150 N. Radnor-Chester Road
Suite B-101
Radnor, Pennsylvania 19087
(484) 654-2200
(Address and Telephone Number of Registrant’s Principal Executive Offices)

Anthony R. Verdi
Chief Financial Officer and Chief Operating Officer
Health Benefits Direct Corporation
150 N. Radnor-Chester Road
Suite B-101
Radnor, Pennsylvania 19087
(484) 654-2200
(Name, Address and Telephone Number of Agent for Service)

Copy to:
James W. McKenzie, Jr., Esq.
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, Pennsylvania 19103
(215) 963-5000

      Approximate Date of Proposed Sale to the Public: As soon as practicable after the effective date of this registration statement.

     If any Securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

     If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

     If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

     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)

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted .

PRELIMINARY PROSPECTUS

TABLE OF CONTENTS

		Page
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			4
QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING			5
PROSPECTUS SUMMARY			13
RISK FACTORS			16
THE RIGHTS OFFERING			27
USE OF PROCEEDS			36
DILUTION			36
CAPITALIZATION			37
DESCRIPTION OF SECURITIES			37
SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS
MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS			39
OUR BUSINESS			40
DESCRIPTION OF PROPERTY
LEGAL PROCEEDINGS			44
MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION			46
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS			81
EXECUTIVE COMPENSATION			84
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			93
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS			95
PLAN OF DISTRIBUTION			96
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS			96
EXPERTS			100
TRANSFER AGENT AND REGISTRAR			100
LEGAL MATTERS			100
WHERE YOU CAN FIND MORE INFORMATION			100
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES			100
FINANCIAL STATEMENTS		F-1
EXHIBIT 4.18
EX-4.19
EX-5.1
EX-23.1
EX-99.1
EX-99.2
EX-99.3
EX-99.4
EX-99.5
EX-99.6
EX-99.7

     You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from the information contained in this prospectus. We will not make an offer to sell these securities in any jurisdiction where offers and sales are not permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of when this prospectus is delivered or when any sale of our common stock occurs. All dollar amounts in this prospectus are in U.S. dollars unless otherwise stated.

     In this prospectus, unless the context specifically indicates otherwise, all references to “the Company,” “we,” “us,” and “our” refer to Health Benefits Direct Corporation and its subsidiaries.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     Certain of the statements contained in this prospectus, including in the sections entitled “Questions and Answers About the Rights Offering,” “Prospectus Summary,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and elsewhere in this report are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained in the forward-looking statements. The forward-looking statements herein include, among others, statements addressing management’s views with respect to future financial and operating results and costs associated with the Company’s operations and other similar statements. Various factors, including competitive pressures, market interest rates, changes in insurance carrier mix, regulatory changes, customer and insurance carrier defaults or insolvencies, litigation, acquisition of businesses that do not perform as we expect or that are difficult for us to integrate or control, adverse resolution of any contract or other disputes with customers and insurance carriers, or the loss of one or more key insurance carrier relationships, could cause actual outcomes and results to differ materially from those described in forward-looking statements.

     The words “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue” and similar expressions may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. While we believe that we have a reasonable basis for each forward-looking statement contained in this prospectus, we caution you that these statements are based on a combination of facts and factors currently known by us and projections of the future about which we cannot be certain. Many factors, including general business and economic conditions, affect our ability to achieve our objectives. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. In addition, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, if at all. We may not update these forward-looking statements, even though our situation may change in the future.

QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING

          The following are examples of what we anticipate will be common questions about the rights offering. The answers are based on selected information included elsewhere in this prospectus. The following questions and answers do not contain all of the information that may be important to you and may not address all of the questions that you may have about the rights offering. This prospectus contains more detailed descriptions of the terms and conditions of the rights offering and provides additional information about us and our business, including potential risks related to the rights offering, the Units, and our business.

What is the rights offering?

          We are distributing, at no charge, to holders of our shares of common stock and preferred stock, non-transferable subscription rights to subscribe for Units consisting of 250 shares of our Series A preferred stock and a five-year warrant to purchase 5,000 additional shares of our common stock at an exercise price of $0.20 per share. You will receive one subscription right for every 12,256 shares of our common stock and are right for every 613 shares of our preferred stock held of record by you as of 5:00 p.m., New York City time, on December ___, 2009, the record date. Each subscription right entitles the holder to a basic subscription right and an over-subscription privilege, which are described below. The shares of preferred stock and the warrant to be issued as components of the Units in the rights offering do not currently trade on the OTCBB or on any other exchange, and are only transferable to the extent permitted in the instruments governing such securities.

What is the basic subscription right?

          The basic subscription right gives our stockholders the opportunity to purchase Units at a subscription price of $1,000 per Unit for each 12,256 shares of common stock or 613 shares of preferred stock you own. We have granted to you, as a stockholder of record on the record date, one subscription right for each 12,256 shares of our common stock and each 613 shares of preferred stock you owned at that time.

          There is no minimum number of Units you must purchase, but you may not purchase fractional Units. When determining the number of subscription rights you will receive, divide the number of shares of our common stock you own by 12,256 and the number of shares of preferred stock you own by 613, and round down to the next whole number. For example, if you own 30,000 shares of our common stock, you will receive two (2) subscription rights (30,000 shares divided by 12,256 = 2.45, rounded down to two (2) subscription rights, the next whole number), which will entitle you to subscribe for up to two (2) Units under your basic subscription privilege.

          You may exercise all or a portion of your basic subscription right, or you may choose not to exercise any subscription rights at all. However, if you exercise less than your full basic subscription right, you will not be entitled to purchase shares under your over-subscription privilege.

          If you hold a Health Benefits Direct Corporation stock certificate, the number of Units you may purchase pursuant to your basic subscription right is indicated on the enclosed rights certificate. If you hold your shares of common stock in the name of a broker, dealer, custodian bank, or other nominee who uses the services of the Depository Trust Company (DTC), you will not receive a rights certificate. Instead, DTC will issue one subscription right to your nominee record holder for each 12,256 shares of our common stock that you own at the record date. If you are not contacted by your nominee, you should contact your nominee as soon as possible.

What is the over-subscription privilege?

          In the event that you purchase all of the Units available to you pursuant to your basic subscription right, you may also choose to purchase any Units that are not purchased by our other stockholders through the exercise of their basic subscription rights. You should indicate on your rights certificate, or the form provided by your nominee if your shares are held in the name of a nominee, how many additional Units you would like to purchase pursuant to your over-subscription privilege.

          If sufficient Units are available, we will seek to honor your over-subscription request in full. If, however, over-subscription requests exceed the number of Units available, we will allocate the available Units pro rata among the stockholders exercising the over-subscription privilege in proportion to the number of shares of common stock and preferred stock owned by such stockholder on the record date, relative to the number of shares owned on the record date by all stockholders exercising the over-subscription privilege. If this pro rata allocation results in any stockholder receiving a greater number of Units than the stockholder subscribed for pursuant to the exercise

of the over-subscription privilege, then such stockholder will be allocated only that number of Units for which the stockholder oversubscribed, and the remaining Units will be allocated among all other stockholders exercising the over-subscription privilege on the same pro rata basis described above. The proration process will be repeated until all Units have been allocated.

          In order to properly exercise your over-subscription privilege, you must deliver the subscription payment related to your over-subscription privilege prior to the expiration of the rights offering. Because we will not know the total number of unsubscribed Units prior to the expiration of the rights offering, if you wish to maximize the number of Units you purchase pursuant to your over-subscription privilege, you will need to deliver payment in an amount equal to the aggregate subscription price for the maximum number of Units that may be available to you (i.e., for the maximum number of Units available to you, assuming you exercise all of your basic subscription rights and are allotted the full amount of your over-subscription). See “The Rights Offering — The Subscription Rights — Over-Subscription Privilege.”

          Any excess subscription payments received by us will be returned, without interest or penalty, as soon as practicable.

Why are we conducting the rights offering?

          We are conducting the rights offering for the primary purpose of raising equity capital to improve our capital position, to inject additional capital into Health Benefits Direct Corporation and to retain the remainder of any proceeds at Health Benefits Direct Corporation for general corporate purposes. See “Use of Proceeds.”

          This rights offering, including the composition and price of the Unit, was designed to give all of the holders of our common stock the opportunity to participate in an equity investment in Health Benefits Direct Corporation on substantially the same economic terms as our last private placement in January 2009.

Are we pursuing other initiatives to improve our capital position?

          Yes. We have undertaken several initiatives to improve our capital position. These initiatives include, but are not limited to, the cessation of the direct marketing and sale of health and life insurance in our Telesales call center, the sale of our Telesales call center produced agency business to an unaffiliated third party, the sublease of unused office space and a reduction in our staff by approximately 72%. We intend to continue to explore additional initiatives to improve our capital position in light of the turbulent economic environment and our desire to preserve capital.

How was the $1,000 per Unit subscription price determined?

          The $1,000 per Unit subscription price was determined by our board of directors based on the per share value of the preferred stock and warrants (considered in the aggregate) purchased by investors in our last private placement in January 2009. In January 2009, we sold units, consisting of one share of our Series A preferred stock (each share of which is convertible, at the sole option of the holder, into twenty shares of our common stock) and one five-year warrant to purchase 20 shares of our common stock, at a per unit price of $4.00. We sold a total of 1,000,000 units for an aggregate purchase price of $4,000,000.

          In determining the subscription price, our board of directors considered the overall economic value offered to investors in Health Benefits Direct Corporation in this last private placement. If an investor had invested in this last private placement , for every $1,000 invested, such investor would have received 250 shares of Series A preferred stock and warrants to purchase 5,000 additional shares of our common stock at an exercise price of $0.20 per share. As a result, the Units offered in this rights offering consist of 250 shares of our Series A preferred stock and a warrant to purchase 5,000 shares of our common stock at a price per Unit of $1,000.

          We did not seek or obtain an opinion of financial advisors in establishing the subscription price. The subscription price will not necessarily be related to our book value, tangible book value, net worth or any other established criteria of fair value.

What are the material terms of the Series A preferred stock offered in this rights offering?

          Each share of Series A preferred stock offered in this rights offering is convertible, at the sole discretion of each holder of preferred stock, into 20 shares of common stock, subject to certain adjustments. The holders of shares of our Series A preferred stock are entitled to vote, with respect to any question upon which holders of our common stock are entitled to vote, together with the holders of common stock as one class on an as-converted basis. At such time, if any, as our board of directors declares a dividend or distribution on the common stock, the holders of preferred stock shall be entitled to receive, for each share of Series A preferred stock held by them, a dividend or distribution in an amount equal to what such holder of preferred stock would receive if their shares were converted into shares of common stock. We do not currently intend to pay any cash dividends to the holders of shares of our common stock.

          In addition, upon the liquidation, sale or merger of Health Benefits Direct Corporation, each share of our Series A preferred stock is entitled to receive an amount equal to the greater of (A) a liquidation preference equal to two and a half (2.5) times the Series A preferred stock original issue price, subject to certain customary adjustments, or (ii) the amount such preferred stock would receive if it participated pari passu with the holders of our common stock on an as-converted basis. For so long as any shares of Series A preferred stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of preferred stock is required to approve (Y) any amendment to our certificate of incorporation or bylaws that would adversely alter the voting powers, preferences or special rights of the Series A preferred stock or (Z) any amendment to our certificate of incorporation to create any shares of capital stock that rank senior to the Series A preferred stock. In addition to the voting rights described above, for so long as 1,000,000 shares of Series A preferred stock are outstanding, the vote or consent of the holders of at least two-thirds of the preferred stock is required to

effect or validate any merger, sale of substantially all of the assets of Health Benefits Direct Corporation or other fundamental transaction, unless such transaction, when consummated, will provide the holders of preferred stock with an amount per share equal to two and a half (2.5) times the Series A preferred stock original issue price.

          In the event of (a) the sale of all or substantially all of the assets of Health Benefits Direct Corporation, (b) any tender offer or exchange pursuant to which the holders of a majority of common stock exchange such shares for other securities, cash or property or (c) any reclassification of the common stock pursuant to which the shares of common stock are effectively converted or exchanges for other securities, cash or property, if we do not effect a dissolution within ninety (90) days after such event, the holder of a majority of the shares of Series A preferred stock may require us, within 120 days of such event, to redeem all outstanding shares of Series A preferred stock at a price per share equal to two and a half (2.5) times the Series A preferred stock original issue price, subject to certain customary adjustments.

