the weighted average number of common shares outstanding. Diluted net loss per share does not
include the effect of common share equivalents because the effect would be antidilutive. At December 31, 2007, there were a total of 448,660 common share equivalents outstanding.

Comprehensive Income or Loss

Comprehensive loss includes net loss and unrealized gain or loss on investments, as follows:

Years ended December 31,2007

2006

2005Unrealized gain (loss) on investments

$
86,552

$
114,001

$
(54,781
)Less: Reclassification adjustment for realized losses included in income





559


Other comprehensive income (loss)

$
86,552

$
114,560

$
(54,781
)


The
specific identification method was used for calculating gains or losses on securities reclassified.

Stock Options

Effective January 1, 2006, the Company began accounting for stock option grants in accordance with Statement of Financial Accounting Standards
No. 123 (revised 2004),Share-Based Payment(Statement 123 (R)), which requires the recognition of compensation expense for all stock options
granted to employees including options where the exercise price is equal to or greater than the market price at the date of the grant. Prior to that date, the Company accounted for stock option grants
in accordance with Accounting Principles Board Opinion 25, "Accounting for Stock Issued to Employees" and related interpretations, and, accordingly, recognized no compensation expense for stock
options granted to employees where the exercise price is equal to or greater than the market price at the date of the
grant. During the years ended December 31, 2007 and 2006, the Company recorded compensation expense related to stock options in its income statement in the amount of $78,000 and $246,000,
respectively, with no related income tax benefit recognized. As a result, net losses were $78,000 and $246,000 higher and net loss per common share (basic and diluted) was $.01 and $.03 higher in 2007
and 2006, respectively, under Statement 123 (R). No income tax benefit was recognized in the income statement for this expense. Unrecognized compensation expense related to stock options totaled
$28,000 as of December 31, 2007. Expense was calculated using the Black-Scholes options pricing model. Due to a lack of historical information, the expected term is based on the midpoint
between the vesting term and contract term. The volatility assumption is based on historical information.

The
Company implemented Statement 123 (R) using the "modified prospective" method in which compensation cost is recognized beginning with the effective date (a) based on
the requirements of Statement 123 (R) for all share-based payments granted after the effective date and (b) based on the requirements of Statement 123 for all awards granted to employees
prior to the effective date of

F-11

---



INSURE.COM, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Statement
123 (R) that remain unvested on the effective date. Under this method, there is no restatement of prior periods to recognize the effects as though Statement 123 (R) had been
implemented in those prior periods. Had compensation expense for the Company's stock option plans been determined based on the estimated fair value at the date of grant consistent with the methodology
prescribed under SFAS 123, approximate net loss and net loss per share would have been as follows:

Year Ended December 31,December 31, 2005(in thousands, except per share data)Net loss as reported

$
(4,926
)Less pro forma stock compensation using fair value method


(136
)Pro forma net loss

$
(5,062
)Pro forma net loss per common share, basic and diluted

$
(0.69
)


Recent Accounting Pronouncements

In June 2006, the FASB issued Interpretation No. 48 ("FIN 48"), "Accounting for Uncertainty in Income Taxesan Interpretation of SFAS
No. 109." FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with SFAS No. 109, "Accounting for
Income Taxes." FIN 48 prescribes a recognition threshold and measurement of a tax position taken or expected to be taken in an enterprise's tax return. In addition, FIN 48 provides
guidance on derecognition, classification, interest, penalties, accounting in interim periods and disclosure related to uncertain income tax positions. FIN 48 is effective for fiscal years
beginning after December 15, 2006. Accordingly, the Company adopted FIN 48 on January 1, 2007. The adoption of FIN 48 did not have a material impact on the Company's
financial statements. No uncertain tax position reserves were recorded, reversed or settled during 2007.

The
Company files a U.S. income tax return and tax returns in various state and local jurisdictions. In the U.S., all tax years from 2004 through the present are open. Interest
and penalties related to tax positions taken in the Company's tax returns are recorded in income tax expense in the statements of operations. The Company did not record interest and penalties during
the years ended 2007, 2006, or 2005.

In
September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements," which defines fair value, establishes a framework for measuring fair value, and expands disclosures
about fair value measurements. The provisions of SFAS No. 157 are effective as of the beginning of the Company's 2008 fiscal year. The Company is currently evaluating the impact of adopting
SFAS No. 157 on its financial statements.

