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.
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.
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.
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.
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.
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.
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:
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.
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.
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.
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.
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.
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.
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.