What are the material terms of the warrants offered in this rights offering?

          The warrants that we are offering in this rights offering are in substantially similar form to those warrants purchased by investors in the last private placement in January 2009. Each warrant issued as a component of the Units will be a five-year warrant to purchase 5,000 shares of our common stock at an exercise price of $0.20 per share, subject to our right to call the warrant under certain conditions. The warrants include full ratchet anti-dilution adjustment provisions for issuances of securities below $0.20 per share during the first two years following the date of issuance of the warrants, subject to customary exceptions.

Am I required to exercise all of the subscription rights I receive in the rights offering?

          No. You may exercise any number of your subscription rights, or you may choose not to exercise any subscription rights. If you do not exercise any subscription rights, the number of shares of our common stock or preferred stock you own will not change. However, if you choose not to exercise your subscription rights, your ownership interest in Health Benefits Direct Corporation may be diluted by other stockholder purchases (to the extent we receive any subscriptions in this rights offering). In addition, if you do not exercise your basic subscription right in full, you will not be entitled to participate in the over-subscription privilege. See “Risk Factors — If you do not exercise your subscription rights, your percentage ownership in Health Benefits Direct Corporation will be diluted.”

How soon must I act to exercise my subscription rights?

          If you received a rights certificate and elect to exercise any or all of your subscription rights, we must receive your completed and signed rights certificate and payments prior to the expiration of the rights offering, which is February 15, 2010, at 5:00 p.m., Eastern Time. If you hold your shares in the name of a broker, dealer, custodian bank or other nominee, your nominee may establish a deadline prior to 5:00 p.m. Eastern Time, on February 15, 2010 by which you must provide it with your instructions to exercise your subscription rights. Although our board of directors may, in its discretion, extend the expiration of the rights offering, we currently do not intend to do so. Our board of directors may cancel or amend the rights offering at any time. In the event that the rights offering is cancelled, all subscription payments received will be returned, without interest or penalty, as soon as practicable.

          Although we will make reasonable attempts to provide this prospectus to our stockholders, the rights offering and all subscription rights will expire at 5:00 p.m., Eastern Time on February 15, 2010, whether or not we have been able to locate each person entitled to subscription rights.

May I transfer my subscription rights?

          No. You may not sell, transfer or assign your subscription rights to anyone. Subscription rights will not be listed for trading on the OTCBB or any other stock exchange or market. Rights certificates may only be completed by the stockholder who receives the certificate.

Are we requiring a minimum subscription to complete the rights offering?

          No. There is no individual minimum purchase requirement in the rights offering and we are not requiring a minimum subscription to complete the rights offering. However, because we are not issuing fractional Units, you must own at least 12,256 shares of our common stock or 613 shares of our preferred stock as of the record date in order to subscribe for one Unit in the rights offering.

          In addition, our board of directors reserves the right to cancel the rights offering for any reason, including if we do not receive aggregate subscriptions that we believe will satisfy our capital plans.

Can the board of directors cancel, amend or extend the rights offering?

          Yes. Our board of directors may decide to cancel, amend or terminate the rights offering at any time before the expiration of the rights offering and for any reason. If our board of directors cancels or terminates the rights offering, any money received from subscribing stockholders will be returned, without interest or penalty, as soon as practicable. We also reserve the right to amend or modify the terms of the rights offering. We further have the right to extend the rights offering and the time for exercising your subscription rights, although we do not presently intend to do so.

Has our board of directors made a recommendation to our stockholders regarding the rights offering?

          No. Our board of directors is making no recommendation regarding your exercise of the subscription rights. Stockholders who exercise subscription rights risk investment loss on new money invested. There is currently no public market for our shares of Series A preferred stock. You are urged to make your decision based on your own assessment of our business and financial condition, our prospects for the future, the terms of the rights offering and the information contained in, or incorporated by reference into, this prospectus. See “Risk Factors” for a discussion of some of the risks involved in investing in our common stock.

How do I exercise my subscription rights if I own shares in certificate form?

          If you hold a Health Benefits Direct stock certificate and you wish to participate in the rights offering, you must take the following steps:

	•		deliver payment to us before 5:00 p.m., Eastern Time, on February 15, 2010; and
	•		deliver a properly completed and signed rights certificate to us before 5:00 p.m., Eastern Time, on February 15, 2010.

In certain cases, you may be required to provide additional documentation or signature guarantees.

          Please follow the delivery instructions on the rights certificate. You are solely responsible for completing delivery to us of your subscription documents, rights certificate and payment. We urge you to allow sufficient time for delivery of your subscription materials to us so that they are received by us by 5:00 p.m., Eastern Time, on February 15, 2010. WE WILL NOT ACCEPT ANY SUBSCRIPTIONS THAT WE RECEIVE AFTER THIS TIME.

          If you send a payment that is insufficient to purchase the number of Units you request, or if the number of Units you request is not specified in the forms, the payment received will be applied to exercise your subscription rights to the fullest extent possible

based on the amount of the payment received, subject to the availability of Units under the over-subscription privilege and the elimination of fractional Units.

What should I do if I want to participate in the rights offering, but my shares are held in the name of a broker, dealer, custodian bank or other nominee?

          If you hold your shares of common stock through a broker, dealer, custodian bank or other nominee, then your nominee is the record holder of the shares you own. The record holder must exercise the subscription rights on your behalf. If you wish to purchase Units through the rights offering, you should contact your broker, dealer, custodian bank or nominee as soon as possible. Please follow the instructions of your nominee. Your nominee may establish a deadline that may be before the expiration date that we have established for the rights offering.

When will I receive my new shares and warrants?

          If you purchase Units in the rights offering you will receive your new shares and warrants as soon as practicable after the closing of the rights offering.

After I send in my payment and rights certificate, may I cancel my exercise of subscription rights?

          No. All exercises of subscription rights are irrevocable unless the rights offering is terminated, even if you later learn information that you consider to be unfavorable to the exercise of your subscription rights. You should not exercise your subscription rights unless you are certain that you wish to purchase Units in the rights offering.

Are there any conditions to completing the rights offering?

          No, there are no conditions to completion of the rights offering.

What effects will the rights offering have on our outstanding preferred stock and warrants?

          As of December ___, 2009, we had 1,000,000 shares of Series A preferred stock and 51,566,887 warrants to purchase shares of common stock issued and outstanding. The number of shares of our preferred stock and warrants that we will issue in this rights offering through the exercise of subscription rights will depend on the number of Units that are subscribed for in the rights offering. We could, depending on the number of Units that are subscribed for in the offering, have a maximum of 2,250,000 shares of preferred stock and warrants to purchase 76,566,887 shares of our common stock outstanding after completion of the rights offering.

          The issuance of Units in the rights offering will dilute, and thereby reduce, your proportionate ownership in Health Benefits Direct Corporation. If you fully exercise your basic subscription right and a certain level of your over-subscription privilege, your ownership interest will be diluted to a lesser extent.

How much will Health Benefits Direct Corporation receive from the rights offering?

          If all of the subscription rights (including all over-subscription privileges) are exercised in full by our stockholders, we expect the gross proceeds from the rights offering to be approximately $5 million. If no subscription rights are exercised by our stockholders, we would receive no proceeds from the offering. We are offering shares in the rights offering to stockholders with no individual minimum purchase requirement.

Are there risks in exercising my subscription rights?

          Yes. The exercise of your subscription rights involves risks. Exercising your subscription rights involves the purchase of additional shares of our preferred stock and warrants to purchase our common stock and should be considered as carefully as you would consider any other equity investment. Among other things, you should carefully consider the risks described under the heading “Risk Factors” in this prospectus and in the documents incorporated by reference in this prospectus.

If the rights offering is not completed, will my subscription payment be refunded to me?

          Yes. We will hold all funds we receive in a segregated bank account until completion of the rights offering. If the rights offering is not completed, all subscription payments received by us will be returned, without interest or penalty, as soon as practicable. If you own shares in “street name,” it may take longer for you to receive your subscription payment because we will return payments through the record holder of your shares.

What fees or charges apply if I purchase Units in the rights offering?

          We are not charging any fee or sales commission to issue subscription rights to you or to issue shares or warrants to you if you exercise your subscription rights. If you exercise your subscription rights through a broker, dealer, custodian bank or other nominee, you are responsible for paying any fees your record holder may charge you.

What are the material U.S. federal income tax consequences of exercising my subscription rights?

          For U.S. federal income tax purposes, you should not recognize income or loss in connection with the receipt or exercise of subscription rights in the rights offering. You should consult your tax advisor as to your particular tax consequences resulting from the rights offering. For a detailed discussion, see “Material U.S. Federal Income Tax Considerations.”

To whom should I send my forms and payment?

          If your shares are held in the name of a broker, dealer or other nominee, then you should send your subscription documents, rights certificate and subscription payment to that record holder. If you are the record holder, then you should send your subscription documents, rights certificate and subscription payment by hand delivery, first class mail or courier service to:

Health Benefits Direct Corporation
150 N. Radnor-Chester Road
Suite B-101
Radnor, Pennsylvania 19087

Attn: Francis L. Gillan III

          You are solely responsible for completing delivery to us of your subscription documents, rights certificate and payment. We urge you to allow sufficient time for delivery of your subscription materials to us.

Whom should I contact if I have other questions?

          If you have any questions regarding Health Benefits Direct Corporation or the rights offering, please contact Francis L. Gillan III at (484) 654-2200. You may also contact us with questions by electronic mail at rightsoffering@HBDC.com.

          If you have any questions regarding completing a rights certificate or submitting payment in the rights offering, please contact Francis L. Gillan III at (484) 654-2200 or by electronic mail at rightsoffering@HBDC.com.

PROSPECTUS SUMMARY

           This summary highlights selected information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information that you should consider before investing in our securities. You should read the entire prospectus carefully, including the “Risk Factors” section, before making a decision to invest in our securities.

Our Business

          We are a technology company that provides software applications for use by insurance agents and insurance administrators in the health insurance industry. Our business focuses on two primary software products: our Insurint™ product and our InsPro software application.

          Insurint™ is a proprietary, professional-grade, web-based agent portal that aggregates real-time quotes and underwriting information from multiple highly-rated carriers of health and life insurance and related products. We market Insurint using a Software as a Service (SaaS) model instead of software licensing model, which offers easy web-based distribution and pay-as-you-go pricing. We market Insurint primarily to insurance agents, agencies, and other organizations selling health insurance products to families and individuals. Unlike existing health insurance quote engines, Insurint also enables an agent to input responses to a set of questions about the health of proposed insureds, which enables the agent to place an insurance policy faster and more accurately. In addition, Insurint offers a suite of sales tools that agents can use to increase their overall sales production.

          InsPro is a comprehensive, web-based insurance administration software application. InsPro was introduced by Atiam Technologies, L.P. (now our InsPro Technologies, LLC subsidiary) in 2004. InsPro clients include health insurance carriers and third party administrators. Unlike our Insurint platform, we market InsPro as a licensed software application, and we realizes revenue from the sale of the software licenses, application service provider fees, software maintenance fees and consulting and implementation services.

          Our common stock is currently publicly traded under the symbol “HBDT.OB” on the OTCBB.

Summary of this Rights Offering

Securities Offered		We are distributing to you, at no charge, one non-transferable subscription right for each 12,256 shares of our common stock and 613 shares of our preferred stock that you owned as of 5:00 p.m., Eastern Time, on December ___, 2009, the record date, either as a holder of record or, in the case of shares held of record by brokers, dealers, custodian banks, or other nominees on your behalf, as a beneficial owner of such shares. If the rights offering is fully subscribed, we expect the gross proceeds from the rights offering to be approximately $5 million. This rights offering was designed to give all of the holders of our common stock the opportunity to participate in an equity investment in Health Benefits Direct Corporation on the same economic terms as the investment made by investors in our last private placement in January 2009.
Basic Subscription Right		The basic subscription right will entitle you to purchase one unit at a subscription price of $1,000. A unit consists of 250 shares of our Series A preferred stock and a five-year warrant to purchase an additional 5,000 shares of our common stock at an exercise price of $0.20 per share. We refer to these units throughout this prospectus as “Units.”
		There is no minimum number of Units you must purchase, but you may not purchase fractional Units. When determining the number of subscription rights you will receive, divide the number of shares of our common stock you own by 12,256 and the number of shares of our preferred stock you own by 613, and round down to the next whole number. For example, if you own 30,000 shares of our common stock, you will receive two (2) subscription rights (30,000 shares divided by 12,256 = 2.45, rounded down to two (2) subscription rights, the next whole number), which will entitle you to subscribe for up to two (2) Units under your basic subscription privilege.