In
February 2007, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities-Including an
amendment of FASB Statement No. 115." SFAS No. 159 permits companies to choose to measure certain financial assets and liabilities at fair value (the "fair value option"). If the fair
value option is elected, any upfront costs and fees related to the item must be recognized in earnings and cannot be deferred, e.g. debt issue costs. The fair value election is irrevocable and
may generally be made on an instrument-by-instrument basis, even if a company has similar instruments that it elects not to fair value. At the adoption date, unrealized gains
and losses on existing items for which fair value has been elected are reported as a cumulative adjustment to beginning retained earnings. SFAS No. 159 is

F-12

---



INSURE.COM, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

effective
for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of adopting SFAS No. 159 on its financial statements.

In
December 2007, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 141(R), "Business Combinations." SFAS 141(R) establishes principles and
requirements for how the acquirer (a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree, (b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and (c) determines what information to disclose to enable users
of the financial statements to evaluate the nature and financial effects of the business combination. This Statement will supersede SFAS 141, "Business Combinations", and applies prospectively
to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply it
before that date. The Company is currently evaluating the impact of adopting SFAS 141 (R) on its financial statements.

3.    Investments

Investments are classified as available-for-sale securities and are reported at fair value, as follows:

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Fair ValueDecember 31, 2007:U.S. Government agency bonds

$
6,934,382

$
20,108

$
1,175

$
6,953,315Corporate bonds and commercial paper


2,003,714





15,919


1,987,795Total

$
8,938,096

$
20,108

$
17,094

$
8,941,110December 31, 2006:U.S. Government agency bonds

$
4,496,259

$
1,611

$
4,402

$
4,493,468Corporate bonds and commercial paper


2,527,812





80,747


2,447,065Total

$
7,024,071

$
1,611

$
85,149

$
6,940,533


As
of December 31, 2007, all investments maturities are within one year.

The
Company's fixed maturity investment portfolio is sensitive to interest rate fluctuations, which impact the fair value of individual securities. Unrealized losses reported above were
generally caused by the effect of a rising interest rate environment on certain securities with stated interest rates currently below market rates. The Company has the ability and the intent to hold
these securities until their full cost can be recovered. Therefore, the Company does not believe the unrealized losses represent an other-than-temporary impairment as of
December 31, 2007.

F-13

---



INSURE.COM, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

4.    Income Taxes

A reconciliation of income taxes (benefit) based on the federal tax rate to amounts reported in the statements of operations is as follows:

Years Ended December 31,2007

2006

2005Pre-tax loss times federal rate

$
(60,000
)
$
(1,220,000
)
$
(1,675,000
)State income tax credit


(8,000
)

(172,000
)

(236,000
)Increase in valuation allowance


23,000


1,313,000


1,916,000Other


45,000


79,000


(5,000
)Income tax benefit

$


$


$



Deferred
income taxes reflect the net tax effect of temporary differences between the amounts of assets and liabilities for financial reporting purposes and the amounts used for income
tax purposes and the effect of net operating loss carryforwards.

Significant
components of the Company's deferred tax assets and liabilities are as follows

December 31,2007

2006Deferred tax liabilities

$


$
Deferred tax assets:Net operating loss carryforwards


18,654,000


17,961,000Capital loss carryforward


18,000


18,000Depreciation and amortization


1,774,000


2,483,000Other


352,000


313,000Total gross deferred tax assets


20,798,000


20,775,000Valuation allowance


(20,798,000
)

(20,775,000
)Net deferred tax assets





Net deferred tax amounts

$


$



As
of December 31, 2007, the Company had net operating loss carryforwards of approximately $48,100,000 available to offset future taxable income, which expire in 2008 to 2027.
There were no income taxes paid or recovered in 2005, 2006 or 2007. The Company had capital loss carryforwards of approximately $46,000 to offset future capital gain income, which expire in 2009
through 2011.

