In the second quarter 2020, Fidelity Life entered into a General Agent’s agreement with an unaffiliated third party, National Service Group of AmeriLife, LLC (“AmeriLife”). This agreement provides Fidelity Life access to AmeriLife distribution channels, its commission systems and assists in streamlining administrative processes related to commissions. This agreement also allows Efinancial to operate as a sub agent to AmeriLife. On May 15, 2020, the Company began selling products using this new distribution arrangement.
Efinancial also generates insurance lead sales revenue through its eCoverage web presence. For the years ended December 31, 2020 and December 31, 2019, our Agency Segment revenue earned 85% and 78% through the retail channel, 5% and 8% through the wholesale channel, and 10% and 14% through insurance lead sales revenue, respectively.
The amortization of DAC for traditional life insurance products is determined as a level proportion of premium based on actuarial methods and assumptions about mortality, morbidity, lapse rates, expenses, and future yield on related investments, established by us at the time the policy is issued. GAAP requires that assumptions for these types of products not be modified while the policy is outstanding. Amortization is adjusted each period to reflect policy lapse or termination rates compared to anticipated experience. Accordingly, acceleration of DAC amortization could occur if policies terminate earlier than originally assumed. We establish the assumptions used to determine DAC amortization based on estimates using Company experience and other relevant information that is used to price the products. We monitor our actual experience and will update the actuarial factors applied to future policy issues if warranted. The selection of actuarial assumptions requires considerable judgment and has inherent uncertainty. Should actual policy lapse experience be higher than that assumed during a reporting period, we will amortize our DAC balance faster and report lower net income.
Under applicable Federal income tax guidance, the taxation of life insurance companies is subject to special rules not applicable to other (non-life) companies. Accordingly, we have to consider the implications of these different tax rules in accounting for income tax expense, as separately applicable to our life and non-life subgroups of companies.
Operating expenses are incurred by all of our segments. The operating expenses of our Insurance Segment include policy acquisition costs in excess of amounts that qualify for deferral, ceding commissions received on ceded reinsurance in excess of amounts deferred, variable policy administration costs, general overhead and administration costs, and insurance premium taxes and assessments paid to various states. Agency Segment expenses consist of compensation paid to employee sales agents, costs of insurance sales leads (marketing), costs of sales management and support activities, agent licensing expenses and general overhead and administration expenses. The expenses of the Corporate Segment include allocation of a portion of the compensation of senior executives related to corporate activities, Board of Director expenses related to corporate business, and other operating costs considered to be of a corporate nature and not directly related to either of our other business segments. Overhead and administrative expenses of the segments include employee costs (salaries, bonuses and benefits), office rent, information technology and costs of third-party administrators and other contractors.
For the year ended December 31, 2020, total benefits and expenses were $175.1 million compared to $155.5 million for the year ended December 31, 2019. This increase of $19.6 million was primarily due to higher life, annuity, and health claim benefits.
For the year ended December 31, 2020, life, annuity and health claim benefits were $77.7 million compared with $61.9 million for the year ended December 31, 2019. This increase of $15.8 million was mainly attributable to an increase of $4.8 million in net claim benefits resulting from $6.8 million higher claim activity on certain Core and Non-Core products, partially offset by a decrease of $2.1 million in annuities and assumed life. Change in benefit reserves increased $11.1 million, primarily related to $1.4 million in our Core and Non-Core lines, $5.9 million in Closed Block and $4.4 million in assumed life resulting from the recapture of the majority of an assumed life block of business, partially offset by a $0.6 million decrease in annuities.
Expense-our Insurance Segment recognizes the first-year commission as a policy acquisition cost, in proportion to the premiums earned from providing insurance coverage throughout the first year that the policy is in force. In addition, our Insurance Segment defers the amount by which the first-year commission acquisition costs exceed the ultimate renewal commission and records this amount as deferred acquisition cost that is amortized over the expected life of the policy.