	•		If you are a registered holder of our common stock or our preferred stock, you must deliver payment and a properly completed rights certificate to us so that we receive these items before 5:00 p.m., Eastern Time, on February 15, 2010. You may deliver the documents and payments by hand delivery, first class mail or courier service. If first class mail is used for this purpose, we recommend using registered mail, properly insured, with return receipt requested.
	•		If you are a beneficial owner of shares that are registered in the name of a broker, dealer, custodian bank or other nominee, or if you would rather an institution conduct the transaction on your behalf, you should instruct your broker, dealer, custodian bank or other nominee to exercise your subscription rights on your behalf. Please follow the instructions of your nominee, who may require that you meet a deadline earlier than 5:00 p.m., Eastern Time, on February 15, 2010.

Our Corporate Information

          Our principal executive offices are located at 150 N. Radnor-Chester Road, Suite B-101, Radnor, Pennsylvania 19087. The principal executive offices of our wholly-owned subsidiary, HBDC II, Inc., are located at 2200 S.W. 10th Street, Deerfield Beach, Florida 33442. The principal executive offices of our wholly-owned subsidiary, InsPro Technologies, LLC, are located at 350 Baldwin Tower, Eddystone, PA 19022. Our telephone number is (484) 654-2200. Our website address is www.healthbenefitsdirect.com. The information contained on our website is not incorporated by reference into, and does not form any part of, this prospectus.

RISK FACTORS

      Investing in our securities involves significant risks. In addition to all of the other information contained in this prospectus, you should carefully consider the risks and uncertainties described below before deciding to invest in our common stock and preferred stock. If any of the following risks actually occur, they may materially harm our business, our financial condition or our results of operations. In this event, the market price of our securities could decline and you could lose all or part of your investment.

Risks Related to the Rights Offering

If you do not exercise your subscription rights, your percentage ownership in Health Benefits Direct Corporation will be diluted.

     Stockholders who do not fully exercise their subscription rights should expect that they will, at the completion of this offering, own a smaller proportional interest in our company than would otherwise be the case had they fully exercised their basic subscription and over-subscription rights. In addition, the shares issuable upon the exercise of the warrants to be issued pursuant to this rights offering will dilute the ownership interest of stockholders not participating in this offering or holders of warrants issued pursuant to this offering who have not exercised them.

The subscription rights are not transferable, and there is no market for the subscription rights.

     You may not sell, give away or otherwise transfer your subscription rights. The subscription rights are only transferable by operation of law. Because the subscription rights are non-transferable, there is no market or other means for you to directly realize any value associated with the subscription rights.

If we terminate this offering for any reason, we will have no obligation other than to return subscription monies as soon as practicable.

     We may decide, in our sole discretion and for any reason, to cancel or terminate the rights offering at any time prior to the expiration date. If this offering is cancelled or terminated, we will have no obligation with respect to subscription rights that have been exercised except to return as soon as practicable, without interest, the subscription payments deposited with us. If we terminate this offering and you have not exercised any subscription rights, such subscription rights will expire worthless.

The subscription price determined for this offering is not an indication of the fair value of our common stock.

     In determining the subscription price, our board of directors considered the overall economic value offered to investors in Health Benefits Direct Corporation in our last private placement in January 2009. If an investor had invested in this last private placement for every $1,000 invested, such investor would have received 250 shares of Series A preferred stock and warrants to purchase 5,000 additional shares of our common stock at an exercise price of $0.20 per share. As a result, the Units offered in this rights offering consist of 250 shares of our Series A preferred stock and a warrant to purchase 5,000 shares of our common stock at a price per Unit of $1,000.

     We did not seek or obtain an opinion of financial advisors in establishing the subscription price. The subscription price will not necessarily be related to our book value, tangible book value, net worth or any other established criteria of fair value.

We will have broad discretion in the use of the net proceeds from this offering and may not use the proceeds effectively.

     Although we plan to use the proceeds of this offering for general corporate purposes, including working capital, we will not be restricted to such use and will have broad discretion in determining how the proceeds of this offering will be used. Our discretion is not substantially limited by the uses set forth in this prospectus in the section entitled “Use of Proceeds.” While our board of directors believes the flexibility in application of the net proceeds is prudent, the broad discretion it affords entails increased risks to the investors in this offering. Investors in this offering have no current basis to evaluate the possible merits or risks of any application of the net proceeds of this offering. Our stockholders may not agree with the manner in which we choose to allocate and spend the net proceeds.

If you do not act on a timely basis and follow subscription instructions, your exercise of subscription rights may be rejected.

     Holders of subscription rights who desire to purchase Units in this offering must act on a timely basis to ensure that all required forms and payments are actually received by us prior to 5:00 p.m., New York City time, on the expiration date, unless extended, unless delivery of the subscription rights certificate is effected pursuant to the guaranteed delivery procedures as described below. If you are a beneficial owner of shares of common stock or preferred stock and you wish to exercise your subscription rights, you must act promptly to ensure that your broker, dealer, custodian bank, trustee or other nominee acts for you and that all required forms and payments are actually received by your broker, dealer, custodian bank, trustee or other nominee in sufficient time to deliver such forms and payments to us to exercise the subscription rights granted in this offering that you beneficially own prior to 5:00 p.m., New York City time on the expiration date, as may be extended, unless delivery of the subscription rights certificate is effected pursuant to the guaranteed delivery procedures as described below. We will not be responsible if your broker, dealer, custodian bank, trustee or other nominee fails to ensure that all required forms and payments are actually received by us prior to 5:00 p.m., New York City time, on the expiration date.

     If you fail to complete and sign the required subscription forms, send an incorrect payment amount, or otherwise fail to follow the subscription procedures that apply to your exercise in this rights offering, we may, depending on the circumstances, reject your subscription or accept it only to the extent of the payment received. We do not undertake to contact you concerning an incomplete or incorrect subscription form or payment, nor are we under any obligation to correct such forms or payment. We have the sole discretion to determine whether a subscription exercise properly follows the subscription procedures.

You may not receive all of the Units for which you subscribe pursuant to the over-subscription privilege.

     Holders who fully exercise their basic subscription rights will be entitled to subscribe for an additional amount of Units that are not purchased by our other holders through the exercise of their basic subscription rights. Over-subscription rights will be allocated pro-rata among subscription rights holders who over-subscribed, based on the number of shares of common stock and preferred stock owned by such holders on the record date, relative to the number of shares owned on the record date by all stockholders exercising the over-subscription privilege. You may not receive any or all of the amount of Units for which you over-subscribed. If the pro rated amount of Units allocated to you in connection with your over-subscription right is less than your over-subscription request, then the excess funds held by us on your behalf will be returned to you, without interest, as soon as practicable after the rights offering has expired and all prorating calculations and reductions contemplated by the terms of the rights offering have been effected, and we will have no further obligations to you.

If you make payment of the subscription price by uncertified check, your check may not clear in sufficient time to enable you to purchase Units in this rights offering.

     Any uncertified check used to pay for Units to be issued in this rights offering must clear prior to the expiration date of this rights offering, and the clearing process may require five or more business days. If you choose to exercise your subscription rights, in whole or in part, and to pay for Units by uncertified check and your check has not cleared prior to the expiration date of this rights offering, you will not have satisfied the conditions to exercise your subscription rights and will not receive the Units you wish to purchase.

The receipt of subscription rights may be treated as a taxable distribution to you.

     The distribution of the subscription rights in this rights offering should be a non-taxable distribution under Section 305(a) of the Internal Revenue Code of 1986, as amended, or the Code. Please see the discussion on the “Material U.S. Federal Income Tax Considerations” below. This position is not binding on the IRS, or the courts, however. If this rights offering is deemed to be part of a “disproportionate distribution” under Section 305(b)(2) of the Code (or otherwise to be within one of the exceptions to Section 305(a) of the Code set forth in Section 305(b) of the Code), your receipt of subscription rights in this offering may be treated as the receipt of a taxable distribution to you equal to the fair market value of the subscription rights. Any such distribution would be treated as dividend income to the extent of our current and accumulated earnings and profits, if any, with any excess being treated as a return of capital to the extent thereof and then as capital gain. Each holder of common stock and preferred stock is urged to consult his, her or its own tax advisor with respect to the particular tax consequences of this rights offering.

Absence of a public trading market for the warrants and shares of Series A preferred stock may limit the ability of a purchaser to resell the warrants.

     There is no established trading market for the warrants or the shares of our Series A preferred stock to be issued pursuant to this offering, and such securities may not be widely distributed. There can be no assurance that a market will develop for the warrants or the shares of Series A preferred stock. Even if a market for these securities does develop, the price of the warrants and the Series A preferred stock may fluctuate and liquidity may be limited. If a market for these securities does not develop, then purchasers of the warrants and the shares of Series A preferred stock may be unable to resell the securities or sell them only at an unfavorable price for an extended period of time, if at all. Future trading prices of the warrants and shares of Series A preferred stock will depend on many factors, including:

	•		our operating performance and financial condition;
	•		our ability to continue the effectiveness of the registration statement, of which this prospectus is a part, covering the warrants and shares of Series A preferred stock and the common stock issuable upon exercise or conversion of these securities;
	•		the interest of securities dealers in making a market; and
	•		the market for similar securities.

The market price of our common stock may never exceed the exercise price of the warrants issued in connection with this offering.

     The warrants being issued in connection with this offering become exercisable on their date of issuance and will expire five years thereafter. We cannot provide you any assurance that the market price of our common stock will ever exceed the exercise price of these warrants prior to their date of expiration. Any warrants not exercised by their date of expiration will expire worthless and we will be under no further obligation to the warrant holder.

Since the warrants are executory contracts, they may have no value in a bankruptcy or reorganization proceeding.

     In the event a bankruptcy or reorganization proceeding is commenced by or against us, a bankruptcy court may hold that any unexercised warrants are executory contracts that are subject to rejection by us with the approval of the bankruptcy court. As a result, holders of the warrants may, even if we have sufficient funds, not be entitled to receive any consideration for their warrants or may

receive an amount less than they would be entitled to if they had exercised their warrants prior to the commencement of any such bankruptcy or reorganization proceeding.

Your ability to resell the securities you acquire in the rights offering may be limited by state securities laws.

     If you purchase securities in the rights offering, you may not be able to resell the securities to other persons unless the securities are registered under the securities laws of the states in which the potential purchasers reside or exemptions from registration requirements are available in such states. We do not intend to register any of the securities for resale in any states or jurisdictions. Consequently, you may only be able to sell the securities in those states where exemptions are available, such as an exemption for sales to institutional investors. In addition, in the event that the warrants to be issued in this rights offering are sold to another person, the purchaser may not be able to exercise the warrants unless an exemption is available in the purchaser’s state of residence for the issuance of common stock upon the exercise of warrants.

Risks Relating to our Company and Industry

We have a limited operating history and have incurred significant operating losses since our inception, which we anticipate will continue for the foreseeable future.

     We are an early stage company with a limited operating history, which makes it difficult for investors to evaluate our business and prospects. Investors in our securities must consider our prospects in light of the risks, expenses and difficulties that we face as an early stage company operating that has recently eliminated a significant portion of it original business line through the sale of our Telesales call center. There can be no assurance that we will successfully overcome these difficulties.