5.    Goodwill

As discussed in Note 2, the Company reviews goodwill for impairment periodically and whenever events or changes in business circumstances indicate that the
carrying value of the assets may not be recoverable. Under those circumstances, if the fair value were less than the carrying amount of the entity, further analysis would be required to determine
whether or not a loss would need to be charged against current period earnings. There were no indicators of impairment in either 2007 or 2006. During the fourth quarter of 2005, the Company
experienced declining revenues from life insurance sales and a decline in the market price of its common stock. The annual impairment review was conducted as of December 31, 2005, and it was
determined that an impairment existed. The determinations of fair value

F-14

---



INSURE.COM, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

were
based on a combination of the market price of our common stock and a discounted cash flow analysis based on estimates and assumptions including the amount and timing of future cash flows and
future interest rates. The use of different estimates or assumptions could produce different results. As a result of this impairment determination, the Company recorded a non-cash
impairment charge against earnings in 2005 amounting to $3.75 million.

6.    Stockholders' Equity

Treasury Stock

As of December 31, 2007, the Company is authorized to repurchase 601,000 additional shares of its common stock.

Employee Stock Purchase Plan

The Company has a plan under which employees could purchase shares of the Company's common stock through payroll deductions of up to 10% of each employee's
compensation. Shares may be purchased at 85% of the lower of the fair value of the common stock on the first or the last day of each six-month offering period. The Company reserved 83,333
shares for purchase under the plan, of which 63,929 were available at December 31, 2007. However, this plan is currently inactive.

Preferred Stock

The Company has 5,000,000 authorized shares of $0.001 par value preferred stock. No shares have been issued.

Stockholder Rights Plan

One preferred stock purchase right is outstanding for each outstanding share of the Company's common stock, and the Company intends to issue those rights along
with future issuances of common shares. The rights become exercisable only if a person or group acquires or announces the intent to acquire 15% or more of the Company's common stock. Prior to the
rights becoming exercisable, the Company may redeem the rights for $0.03 per right. If the rights become exercisable, the Company
may exchange each right for one share of common stock providing that 50% of the Company has not been acquired. The rights expire in 2009.

If
the rights become exercisable and they have not been exchanged, holders of each right, other than the acquiring person or group, would be entitled to acquire three hundredths of a
share of the Company's preferred stock at an exercise price equal to five times the initial offering price of the Company's common stock. If issued, each preferred share would entitle the holder to
cumulative quarterly dividends of the greater of $1.00 per share or 33.3 times the common share dividends. The preferred shareholders would receive 33 votes per share and have a liquidation preference
of $0.333 per share over the common shares.

In
lieu of purchasing preferred shares, holders of each right, other than the acquiring person or group, on payment of the exercise price, would be entitled to acquire the number of
shares of the Company's common stock or other assets with a value of two times the exercise price. In addition, if 50% of the Company is acquired, the holders of each right would be entitled to
acquire the number of shares of the acquiring company's common stock having a value of two times the exercise price.

F-15

---



INSURE.COM, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

Investor Rights Agreement

Zions Bancorporation (Zions) acquired 2.4 million shares of the Company's common stock during 2004. In connection with that transaction, the Company and
Zions signed an Investor Rights Agreement which provides that, as long as Zions continues to hold 40% of the shares issued to them, Zions has the right to nominate or appoint one member of the
Company's Board of Directors. Additionally, certain transactions would require the approval of 75% of our directors, including the merger with, or acquisition of another company, the sale of business
or assets in excess of $1 million, incurring debt in excess of $2.5 million, declaring dividends or issuing additional capital stock.

7.    Stock Options

The Company has established the 1997 Stock Option Plan and the 2004 Non-Qualified Stock Option Plan, (the Plans), to provide additional incentives to
our employees, officers, and directors. The Company believes that such awards better align the interests of its employees with those of its shareholders. Under the Plans, an aggregate of 800,000
shares of Insure.com common stock may be granted to participants in the plan. Option awards are generally granted with an exercise price equal
to the market price of the Company's stock at the date of the grant. Options granted under the plans vest over periods ranging from one to three years, and expire if not exercised within ten years. As
of December 31, 2007, there were options outstanding on 398,660 shares of stock under these plans.

The
fair value of each option is estimated on the date of the grant using the Black-Scholes model with the assumptions noted in the table below. In order to calculate stock option
compensation expense in 2007 and 2006, and for purposes of the pro forma disclosures presented in Note 2 for 2005, the estimated fair values of the option grants are amortized to expense over
the options' vesting period.