     Since our inception, we have incurred significant operating losses. As of September 30, 2009, we had an accumulated deficit of approximately $47.7 million. We incurred operating losses of approximately $6.3 million for the nine months ended September 30, 2009, $9.0 for the year ended December 31, 2008, $14.3 million for the year ended December 31, 2007, $14 million for the year ended December 31, 2006, $3.2 million for the year ended December 31, 2005 and approximately $1.1 million for the period from our inception on January 27, 2004 through December 31, 2004. We expect to incur significant and increasing operating expenses and capital expenditures relating to the development of our software-related business, particularly as we pursue growth both internally and through potential strategic acquisitions, expand our marketing efforts, and further the development of our technologies. In addition, we will continue to incur significant legal, accounting and other expenses associated with our status as a reporting company under the Securities Exchange Act of 1934, as amended, or the Exchange Act. As a result, we will need to generate significant revenues to achieve profitability. Even if we achieve profitability, we may be unable to maintain or increase profitability on a quarterly or annual basis. If we are unable to achieve and then maintain profitability, the market value of our common stock will decline.

If we fail to increase our brand recognition, we may face difficulty in attracting new customers and insurance carrier partners.

     We believe that establishing, maintaining and enhancing our brand in a cost-effective manner is critical to achieving widespread acceptance of our current and future products and services and is an important element in our efforts to maintain and expand our relationships with insurance carriers and to grow our customer base, particularly in light of the competitive nature of our business. We believe that the importance of brand recognition will increase as competition in our market develops. Some of our competitors already have well-established brands in the individual health and life insurance market. Successful promotion of our brand will depend largely on our ability to maintain a sizeable and active customer base, the success of our marketing efforts and our ability to provide high quality products and reliable and useful service to our customers. There can be no assurance that brand promotion activities will yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incur in building our brand. If we fail to successfully promote and maintain our brand, or if we incur substantial expenses in an unsuccessful attempt to promote and maintain our brand, we may fail to attract enough new customers or retain our existing customers to the extent necessary to realize a sufficient return on our brand-building efforts, in which case our business, financial condition and results of operations could be materially harmed.

We may be unable to obtain additional capital when necessary or on terms that are acceptable to us, if at all.

     Since our inception, we have used significant amounts of cash in our operations and in investing activities. As of September 30, 2009, we had a cash balance of approximately $0.6 million. We used cash in operations of approximately $5.0 million for the 9 months ended September 30, 2009, $8.4 million for the year ended December 31, 2008, $5.5 million for the year ended December 31, 2007, approximately $6.5 million for the year ended December 31, 2006, $1.2 million for the year ended December 31, 2005 and approximately $0.5 million for the period from our inception on January 27, 2004 through December 31, 2004. We used cash in investing of approximately $0.3 million for the 9 months ended September 30, 2009, $0.8 million for the year ended December 31, 2008, $1.9 million for the year ended December 31, 2007, approximately $3.2 million for the year ended December 31, 2006, $0.3 million for the year ended December 31, 2005 and approximately $0.2 million for the period from our inception on January 27, 2004 through December 31, 2004.

     We expect that we will need significant additional cash resources to operate and expand our business in the future. Our future capital requirements will depend on many factors, including our ability to maintain our existing cost structure and return on sales, fund obligations for additional capital and repayment of our $1,250,000 secured promissory note and execute our business and strategic plans as currently conceived. If these resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity securities would result in additional dilution to our stockholders. Additional indebtedness would result in debt service obligations and could result in operating and financing covenants that would restrict our operations. In addition, financing might be unavailable in amounts or on terms acceptable to us, if at all.

We are substantially dependent on our InsPro software application.

     We derive a significant portion of our revenue from software license and maintenance revenue attributable to our InsPro software application. Accordingly, our future results depend on continued market acceptance of InsPro, and any factor adversely affecting the market for InsPro could have a material adverse effect on our business, financial condition and operating results.

We may be unsuccessful in attracting or retaining key sales, marketing and other personnel or in retaining the members of our senior management team.

     The success of our business is dependent on our ability to attract and retain highly skilled managers and sales and marketing personnel and to retain the members of our senior management team. In particular, there is intense competition for qualified sales and marketing personnel in the health and life insurance market, and we may be unable to attract, assimilate and retain qualified sales and marketing personnel on a timely basis. Our inability to retain key personnel and attract additional qualified personnel could harm our development and results of operations.

Our management team has limited experience managing a public company and regulatory compliance could divert its attention from the day-to-day management of our business.

     Prior to completing the merger transaction that resulted in our current public company structure in November 2005, our management team operated our business as a private company. Certain members of our current management team have little or no experience managing a public company or complying with the increasingly complex laws pertaining to public companies. There can be no assurance that our management team will continue to successfully or efficiently manage our operations as a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws. In particular, our obligations as a public company will continue to require substantial attention from our senior management and could divert its attention away from the day-to-day management of our business, which could materially and adversely impact our business and results of operations.

We may be unable to sufficiently protect our intellectual property.

     Our business and competitive positions are dependent on our ability to use and protect our proprietary technologies. Our patent applications may not protect our technologies because, among other things:

	•		there is no guarantee that any pending patent applications will result in issued patents;
	•		we may develop additional proprietary technologies that are not patentable;

	•		there is no guarantee that any patent issued to us will provide us with any competitive advantage;
	•		there is no guarantee that any patents issued to us will not be challenged, circumvented or invalidated by third parties; and
	•		there is no guarantee that any patents previously issued to others or issued in the future will not have an adverse effect on our ability to do business.

     In addition, if we are unable to protect and control unpatented trade secrets, know-how and other technological innovation, we may suffer competitive harm. We also rely on trade secrets, know-how and technologies that are not protected by patents to maintain our competitive position. Trade secrets are difficult to protect. To maintain the confidentiality of trade secrets and proprietary information, we generally seek to enter into confidentiality agreements with our employees, consultants and collaborators upon the commencement of a relationship with us. However, we at times do not obtain these agreements, nor can we guarantee that these agreements will provide meaningful protection, that these agreements will not be breached or that we will have an adequate remedy for any such breach. In addition, adequate remedies may not exist in the event of unauthorized use or disclosure of this information. Others may have developed, or may develop in the future, substantially similar or superior know-how and technologies. The loss or exposure of our trade secrets, know-how and other proprietary information, or independent development of similar or superior know-how, could harm our business, financial condition and results of operations.

We may become subject to intellectual property rights claims in the future, which are extremely costly to defend, could require us to pay significant damages and could limit our ability to use the affected technologies.

     Our commercial success will depend in part on not infringing the patents or proprietary rights of third parties. Third parties could bring legal actions against us claiming damages and seeking to enjoin us from using any technology found to be in violation of a third party’s rights. If we become involved in any litigation, it could consume a substantial portion of our resources, regardless of the outcome of the litigation. If any of these actions are successful, in addition to any potential liability for damages, we could be required to obtain a license to continue to use the affected technology, in which case we may be required to pay substantial fees. There can be no assurance that any such license will be available on acceptable terms or at all.

If we are unable to satisfy regulatory requirements relating to internal controls, or if our internal controls over financial reporting are not effective, our stock price could decline.

     As directed by Section 404 of the Sarbanes-Oxley Act of 2002, the Commission adopted rules requiring public companies to include a report of management on the company’s internal controls over financial reporting in their annual reports required by Section 13(a) of the Exchange Act. In addition, the public accounting firm auditing the company’s financial statements must attest to and report on management’s assessment of the effectiveness of the company’s internal controls over financial reporting. Ensuring that we have adequate internal financial and accounting controls and procedures in place to help ensure that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. Any failure to maintain the adequacy of our internal controls, or the resulting inability to produce accurate financial statements on a timely basis, could increase our operating costs and harm our ability to operate our business. In addition, investor perception that our internal controls are inadequate or that we are unable to produce accurate financial statements on a consistent basis may adversely affect our stock price.

We may be unable to manage our growth effectively.

     Our ability to compete effectively and to manage our future growth, if any, requires us to:

	•		continue to improve our financial and management controls and reporting systems and procedures to support the proposed expansion of our business operations; and
	•		locate or hire, at reasonable compensation rates, qualified personnel and other employees necessary to expand our capacity in order to accommodate the proposed expansion of our business operations.

We may be unable to find or complete strategic acquisitions of complementary businesses or technologies or to integrate acquired businesses or technologies.

     Our business strategy includes, among other things, achieving growth through the acquisition and integration into our business of complementary businesses or technologies. We may be unable to find additional complementary businesses or technologies to acquire. Future acquisitions may result in substantial per share financial dilution of our common stock from the issuance of equity securities. Completion of future acquisitions also would expose us to potential risks, including risks associated with:

	•		the assimilation of new operations, technologies and personnel;
	•		unforeseen or hidden liabilities or other unanticipated events or circumstances;
	•		the diversion of resources from our existing business;
	•		the inability to generate sufficient revenue to offset the costs and expenses of acquisitions, which may result in the impairment of assets acquired through acquisitions; and
	•		the potential loss of, or harm to, relationships with our employees, customers and insurance carrier partners as a result of the integration of new businesses.

Our operating results may fluctuate as a result of factors beyond our control.

     Our operating results may fluctuate significantly in the future as a result of a variety of factors, many of which are beyond our control. These factors include, but are not limited to:

	•		capital expenditures for the development of our technologies;
	•		marketing and promotional activities and other costs;
	•		changes in operating expenses;
	•		increased competition in our market; and
	•		other general economic and seasonal factors.

Our business may be materially adversely impacted by U.S. and global market and economic conditions, particularly adverse conditions in the insurance industry.

          For the foreseeable future, we expect to continue to derive most of our revenue from products and services we provide to the insurance industry. Given the concentration of our business activities in the healthcare industry, we may be particularly exposed to economic downturns in this industry. U.S. and global market and economic conditions have been, and continue to be, disrupted and volatile. A poor economic environment could result in significant decreases in demand for our products or could present difficulties in collecting accounts receivables from our customers due to their deteriorating financial condition. Our existing customers may be acquired by or merged into other institutions that use our competitors or decide to terminate their relationships with us for other reasons. As a result, our sales could decline if an existing customer is merged with or acquired by another company or closed. All of these conditions could adversely affect our operating results and financial position.

We may not be able to secure additional financing to support capital requirements when needed.

          We may need to raise additional funds in the future in order to fund more aggressive promotion or more rapid market penetration, to develop new or enhanced products, to respond to competitive pressures, to make acquisitions or for other purposes. Any required additional financing may not be available on terms favorable to us, or at all, particularly in light of current conditions in the credit markets. If adequate funds are not available on acceptable terms, we may be unable to meet our strategic business objectives or compete effectively, and the future growth of our business could be adversely impacted. If additional funds are raised by our issuing equity securities, stockholders may experience dilution of their ownership and economic interests, and the newly issued

securities may have rights superior to those of our common stock. If additional funds are raised by our issuing debt, we may be subject to significant market risks related to interest rates, and operating risks regarding limitations on our activities.

The markets for our products are highly competitive and are likely to become more competitive, and our competitors may be able to respond more quickly to new or emerging technology and changes in customer requirements.

          Our insurance software business experiences competition from certain large hardware suppliers that sell systems and system components to independent agencies and from small independent developers and suppliers of software, who sometimes work in concert with hardware vendors to supply systems to independent agencies. Pricing strategies and new product introductions and other pressures from existing or emerging competitors could result in a loss of customers or a rate of increase or decrease in prices for our services different than past experience. Our internet business may also face indirect competition from insurance carriers that have subsidiaries which perform in-house agency and brokerage functions.

          Some of our current competitors have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial and marketing resources than we do.

If we infringe on the proprietary rights of others, our business operations may be disrupted, and any related litigation could be time consuming and costly.

          Third parties may claim that we have violated their intellectual property rights. Any of these claims, with or without merit, could subject us to costly litigation and divert the attention of key personnel. To the extent that we violate a patent or other intellectual property right of a third party, we may be prevented from operating our business as planned, and we may be required to pay damages, to obtain a license, if available, to use the right or to use a non-infringing method, if possible, to accomplish our objectives. The cost of such activity could have a material adverse effect on our business.

We may be unable to compete successfully against new and existing competitors.

     We operate in a highly competitive market with few barriers to entry. We expect that competition will continue to intensify. Some of our competitors are more established than we are, and have significantly greater financial, technical, marketing, and other resources than we do. In addition, many of our current and potential competitors can devote substantially greater resources than we can to promotion, website development and systems development. Many of our competitors have greater name recognition and a larger customer base than we do. These competitors may be able to respond more quickly to new or changing opportunities and customer requirements and may be able to undertake more extensive promotional activities and offer more attractive terms to insurance carriers. Competition could reduce our market share in the individual health and life insurance market.

Changes and developments in the structure of the health insurance system in the United States could harm our business.

          Our business largely depends upon the private sector of the United States health insurance system and its relative role in the sale of individual health insurance. Recently, there has been substantial national and state attention and debate regarding healthcare reform. While President Obama and members of Congress have expressed that our healthcare system is in need of reform, a detailed proposal regarding federal healthcare reform has yet to emerge. It is therefore not possible for us to predict the impact of any healthcare reform at the federal level on our business. Significant federal or state changes to the existing health insurance system, the individual and family health insurance market or in the manner in which health insurance is distributed in the United States could increase competition or reduce or eliminate the need for health insurance agents or demand for private health insurance for individuals, families or small businesses, any of which could materially harm our ability to sell insurance-related software and applications to these agents and, as a result, could materially harm our business, operating results and financial condition. The adoption of state or federal laws that promote or establish a government-sponsored or partially government-sponsored healthcare system could reduce or eliminate the number of individuals, families and small businesses seeking or permitted to purchase private health insurance or supplemental coverage, which would substantially reduce the demand for our products by insurance carriers and agents and harm our business, operating results and financial condition. In addition, speculation regarding healthcare reform or potential changes in the regulatory environment in which we operate creates uncertainty that could lead to increased volatility and a reduction in stock price.

Governmental regulation of the Internet may adversely affect our business and operating results.

     The laws governing general commerce on the Internet remain unsettled and it may take years to fully determine whether and how existing laws such as those governing intellectual property, privacy and taxation apply to the Internet. Due to the rapid growth and widespread use of the Internet, federal and state governments have are considering enacting additional laws relating to the Internet. Any of these existing laws or future laws relating to the Internet could expose us to substantial compliance costs and liabilities and may impede the growth of Internet commerce.

Technology and customer requirements evolve rapidly in our industry, and if we do not continue to develop new products and enhance our existing products in response to these changes, our business could be harmed.

          Ongoing enhancements to our products will be required to enable us to maintain our competitive position. We may not be successful in developing and marketing enhancements to our products on a timely basis, and any enhancements we develop may not adequately address the changing needs of the marketplace. Overlaying the risks associated with our existing products and enhancements are ongoing technological developments and rapid changes in customer requirements. Our future success will depend upon our ability to develop and introduce in a timely manner new products or upgrades to our existing products that take advantage of technological advances and respond to new customer requirements. The development of new products is increasingly complex and uncertain, which increases the risk of delays. We may not be successful in developing new or updated products incorporating new technology on a timely basis, and any new products may not adequately address the changing needs of the marketplace. Failure to develop new products and product enhancements that meet market needs in a timely manner could have a material adverse effect on our business, financial condition and operating results.

Risks Relating to our Common Stock

Sales of substantial amounts of our common stock in the public market could depress the market price of our common stock.

     Our common stock currently is quoted on the OTCBB, which is a limited and illiquid market. If our stockholders sell substantial amounts of our common stock in the public market, including the shares being registered under this registration statement and shares issuable upon the exercise of outstanding warrants and options, or the market perceives that such sales may occur, the market price of our common stock could fall and we may be unable to sell our common stock in the future.

Our common stock may experience extreme price and volume fluctuations, which could lead to costly litigation for us and make an investment in us less appealing.

     The market price of our common stock may fluctuate substantially due to a variety of factors, including:

	•		our business strategy and plans;
	•		announcements concerning our competitors or the individual health and life insurance market;
	•		rate of sales and customer acceptance;
	•		changing factors related to doing business in various jurisdictions within the United States;
	•		new regulatory pronouncements and changes in regulatory guidelines and timing of regulatory approvals;
	•		general and industry-specific economic conditions;
	•		additions to or departures of our key personnel;
	•		variations in our quarterly financial and operating results;
	•		changes in market valuations of other companies that operate in our business segments or in our industry;

	•		lack of adequate trading liquidity;
	•		announcements about our business partners;
	•		changes in accounting principles; and
	•		general market conditions.

     The market prices of the securities of early-stage companies, particularly companies like ours without consistent product revenues and earnings, have been highly volatile and are likely to remain highly volatile in the future. This volatility has often been unrelated to the operating performance of particular companies. In the past, companies that experience volatility in the market price of their securities have often faced securities class action litigation. Whether or not meritorious, litigation brought against us could result in substantial costs, divert our management’s attention and resources and harm our financial condition and results of operations.

Our directors, executive officers and entities affiliated with them beneficially own a substantial number of shares of our common stock, which gives them significant control over certain major decisions.

     As of December ___, 2009, our executive officers and directors and entities affiliated with them beneficially owned, in the aggregate, approximately 93.0% of our outstanding shares of common stock and 100% of our outstanding shares of Series A preferred stock, based on a total of 41,543,655 shares of common stock and 1,000,000 shares of Series A preferred stock outstanding. These executive officers, directors and their affiliates may have different interests than you. For example, they could act to delay or prevent a change of control of us, even if such a change of control would benefit our other stockholders, could prevent or frustrate attempts to replace or remove current management or could pursue strategies that are different from the wishes of other investors. This significant concentration of stock ownership may adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise.

Transactions in which a privately-held company merges into a largely inactive company with publicly traded stock are generally closely scrutinized by the Commission and we may encounter difficulties or delays in obtaining future regulatory approvals.

     Historically, the Commission and Nasdaq and securities exchanges have disfavored transactions in which a privately-held company merges into a largely inactive company with publicly traded stock, and there is a significant risk that we may encounter difficulties in obtaining the regulatory approvals necessary to conduct future financing or acquisition transactions, or to eventually achieve our common stock being quoted on Nasdaq or listed on a securities exchange. Effective August 22, 2005, the Commission adopted rules dealing with private company mergers into dormant or inactive public companies. As a result, it is likely that we will be scrutinized carefully by the Commission and possibly by the National Association of Securities Dealers or Nasdaq or a national securities exchange, which could result in difficulties or delays in achieving Commission clearance of any future registration statements or other Commission filings that we may pursue, in attracting NASD-member broker-dealers to serve as market-makers in our stock, or in achieving admission to Nasdaq or a national securities exchange. As a result, our financial condition and the value and liquidity of our shares may be negatively impacted.

As a stock quoted on the OTCBB, our common stock, which is deemed to be “penny stock,” currently has limited liquidity.

     Holders of shares of our common stock, which are quoted on the OTCBB, may find that the liquidity of our common stock is impaired as compared with the liquidity of securities listed on Nasdaq or one of the national or regional exchanges in the United States. This impairment of liquidity may result from reduced coverage of us by security analysts and news media and lower prices for our common stock than may otherwise be attained. In addition, our common stock is deemed to be “penny stock,” as that term is defined in rules under the Exchange Act. Penny stocks generally are equity securities that are not registered on certain national securities exchanges or quoted by Nasdaq and have a price per share of less than $5.00. Penny stock may be difficult for investors to resell. Federal rules and regulations impose additional sales practice requirements on broker-dealers who sell the stock to persons other than established customers and accredited investors. For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of these securities and obtain the purchaser’s written consent to the transaction prior to the sale. Prior to the sale, broker-dealers must also deliver to the potential purchaser a disclosure schedule prescribed by the Commission, describing the penny stock market and disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, broker-dealers must deliver to penny stock investors monthly

statements disclosing recent price information for penny stocks held in the account and information on the limited market in penny stocks. These additional requirements restrict the ability of broker-dealers to sell our common stock and make it more difficult for investors to dispose of our common stock in the secondary market and may also adversely affect the price of our common stock.

THE RIGHTS OFFERING

The Subscription Rights

          We are distributing, at no charge to the holders of our common stock and preferred stock non-transferable subscription rights to subscribe for units, which we refer to throughout this prospectus as Units, consisting of 250 shares of our Series A preferred stock and a five-year warrant to purchase 5,000 additional shares of our common stock at an exercise price of $0.20 per share. Our stockholders will receive one subscription right for every 12,256 shares of our common stock and 613 shares of preferred stock held of record as of 5:00 p.m., New York City time, on December ___, 2009, the record date. Pursuant to the terms of this offering, the rights may only be exercised for a maximum of 5,000 Units, or $5 million of gross subscription proceeds

          Each subscription right entitles the holder to a basic subscription right and an over-subscription privilege.

           Basic Subscription Right . With your basic subscription right, you may purchase one Unit, consisting of 250 shares of our Series A preferred stock and a five-year warrant to purchase 5,000 additional shares of our common stock at and exercise price of $0.20 per share, subject to delivery of the required documents and payment of the subscription price of $1,000 per Unit, prior to the expiration of the rights offering. You may exercise all or a portion of your basic subscription right, or you may choose not to exercise any of your subscription rights. If you do not exercise your basic subscription rights in full, you will not be entitled to purchase any shares under your over-subscription privilege.

          There is no minimum number of Units you must purchase, but you may not purchase fractional Units. When determining the number of subscription rights you will receive, divide the number of shares of our common stock you own by 12,256 and the number of shares of preferred stock you own by 613, and round down to the next whole number. For example, if you own 30,000 shares of our common stock, you will receive two (2) subscription rights (30,000 shares divided by 12,256 = 2.45, rounded down to two (2) subscription rights, the next whole number), which will entitle you to subscribe for up to two (2) Units under your basic subscription privilege. Any excess subscription payments received by us will be returned, without interest, as soon as practicable following the expiration of the rights offering.

          We will deliver certificates representing shares of our preferred stock and warrants or credit your account at your record holder with shares of our preferred stock and warrants that you purchased with the basic subscription rights as soon as practicable after the rights offering has expired.

           Over-Subscription Privilege . If you purchase all of the Units available to you pursuant to your basic subscription right, you may also choose to purchase a portion of any Units that are not purchased by other stockholders through the exercise of their basic subscription rights. If sufficient Units are available, we will seek to honor the over-subscription requests in full. If, however, over-subscription requests exceed the number of Units available, we will allocate the available Units pro rata among the stockholders exercising the over-subscription privilege in proportion to the number of shares of common stock and preferred stock owned by such stockholder on the record date, relative to the number of shares owned on the record date by all stockholders exercising the over-subscription privilege. If this pro rata allocation results in any stockholder receiving a greater number of Units than the stockholder subscribed for pursuant to the exercise of the over-subscription privilege, then such stockholder will be allocated only that number of Units for which the stockholder oversubscribed, and the remaining Units will be allocated among all other stockholders exercising the over-subscription privilege on the same pro rata basis described above. The proration process will be repeated until all Units have been allocated.

          In order to properly exercise your over-subscription privilege, you must deliver the subscription payment related to your over-subscription privilege prior to the expiration of the rights offering. Because we will not know the total number of unsubscribed Units prior to the expiration of the rights offering, if you wish to maximize the number of Units you purchase pursuant to your over-subscription privilege, you will need to deliver payment in an amount equal to the aggregate subscription price for the maximum number of Units that may be available to you (i.e., for the maximum number of Units available to you, assuming you exercise all of your basic subscription right and are allotted the full amount of your over-subscription without reduction).

          We can provide no assurances that you will actually be entitled to purchase the number of Units issuable upon the exercise of your over-subscription right in full at the expiration of the rights offering. We will not be able to satisfy any orders for Units pursuant to the over-subscription privilege if all of our stockholders exercise their basic subscription rights in full, and we will only honor an over-subscription privilege to the extent sufficient Units are available following the exercise of subscription rights pursuant to the basic subscription rights.

          To the extent the aggregate subscription price of the actual number of unsubscribed Units available to you pursuant to the over-subscription privilege is less than the amount you actually paid in connection with the exercise of the over-subscription privilege, you will be allocated only the number of unsubscribed Units available to you, and any excess subscription payments will be returned to you, without interest or penalty, as soon as practicable.

          To the extent the amount you actually paid in connection with the exercise of the over-subscription privilege is less than the aggregate subscription price of the maximum number of unsubscribed Units available to you pursuant to the over-subscription privilege, you will be allocated the number of unsubscribed Units for which you actually paid in connection with the over-subscription privilege and subject to the elimination of any fractional Units.

          Any excess subscription payments received by us will be returned, without interest or penalty, as soon as practicable.