Years Ended December 31,2007

2006

2005Dividend yield

0.0
%
0.0
%
0.0
%Risk-free interest rate

4.7
%
4.4
%
3.8
%Volatility

37.1
%
58.6
%
75.2
%Expected life (years)

5.5

5.5

5.0


There
were no stock options granted below the estimated fair value of the Company's common stock in 2007, 2006 or 2005.

In
connection with the 2001 acquisition of selected assets of Insurance News Network, LLC, the Company issued options to acquire 50,000 shares of its common of stock at a price of
$2.00 per share. These options remain outstanding as of December 31, 2007.

F-16

---



INSURE.COM, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

A
summary of options activity as of December 31, 2007, and changes during the three years then ended is presented below:

Shares Under Option

Weighted Average Exercise Price

Weighted Average Remaining Contractual Term (Years)

Aggregate Intrinsic ValueBalance, January 1, 2005

601,728

$
6.22Granted

10,500


5.09Exercised




Forfeited

(200,167
)

5.16Balance, December 31, 2005

412,061

$
6.71

6.59Granted

85,000


3.00Exercised




Forfeited

(66,500
)

5.17Balance, December 31, 2006

430,561

$
6.22

6.0

$
267,599Granted

50,000


4.38Exercised

(2,567
)

2.93Forfeited

(29,334
)

6.00Balance, December 31, 2007

448,660

$
6.02

5.6

$
289,775Exercisable as of December 31, 2006

287,895

$
7.61

4.9

$
143,849Exercisable as of December 31, 2007

418,660

$
6.15

5.4

$
286,075


The
weighted average fair value per share of options granted were as follows:

2007

2006

2005$1.86

$
1.70

$
3.24


The
total intrinsic value of options exercised during the year ended December 31, 2007 was $3,282. There were no options exercised during the years ended December 31, 2006
or 2005.

A
summary of the status of the Company's non-vested options as of December 31, 2007, and changes during the year then ended, is presented below:

Shares Under Option

Weighted-Average Grant-Date Fair ValueNon-vested at January 1, 2007

117,499

$
2.22Granted

50,000


1.86Vested

(112,499
)

2.23Forfeited

(25,000
)

1.39Non-vested at December 31, 2007

30,000


1.49


As
of December 31, 2007, there was $28,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plans.
That cost is expected to be recognized over a weighted-average period of one year. The total fair value of shares vested during the years ended December 31, 2007, 2006 and 2005 was $251,000,
$112,000 and $210,000, respectively.

F-17

---



INSURE.COM, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

8.    Land and Building

As discussed in Note 2, the Company reviews the carrying value of the land and building for impairment periodically and whenever events or changes in
circumstances indicate that the carrying value of the assets may not be recoverable. Under those circumstances, if the fair value were less than the carrying amount of the land and building, a loss
would need to be charged against current period earnings. During the third quarter of 2006, the Company accepted an offer to sell the land and building for less than the carrying value at that time.
After estimating closing costs and broker commissions, the Company recorded an impairment charge of $1,321,000 against income for the quarter ended September 30, 2006. During the fourth quarter
of 2006, this proposed sale was cancelled by the buyer. Based on a March 2007 agreement to sell the land and building for $3,400,000, net of estimated closing costs, the Company recorded an additional
impairment charge against the land and building of $480,000 as of December 31, 2006. The land and building were sold during 2007 at a price approximately equal to the book value at
December 31, 2006.

9.    Commitments and Contingencies

As of December 31, 2007, the Company leases office space in Darien, IL under an operating lease agreement in which the Company is committed to rent expense
of approximately $290,000 in 2008, 2009, 2010, 2011and 2012. Estimated future minimum lease payments required under the lease are $249,000 in 2008, $257,000 in 2009, $317,000 in 2010, $327,000 in
2011, $337,000 in 2012 and $347,000 in 2013. The difference between the expense recognized and payments required results in a liability for deferred rent.

Rent
expense was $272,000 in 2005, $290,000 in 2006 and $237,000 in 2007.

The
Company has employment agreements with two of its executives under which the Company would be required to pay severance of one to two years of annual salary to terminate those
agreements. The Company has an employment agreement with one additional executive under which the Company would be required to pay severance of one year of annual salary in the event of a change in
control.