          We will deliver certificates representing shares of our preferred stock and warrants or credit the account of your record holder with shares of our preferred stock and warrants that you purchased with the over-subscription privilege as soon as practicable after the expiration of the rights offering.

Reasons for the Rights Offering

          We are engaging in the rights offering to raise capital to improve our overall capital position. Our board of directors has chosen to raise capital through a rights offering to give our stockholders the best opportunity to limit ownership dilution by participating in the rights offering on a pro-rata basis. In addition, this rights offering, including the composition and price of the Unit, was designed to give all of the holders of our common stock the opportunity to participate in an equity investment in Health Benefits Direct Corporation on substantially the same economic terms as our last private placement in January 2009.

Effect of Rights Offering on Existing Stockholders

          The ownership interests and voting interests of the existing stockholders that do not exercise their basic subscription privileges will be diluted. See “Questions and Answers Related to the Rights Offering.”

Method of Exercising Subscription Rights

          The exercise of subscription rights is irrevocable and may not be cancelled or modified. You may exercise your subscription rights as follows:

           Subscription by Registered Holders . If you hold a Health Benefits Direct Corporation stock certificate, the number of Units you may purchase pursuant to your basic subscription right is indicated on the enclosed rights certificate. You may exercise your subscription rights by properly completing and executing the rights certificate and forwarding it, together with your full payment, to us at the address set forth below under “— Delivery of Subscription Payments,” to be received prior to 5:00 p.m., Eastern Time, on February 15, 2010.

           Subscription by Beneficial Owners . If you are a beneficial owner of shares of our common stock or preferred stock that are registered in the name of a broker, custodian bank or other nominee, you will not receive a rights certificate. Instead, the DTC will issue one subscription right to the nominee record holder for each 12,256 shares of our common stock or 613 shares of our preferred stock that you own at the record date. If you are not contacted by your nominee, you should promptly contact your nominee in order to subscribe for Units in the rights offering.

Payment Method

          Payments must be made in full in U.S. currency by:

	•		check or bank draft payable to Health Benefits Direct Corporation, drawn upon a U.S. bank; or
	•		wire transfer of immediately available funds to an account maintained by Health Benefits Direct Corporation for purposes of this rights offering.

          Payment received after the expiration of the rights offering will not be honored, and we will return your payment to you, without interest, as soon as practicable. We will be deemed to receive payment upon:

•

clearance of any uncertified check deposited by us into our account designated for the rights offering;

	•		receipt by us of any certified check or bank draft, drawn upon a U.S. bank; or
	•		receipt of collected funds in our account designated for the rights offering.

          If you elect to exercise your subscription rights, we urge you to consider using a certified or cashier’s check, money order or wire transfer of funds to ensure that we receive your funds prior to the expiration of the rights offering. If you send an uncertified check, payment will not be deemed to have been received by us until the check has cleared. If you send a certified check or bank draft, drawn upon a U.S. bank, or wire or transfer funds directly to our account, payment will be deemed to have been received by us immediately upon receipt of such instruments or wire transfer.

          Any personal check used to pay for Units must clear the appropriate financial institutions prior to 5:00 p.m., Eastern Time, on February 15, 2010, which is the expiration of the rights offering. The clearinghouse may require five or more business days. Accordingly, holders that wish to pay the subscription price by means of an uncertified personal check are urged to make payment sufficiently in advance of the expiration of the rights offering to ensure such payment is received and clears by such date.

          You should read the instruction letter accompanying the rights certificate carefully and strictly follow it. We will not consider your subscription received until we have received delivery of a properly completed and duly executed rights certificate and payment of the full subscription amount. The risk of delivery of all documents and payments is borne by you or your nominee, not by Health Benefits Direct Corporation.

          The method of delivery of rights certificates and payment of the subscription amount to us will be at the risk of the holders of subscription rights. If sent by mail, we recommend that you send those certificates and payments by overnight courier or by registered mail, properly insured, with return receipt requested, and that a sufficient number of days be allowed to ensure delivery to us and clearance of payment prior to the expiration of the rights offering.

          Unless a rights certificate provides that the shares of preferred stock and the warrants are to be delivered to the record holder of such rights or such certificate is submitted for the account of a bank or a broker, signatures on such rights certificate must be guaranteed by an “eligible guarantor institution,” as such term is defined in Rule 17Ad-15 of the Exchange Act.

Medallion Guarantee May Be Required

          Your signature on your rights certificate must be guaranteed by an eligible institution, such as a member firm of a registered national securities exchange or a member of the Financial Industry Regulatory Authority, Inc., or a commercial bank or trust company having an office or correspondent in the United States, unless:

	•		you provide on the rights certificate that shares and warrants are to be delivered to you as record holder of those subscription rights; or
	•		you are an eligible institution.

Missing or Incomplete Subscription Information

          If you hold your shares of common stock or preferred stock in the name of a custodian bank, broker, dealer or other nominee, the nominee will exercise the subscription rights on your behalf in accordance with your instructions. Your nominee may establish a deadline that may be before the 5:00 p.m., Eastern Time February 15, 2010 expiration date that we have established for the rights offering. If you send a payment that is insufficient to purchase the number of Units you requested, or if the number of Units you requested is not specified in the forms, the payment received will be applied to exercise your subscription rights to the fullest extent possible based on the amount of the payment received, subject to the availability of Units under the over-subscription privilege and the elimination of fractional Units. Any excess subscription payments received by us will be returned, without interest, as soon as practicable following the expiration of the rights offering.

Expiration Date and Cancellation Rights

          The subscription period, during which you may exercise your subscription rights, expires at 5:00 p.m., Eastern Time, on February 15, 2010, which is the expiration of the rights offering. If you do not exercise your subscription rights prior to that time, your

subscription rights will expire and will no longer be exercisable. We will not be required to issue shares of our preferred stock or warrants to you if we receive your rights certificate or your subscription payment after that time. We have the option to extend the rights offering without notice to you, although we do not presently intend to do so. We may extend the expiration of the rights offering at any time prior to the scheduled expiration of the rights offering. If we elect to extend the expiration of the rights offering, we will issue a press release announcing such extension no later than 9:00 a.m., Eastern Time, on the next business day after the most recently announced expiration of the rights offering. We reserve the right to amend or modify the terms of the rights offering.

          If you hold your shares of common stock in the name of a broker, dealer, custodian bank or other nominee, the nominee will exercise the subscription rights on your behalf in accordance with your instructions. Please note that the nominee may establish a deadline that may be before the 5:00 p.m., Eastern Time, February 15, 2010, expiration date that we have established for the rights offering.

          We may cancel the rights offering at any time for any reason prior to the time the rights offering expires. If we cancel the rights offering, we will issue a press release notifying stockholders of the cancellation and all subscription payments received by us will be returned, without interest or penalty, as soon as practicable.

Determination of Subscription Price

          The $1,000 per Unit subscription price was determined by our board of directors based on the per share value of the preferred stock and warrants (considered in the aggregate) purchased by investors in our last private placement in January 2009. In January 2009, we sold units, consisting of one share of our Series A preferred stock (each share of which is convertible, at the sole option of the holder, into twenty shares of our common stock) and one five-year warrant to purchase 20 shares of our common stock, at a per unit price of $4.00. We sold a total of 1,000,000 units for an aggregate purchase price of $4,000,000.

          In determining the subscription price, our board of directors considered the overall economic value offered to investors in Health Benefits Direct Corporation in this last private placement. If an investor had invested in this last private placement , for every $1,000 invested, such investor would have received 250 shares of Series A preferred stock and warrants to purchase 5,000 additional shares of our common stock at an exercise price of $0.20 per share. As a result, the Units offered in this rights offering consist of 250 shares of our Series A preferred stock and a warrant to purchase 5,000 shares of our common stock at a price per Unit of $1,000.

          We did not seek or obtain an opinion of financial advisors in establishing the subscription price. The subscription price will not necessarily be related to our book value, tangible book value, net worth or any other established criteria of fair value.

          There is currently no market for our shares of Series A preferred stock and, unless you choose to convert any shares of preferred stock you purchase in this offering into shares of common stock, you will not be able to re-sell such shares. We urge you to obtain a current quote for our common stock and perform an independent assessment of our preferred stock and warrants before exercising your subscription rights and to make your own assessment of our business and financial condition, our prospects for the future, and the terms of this rights offering.

Terms of Series A Convertible Preferred Stock

          Each share of Series A preferred stock offered in this rights offering is convertible, at the sole discretion of each holder of preferred stock, into 20 shares of common stock, subject to certain adjustments. The holders of shares of our Series A preferred stock are entitled to vote, with respect to any question upon which holders of our common stock are entitled to vote, together with the holders of common stock as one class on an as-converted basis. At such time, if any, as our board of directors declares a dividend or distribution on the common stock, the holders of preferred stock shall be entitled to receive, for each share of Series A preferred stock held by them, a dividend or distribution in an amount equal to what such holder of preferred stock would receive if their shares were converted into shares of common stock. We do not currently intend to pay any cash dividends to the holders of shares of our common stock.

          In addition, upon the liquidation, sale or merger of Health Benefits Direct Corporation, each share of our Series A preferred stock is entitled to receive an amount equal to the greater of (A) a liquidation preference equal to two and a half (2.5) times the Series A preferred stock original issue price, subject to certain customary adjustments, or (ii) the amount such preferred stock would receive if it participated pari passu with the holders of our common stock on an as-converted basis. For so long as any shares of Series A preferred stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of preferred stock is required to approve (Y) any amendment to our certificate of incorporation or bylaws that would adversely alter the voting powers, preferences or special rights of the Series A preferred stock or (Z) any amendment to our certificate of incorporation to create any shares of capital stock that rank senior to the Series A preferred stock. In addition to the voting rights described above, for so long as 1,000,000 shares of Series A preferred stock are outstanding, the vote or consent of the holders of at least two-thirds of the preferred stock is required to effect or validate any merger, sale of substantially all of the assets of Health Benefits Direct Corporation or other fundamental transaction, unless such transaction, when consummated, will provide the holders of preferred stock with an amount per share equal to two and a half (2.5) times the Series A preferred stock original issue price.

          In the event of (a) the sale of all or substantially all of the assets of Health Benefits Direct Corporation, (b) any tender offer or exchange pursuant to which the holders of a majority of common stock exchange such shares for other securities, cash or property or (c) any reclassification of the common stock pursuant to which the shares of common stock are effectively converted or exchanges for other securities, cash or property, if we do not effect a dissolution within ninety (90) days after such event, the holder of a majority of the shares of Series A preferred stock may require, within 120 days of such event, to redeem all outstanding shares of Series A preferred stock at a price per share equal to two and a half (2.5) times the Series A preferred stock original issue price, subject to certain customary adjustments.

Terms of Warrants

          The warrants that we are offering in this rights offering are in substantially similar form to those warrants purchased by our investors in the last private placement in January 2009. Each warrant issued as a component of the Units will be a five-year warrant to purchase 5,000 shares of our common stock at an exercise price of $0.20 per share, subject to our right to call the warrant under certain conditions. The warrants include full ratchet anti-dilution adjustment provisions for issuances of securities below $0.20 per share during the first two years following the date of issuance of the warrants, subject to customary exceptions.

Withdrawal, Amendment and Termination

          We reserve the right to withdraw the rights offering at any time for any reason. We also may amend or terminate the rights offering at any time before its completion if our board of directors decides to do so in its sole discretion. If we terminate the rights offering, all affected subscription rights will expire without value, and all excess subscription payments received by us will be returned, without interest, as soon as practicable.

Delivery of Subscription Payments

          The address to which rights certificates and payments, other than wire transfers, should be mailed or delivered is provided below. If sent by mail, we recommend that you send documents and payments by overnight courier or by registered mail, properly insured, with return receipt requested, and that a sufficient number of days be allowed to ensure delivery.

Health Benefits Direct Corporation
150 N. Radnor-Chester Rd.
Suite B-101
Radnor, PA 19087
Attn: Francis L. Gillan III

          If you deliver subscription documents or rights certificates in a manner different than that described in this prospectus, we may not honor the exercise of your subscription rights.

          If you have any questions regarding completing a rights certificate, submitting payment in the rights offering, or questions or requests regarding Health Benefits Direct Corporation or the rights offering in general, please call Francis L. Gillan III, at (484) 654-2200. You may also contact us with questions by electronic mail at rightsoffering@HBDC.com.