The
Company is subject to legal proceedings and claims in the ordinary course of business. The Company is not aware of any legal proceedings or claims that are believed to have a
material effect on the Company's financial position.

F-18

---





SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized on March 3, 2008.

|INSURE.COM, INC. | 
|---------------- | 
|By:              | 
|                 | 
|                 | 
|                 | 
|                 | 
|                 | 
|                 | 
|                 | 

---





EXHIBITS

FORM 10-K  INDEX TO EXHIBITS

|Exhibit Number |  | Description of Document                                                                                                                                 
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1          |  | Restated Certificate of Incorporation of Company.                                                                                                       
|3.2          |  | Amended and Restated By-Laws of the Company.                                                                                                            
|4.3          |  | Form of Rights Agreement.                                                                                                                               
|4.3(a)       |  | Certificate of Designation, Preferences and Rights.                                                                                                     
|10.1         |  | Quotesmith.com 1997 Stock Option Plan (as amended and restated March 29, 1999) of Registrant                                                            
|10.2         |  | Quotesmith.com 1999 Employee Stock Purchase Plan.                                                                                                       
|10.3         |  | Employment Agreement between the Company and Robert S. Bland.                                                                                           
|10.4         |  | Employment Agreement between the Company and William V. Thoms.                                                                                          
|10.5        |  | Employment Agreement between the Company and Phillip A. Perillo.                                                                                        
|10.6         |  | Form of Director Indemnification Agreement.                                                                                                             
|10.7         |  | Lease dated as of August 1994, between the Company and LaSalle National Trust N.A.                                                                      
|10.8         |  | Lease Amendment Agreement dated as of November 1995, between the Company and LaSalle National Trust N.A.                                                
|10.9         |  | Lease Amendment Agreement as of September 1997, between the Company and LaSalle National Trust N.A.                                                     
|10.10        |  | Lease Amendment Agreement dated as of July 1998, between the Company and LaSalle National Trust N.A..                                                   
|10.11        |  | Services Agreement, dated as of September 9, 1998, by and between the Company and Intuit Insurance Services, Inc.                                       
|10.12        |  | Investor Rights Agreement, dated February 10, 1999, between the Company and Intuit Inc.                                                                 
|10.13         |  | Stock Purchase Agreement, dated as of March 1, 2004, between the Company and Zions Bancorporation                                                       
|10.14         |  | Investor Rights Agreement, dated as of March 1, 2004, between the Company, Zions Bancorporation, Robert S. Bland and William V. Thom                    
|10.15         |  | Amendment and Waiver to July 7, 1999 Employment Agreement between the Company and with Robert S. Bland (12/15/03), dated March 1, 2004                  
|10.16         |  | Amendment and Waiver to July 7, 1999 Employment Agreement between the Company and William V. Thoms (2/10/03), dated March 1, 2004                       
|10.17         |  | Asset Purchase Agreement, dated as of January 31, 2004, by and among the Company, Life Quotes Acquisition, Inc., Life Quotes, Inc. and Kenneth L. Manley

1

---



|10.18    |  | Real Estate Purchase and Sale Agreement, dated as of January 31, 2004, between Life Quotes Acquisition, Inc. and The Kenneth L. Manley Revocable Trust dated as of June 10, 1987
|--------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.19 |  | Quotesmith.com, Inc. 2004 Non-Qualified Stock Option Plan                                                                                                                       
|21.0      |  | Subsidiaries of the Company                                                                                                                                                     
|23.1      |  | Consent of BDO Seidman LLP (filed herewith)                                                                                                                                     
|23.2      |  | Consent of Ernst & Young LLP (filed herewith)                                                                                                                                   
|31.1      |  | Certification of Chief Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act                                                                                     
|31.2      |  | Certification of Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act                                                                                     
|32.1      |  | Certification of Chief Executive Officer, Pursuant to Section 1350 of Title 18 of the United States Code                                                                        
|32.2      |  | Certification of Chief Financial Officer, Pursuant to Section 1350 of Title 18 of the United States Code                                                                        
|99.1  |  | Code of Ethics                                                                                                                                                                  

---

2

---



QuickLinks