Fees and Expenses

          We will pay the fees and expenses of collecting the subscription payments and distributing the share certificates and warrants associated with the Units. You are responsible for paying any other commissions, fees, taxes or other expenses that you may incur in connection with the exercise of your subscription rights.

No Fractional Units

          All Units will be sold at a purchase price of $1,000 per Unit. We will not issue fractional Units. Fractional Units resulting from the exercise of the basic subscription rights and the over-subscription privileges will be eliminated by rounding down to the nearest whole Unit. Any excess subscription payments received by us will be returned, without interest, as soon as practicable.

Notice to Nominees

          If you are a broker, custodian bank or other nominee holder that holds shares of our common stock or preferred stock for the account of others on the record date, you should notify the beneficial owners of the shares for whom you are the nominee of the rights offering as soon as possible to learn their intentions with respect to exercising their subscription rights. You should obtain instructions from the beneficial owners of our common stock. If a registered holder of our common stock or preferred stock so instructs, you should complete the rights certificate and submit it to us with the proper subscription payment by the expiration date. You may exercise the number of subscription rights to which all beneficial owners in the aggregate otherwise would have been entitled had they been direct holders of our common stock or preferred stock on the record date, provided that you, as a nominee record holder, make a proper showing to us by submitting the form entitled “Nominee Holder Certification,” which is provided with your rights offering materials. If you did not receive this form, you should contact us to request a copy.

Beneficial Owners

          If you are a beneficial owner of shares of our common stock or preferred stock and will receive your subscription rights through a broker, custodian bank or other nominee, we will ask your nominee to notify you of the rights offering. If you wish to exercise your subscription rights, you will need to have your nominee act for you, as described above. To indicate your decision with respect to your subscription rights, you should follow the instructions of your nominee. If you wish instead to obtain a separate rights certificate, you should contact your nominee as soon as possible and request that a rights certificate be issued to you. You should contact your nominee if you do not receive notice of the rights offering, but you believe you are entitled to participate in the rights offering. We are not responsible if you do not receive the notice by mail or otherwise from your nominee or if you receive notice without sufficient time to respond to your nominee by the deadline established by your nominee, which may be before the 5:00 p.m., Eastern Time, February 15, 2010, expiration date.

Non-Transferability of Subscription Rights

          The subscription rights granted to you are non-transferable and, therefore, you may not sell, transfer or assign your subscription rights to anyone. We will not be listing shares of our Series A preferred stock, the warrants or the subscription rights for trading on OTCBB or any other stock exchange or market.

Validity of Subscriptions

          We will resolve all questions regarding the validity and form of the exercise of your subscription rights, including time of receipt and eligibility to participate in the rights offering. Our determination will be final and binding. Once made, subscriptions and directions are irrevocable, and we will not accept any alternative, conditional or contingent subscriptions or directions. We reserve the absolute right to reject any subscriptions or directions not properly submitted or the acceptance of which would be unlawful. You must resolve any irregularities in connection with your subscriptions before the subscription period expires, unless waived by us in our sole discretion. We shall not be under any duty to notify you or your representative of defects in your subscriptions. A subscription will be considered accepted, subject to our right to withdraw or terminate the rights offering, only when a properly completed and duly executed rights certificate and any other required documents and the full subscription payment have been received by us. Our interpretations of the terms and conditions of the rights offering will be final and binding.

Escrow Arrangements; Return of Funds

          We will hold funds received in payment for Units in a segregated account pending completion of the rights offering. We will hold this money in escrow until the rights offering is completed or is withdrawn and cancelled. If the rights offering is cancelled for any reason, all subscription payments received by us will be returned, without interest or penalty, as soon as practicable.

Stockholder Rights

          You will have no rights as a holder of the shares of our preferred stock you purchase in the rights offering until certificates representing the shares of our preferred stock are issued to you.

No Revocation or Change

          Once you submit the rights certificate or have instructed your nominee of your subscription request, you are not allowed to revoke or change the exercise or request a refund of monies paid. All exercises of subscription rights are irrevocable, even if you learn information about us that you consider to be unfavorable. You should not exercise your subscription rights unless you are certain that you wish to purchase Units at the subscription price.

Material U.S. Federal Income Tax Treatment of Rights Distribution

          For U.S. federal income tax purposes, you should not recognize income or loss upon receipt or exercise of these subscription rights to purchase shares of our common stock for the reasons described below in “Material U.S. Federal Income Tax Considerations.”

No Recommendation to Rights Holders

          Our board of directors is making no recommendation regarding your exercise of the subscription rights. Stockholders who exercise subscription rights risk investment loss on new money invested. You are urged to make your decision based on your own assessment of our business and financial condition, our prospects for the future and the terms of this rights offering. Please see “Risk Factors” for a discussion of some of the risks involved in investing in our common and preferred stock.

Shares of Our Preferred Stock and Warrants Outstanding After the Rights Offering

          As of December ___, 2009, 1,000,000 shares of our preferred stock and warrants to purchase 51,566,887 shares of our common stock were issued and outstanding. Assuming no other transactions by us involving our preferred stock or warrants, if the rights offering is fully subscribed through the exercise of the subscription rights, then an additional 1,250,000 shares of our preferred stock and warrants to purchase 25,000,000 shares of our common stock will be issued and outstanding after the closing of the rights offering, for a total of 2,250,000 shares of preferred stock and warrants to purchase 76,566,887 shares of common stock outstanding.

distribution in an amount equal to what such holder of preferred stock would receive if their shares were converted into shares of common stock. We do not currently intend to pay any cash dividends to the holders of shares of our common stock.

          In addition, upon the liquidation, sale or merger of Health Benefits Direct Corporation, each share of our Series A preferred stock is entitled to receive an amount equal to the greater of (A) a liquidation preference equal to two and a half (2.5) times the Series A preferred stock original issue price, subject to certain customary adjustments, or (ii) the amount such preferred stock would receive if it participated pari passu with the holders of our common stock on an as-converted basis. For so long as any shares of Series A preferred stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of preferred stock is required to approve (Y) any amendment to our certificate of incorporation or bylaws that would adversely alter the voting powers, preferences or special rights of the Series A preferred stock or (Z) any amendment to our certificate of incorporation to create any shares of capital stock that rank senior to the Series A preferred stock. In addition to the voting rights described above, for so long as 1,000,000 shares of Series A preferred stock are outstanding, the vote or consent of the holders of at least two-thirds of the preferred stock is required to effect or validate any merger, sale of substantially all of the assets of Health Benefits Direct Corporation or other fundamental transaction, unless such transaction, when consummated, will provide the holders of preferred stock with an amount per share equal to two and a half (2.5) times the Series A preferred stock original issue price.

          In the event of (a) the sale of all or substantially all of the assets of Health Benefits Direct Corporation, (b) any tender offer or exchange pursuant to which the holders of a majority of common stock exchange such shares for other securities, cash or property or (c) any reclassification of the common stock pursuant to which the shares of common stock are effectively converted or exchanges for other securities, cash or property, if we do not effect a dissolution within ninety (90) days after such event, the holder of a majority of the shares of Series A preferred stock may require, within 120 days of such event, to redeem all outstanding shares of Series A preferred stock at a price per share equal to two and a half (2.5) times the Series A preferred stock original issue price, subject to certain customary adjustments.

          Except as noted above our shares of Series A preferred stock have no other conversion, preemptive or other subscription rights. There are no sinking fund provisions applicable to preferred stock.

Warrants

          As of December ___, 2009, there were outstanding (i) warrants to purchase up to 45,000,000 shares of our common stock at an exercise price per share of $0.20; (ii) warrants to purchase up to 1,250,000 shares of our common stock at an exercise price per share of $1.50; (iii) warrants to purchase up to 4,966,887 shares of our common stock at an exercise price per share of $1.51; and (iv) warrants to purchase up to 350,000 shares of our common stock at an exercise price per share of $2.80.

          In connection with our private placement in March 2007, we issued to investors five-year warrants to purchase up to 2,500,000 shares of our common stock at $3.00 per share, which warrants were subsequently adjusted upon the closing of our private placements in March 2008 and January 2009 to provide for the purchase of up to 2,466,887 shares of our common stock at an exercise price of $1.51 per share, per the anti-dilution provisions contained in such warrants. In addition, we also issued to each of the placement agents in the private placement warrants to purchase in the aggregate 350,000 shares of our common stock at an exercise price of $2.80 per share.

          In connection with our private placement in March 2008, we issued to investors five-year warrants to purchase up to 6,250,000 shares of our common stock at $0.80 per share, which warrants were subsequently adjusted following the closing of our private placement in January 2009 to provide for the purchase of up to 18,750,000 shares of our common stock at an exercise price of $0.20 per share, per the anti-dilution provisions contained in such warrants.

          The warrants to be issued as part of the Units upon exercise of the subscription rights will contain substantially the same terms as the warrants issued to the investors in our January 2009 private placement. Each warrant issued as a component of the Units will be a five-year warrant to purchase 5,000 shares of our common stock at an exercise price of $0.20 per share, subject to our right to call the warrant under certain conditions. The warrants include full ratchet anti-dilution adjustment provisions for issuances of securities below $0.20 per share during the first two years following the date of issuance of the warrants, subject to customary exceptions.

          Prior to exercise, the warrants do not confer upon holders any voting or any other rights as a stockholder.

MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Holders of Record and Dividends

          Our common stock has been quoted on the OTCBB since December 13, 2005 under the symbol HBDT.OB. Prior to that date, there was no active market for our common stock. Based on information furnished by our transfer agent, as of December ___, 2009, we had approximately 139 holders of record of our common stock. We have not declared any cash dividends on our common stock during the last two fiscal years.

BUSINESS

Overview

          We were originally incorporated under the laws of the state of Nevada on October 21, 2004 as Darwin Resources Corp., an exploration stage company engaged in mineral exploration. On November 22, 2005, Darwin Resources Corp. merged with and into its newly-formed wholly-owned subsidiary, Darwin Resources Corp., a Delaware corporation, solely for the purpose of changing its state of incorporation from Nevada to Delaware. On November 23, 2005, HBDC II, Inc., a newly-formed wholly-owned subsidiary of Darwin Resources Corp., was merged with and into Health Benefits Direct Corporation, a privately-held Delaware corporation, and the name of the resulting entity was changed from Health Benefits Direct Corporation to HBDC II, Inc. Following the merger, Darwin Resources Corp. changed its name to Health Benefits Direct Corporation and we began operations in our current form.

          We are a technology company that provides software applications for use by insurance agents and insurance administrators in the health insurance industry. Our business focuses on two primary software products: our Insurint™ product and our InsPro software application.

          Insurint™ is a proprietary, professional-grade, web-based agent portal that aggregates real-time quotes and underwriting information from multiple highly-rated carriers of health and life insurance and related products. We market Insurint using a Software as a Service (SaaS) model instead of software licensing model, which offers easy web-based distribution and pay-as-you-go pricing. We market Insurint primarily to insurance agents, agencies, and other organizations selling health insurance products to families and individuals. Unlike existing health insurance quote engines, Insurint also enables an agent to input responses to a set of questions about the health of proposed insureds, which enables the agent to place an insurance policy faster and more accurately. In addition, Insurint offers a suite of sales tools that agents can use to increase their overall sales production.

          InsPro is a comprehensive, web-based insurance administration software application. InsPro was introduced by Atiam Technologies, L.P. (now our InsPro Technologies, LLC subsidiary) in 2004. InsPro clients include health insurance carriers and third party administrators. Unlike our Insurint platform, we market InsPro as a licensed software application, and we realizes revenue from the sale of the software licenses, application service provider fees, software maintenance fees and consulting and implementation services.

Insurint

           Product and Services

          Insurint™ is a web based tool that provides insurance agents and brokers with an all-in-one, real time quoting engine and on-demand customer relationship management, or CRM, platform. It helps insurance agents and brokers streamline their sales and marketing activities and increases agent productivity, which ultimately strengthens the customer relationship. Insurint utilizes a Software as a Service (SaaS) model instead of software licensing model, which offers easy web-based access and pay-as-you-go pricing. Currently, we recognize revenue based on both one time setup and recurring monthly access fees.

          During 2008 we earned $97,177 in revenue from Insurint™.

          There are more than one million independent insurance agents licensed to sell health and life insurance to individuals and groups in the United States. The vast majority of these agents use a combination of manual quoting methods (such as rating tables from different carriers), legacy software tools (such as stand-alone CRM software) and hard copies of underwriting guides to address their customer’s needs and manage their business. While Insurint™ is designed for the use of independent insurance agents, it may also be used by insurance company’s direct sales departments, or captive agents. We believe there is a significant opportunity for Insurint™, based on this tool’s unique strengths as described below, to provide a large number of these agents with a comprehensive, end-to-end solution that meets all of their quoting, underwriting, CRM and marketing needs, allowing them to improve their efficiency and maximize their productivity:

•

Insurint™ is a one-stop platform from which an agent may choose from a variety of health and life insurance products and carriers. Insurint™ allows the insurance sales agent to cross sell products or bundle quotes across different product lines.

	•		Insurint™ provides real-time information and underwriting intelligence to help agents build their business, while saving time and taking the hassle out of quoting and comparing individual plans.
	•		Insurint™ provides seamless integration of the quoting engine with CRM features, which helps an agent to be more efficient with his or her sales, marketing and customer management activities. Insurint™ can also enable an agent to make service calls to his or her customers, thus improving customer service and providing another selling opportunity for the agent.
	•		Insurint™ provides an integrated web sharing tool, InsurintConnect, which allows the agent to share the sales process and presentation with the client, thereby involving the client in the sale, and helping them move from multiple plan choices to a logical conclusion to meet their coverage needs.
	•		Insurint™ provides a brandable, flexible technology framework, which can be customized to the needs of agencies of all sizes, and may integrate with any existing telephony and/or CRM solution they may already employ.
			Marketing, Sales and Operations

          Insurint’s marketing utilizes aggregator and affinity relationships, which seeks co-marketing opportunities that create synergies between products and organizations, email promotions and presentations at important industry events. Insurint’s marketing message and graphical treatment is centered on an evolutionary concept, and is positioning itself as the “Next Stage in the Evolution of Insurance Technology.” Insurint’s sales team provides both personalized and group demonstrations to agents, agencies and carriers looking to learn more about Insurint™.

          Insurint currently has several key vendor agreements and relationships, which provide functionality for portions of Insurint™’s quoting engine. The unanticipated loss of the functionality of portions of Insurint’s quoting engine, which are provided by key vendors, would result in an interruption of Insurint™’s product delivery to its customers until such time that Insurint integrated replacement functionality from alternative vendors or sources. The loss of such functionality could result in the loss of existing customers and revenue. To mitigate the negative impact of the potential loss of such functionality Insurint has contractual agreements with key vendors, which include performance standards and minimum contractual time periods. Insurint monitors these key vendor relationships, their performance of services and periodically evaluates alternative vendors and services.

          Insurint depends on various hosting and technology vendors, which provide services critical to Insurint’s delivery of products and services to Insurint’s customers. Such hosting and technology services can be replaced with comparable services from other vendors on short notice.

InsPro

          We acquired Atiam Technologies, L.P. on October 1, 2007 and, following a name change on May 14, 2009 to InsPro Technologies, LLC, this entity sells and markets our InsPro software application. InsPro and its predecessor, Systems Consulting Associates, Inc., or SCA, was founded in 1986 by Robert J. Oakes as a programming and consulting services company. In 1988, SCA entered into a long-term contract with Provident Mutual Insurance Company to develop, maintain, install, support, and enhance IMACS, which was an insurance direct marketing and administration software system. IMACS was the precursor of InsPro. InsPro dedicated four years, from 2001 to 2005, to developing its principal product, InsPro, which is a comprehensive, scalable, and modular web-based insurance marketing, claims administration, and policy servicing platform.

           Product and Services

          We offer InsPro on a licensed and an ASP (Application Service Provider) basis. InsPro is an insurance administration and marketing system that supports group and individual business lines, and efficiently processes agent, direct market, worksite and web site generated business.

          During 2008, we earned 87% of InsPro’s revenues from our four largest InsPro clients as follows; client #1 $2,885,388, client #2 $786,740, client #3 $576,399 and client #4 $552,138.

          InsPro incorporates a modular design, which enables the customer to purchase only the functionality needed, thus minimizing the customer’s implementation cost and time necessary to implement InsPro. InsPro can be rapidly tailored to the requirements of a wide range of customers from the largest insurance companies and marketing organizations to the smallest third party administrators, operating in environments ranging from a single server environment to the mainframe installations. InsPro currently supports a wide range of distribution channels, including the Internet, traditional direct marketing, agent-booked, individual and group plans, worksite, and association booked business, and supports underwritten as well as guaranteed products including long term care, Medicare supplement, critical illness, long and short term disability, whole and term life, comprehensive major, hospital indemnity accidental death and dismemberment.

          An InsPro software license entitles the purchaser a perpetual license to a copy of the InsPro software installed at a single client location, which may be used to drive a production and model office instance of the application. The ASP Hosting Service enables a client to lease the InsPro software, paying only for that capacity required to support their business. ASP clients access an instance of InsPro installed on our servers located at InsPro’s offices or at a third party’s site.

          Software maintenance fees apply to both licensed and ASP clients. Maintenance fees cover periodic updates to the application and the InsPro Help Desk.

          Consulting and implementation services are generally associated with the implementation of an InsPro instance for either an ASP or licensed client, and cover such activity as InsPro installation, configuration, modification of InsPro functionality, client insurance plan set-up, client insurance document design, and system documentation.

           Sales, Marketing and Operations

          InsPro markets its products and services directly to prospective insurance carriers and third party administrators via trade shows, advertising in industry publications and direct mail.

          InsPro delivers services to its clients, which include InsPro system implementation, legacy system migration to InsPro, InsPro application management, web development, InsPro help desk and 24x7 hosting service support.

Competition

           Insurint

          The life and health insurance field agent tool market is fragmented, but also very competitive, and is characterized by rapidly changing consumer demand and technological change. We believe Insurint’s competitors fall into three categories, which are:

	•		Direct competitors, who provide web based tools targeting the life and health insurance agent’s desktop, which includes Norvax, Quotit and HealthConnect;
	•		The insurance agent’s insurance agencies and their technology partners, who provide internally developed web based tools;
	•		Indirect competitors, who provide web based tools targeting insurance agents selling insurance products other than primarily health insurance, such as Agencyworks’ InsureSocket Brokerage, Connecture’s InsureConnect, and iPipeline, which all target life insurance agents, and Ebix (for Life and Property and casualty insurance agents) and iBommerang, which provide co-browsing for insurance agents.

           Insurint’s major competitors in the agent quoting and sales software market for individual major medical products are Norvax, which was founded in 2001 and has created a recognized brand, and Quotit, which was founded in 1999 and has strong relationships with more than 120 insurance carriers in health, life, dental and vision insurance markets.

           InsPro

          The market for insurance policy administration systems and services are very competitive, rapidly evolving, highly fragmented and subject to rapid technological change. Many of our competitors are more established than we are and have greater name recognition, a larger customer base and greater financial, technical and marketing resources than InsPro.

          InsPro is focused on the senior health, disability, affinity and association segments. InsPro competes with such concerns as International Business Machines Corporation (Genelco Software), Computer Sciences Corporation (FutureFirst), LifePro, and Fiserv Inc. (ID3), as well as with such smaller enterprises as Management Data, Inc. To compete we use best practice technologies and methods incorporated into InsPro, which provides customers with a user-friendly, flexible, modular and cost-effective insurance administrative software system. We also compete on price with a typical InsPro software license fee ranging from $500,000 to $750,000, compared to $800,000 to $900,000 from our competitors. InsPro’s modular design, scalability and ASP hosting service option makes it a compelling insurance administrative system from small third party administrators to the largest insurance carriers.

Employees

          As of December ___, 2009, we had 47 employees, which included 46 full-time and 1 part-time employee. None of our employees are members of any labor union and we are not a party to any collective bargaining agreement. We believe that the relationship between our management and our employees is good.

Intellectual Property and Proprietary Rights

          We rely on a combination of trademark, copyright and trade secret laws in the United States and other jurisdictions as well as confidentiality procedures and contractual provisions to protect our proprietary technology and our brand. We also have filed patent applications that relate to certain of our technologies and business processes.

Governmental Regulation

          There are still relatively few laws or regulations specifically addressing our Internet activities. As a result, the manner in which existing laws and regulations could be applied to the Internet in general, and how they relate to our businesses in particular, is unclear in many cases. Such uncertainty arises under existing laws regulating matters including user privacy, defamation, pricing, advertising, taxation, gambling, sweepstakes, promotions, content regulation, quality of products and services, and intellectual property ownership and infringement.

          We expect to post privacy policy and practices concerning the use and disclosure of any user data on our websites. Failure to comply with posted privacy policies, Federal Trade Commission requirements, or other domestic or international privacy-related laws and regulations could result in governmental proceedings. There are multiple legislative proposals before federal and state legislative bodies regarding privacy issues. It is not possible to predict whether or when such legislation may be adopted, and certain proposals, if adopted, could harm our business through a decrease in use and revenue.

Corporate Information

          We were incorporated under the laws of the state of Nevada on October 21, 2004 as Darwin Resources Corp., or Darwin-NV, an exploration stage company engaged in mineral exploration. On November 22, 2005, Darwin-NV merged with and into its newly-formed wholly-owned subsidiary, Darwin Resources Corp., a Delaware corporation, or Darwin-DE, solely for the purpose of changing the company’s state of incorporation from Nevada to Delaware. On November 23, 2005, HBDC II, Inc., a newly-formed wholly-owned subsidiary of Darwin-DE, was merged with and into Health Benefits Direct Corporation, a privately-held Delaware corporation engaged in direct marketing and distribution of health and life insurance and related products primarily over the Internet, and the name of the resulting entity was changed from Health Benefits Direct Corporation to HBDC II, Inc. Following this merger, Darwin-DE changed its name to Health Benefits Direct Corporation and, as a result, HBDC II, Inc. became our wholly-owned subsidiary.

          Our principal executive offices are located at 150 N. Radnor-Chester Road, Suite B-101, Radnor, Pennsylvania 19087. Our telephone number is (484) 654-2200. Our website address is www.healthbenefitsdirect.com . The principal offices of our wholly-owned subsidiary, HBDC II, Inc., are located at 2200 S.W. 10th Street, Deerfield Beach, Florida 33442. The principal offices of our wholly-owned subsidiary, Insurint Corporation are located at 2200 S.W. 10th Street, Deerfield Beach, Florida 33442 and its web site is www.insurint.com . The principal offices of our wholly-owned subsidiary, InsPro Technologies, LLC, are located at 130 Baldwin Tower, Eddystone, PA 19022 and its web site is www.inspro.com .

Investor Information

          All periodic and current reports, registration statements and other material that we are required to file with the Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, are available free of charge through our investor relations page at www.healthbenefitsdirect.com. Such documents are available as soon as reasonably practicable after electronic filing of the material with the Commission. Our Internet websites and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K.

          The public may also read and copy any materials filed by the Company with the Commission at the Commission’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains an Internet site, www.sec.gov , which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission.

Properties

          We do not own any real property. We currently lease approximately 50,000 square feet of office space in Deerfield Beach, Florida under a lease agreement with 2200 Deerfield Florida LLC. The lease expires on March 31, 2016 and we have the option to extend the term for two additional 36-month periods, as well as the right to terminate the lease within the first five years. The monthly rent increases every 12 months, starting at $62,500 and ending at approximately $81,550.

          We also lease 7,414 square feet of office space in Radnor, Pennsylvania. We lease this office space under a lease agreement with Radnor Properties-SDC, L.P. The term of the lease commenced on November 1, 2006, and will expire on March 31, 2017. The monthly base rent increases every 12 months, starting at approximately $13,466 and ending at approximately $21,531. Under the terms of the lease agreement, rent is waived for the first five months of the lease term with respect to 5,238 square feet and for the first 12 months for the remaining 2,176 square feet.

          We also sublease approximately 14,000 square feet of office space located in New York, New York. We sublease this office space under a sublease agreement with World Travel Partners I, LLC. The initial term of the sublease terminates on December 30, 2010. The monthly base rent increases every 12 months, starting at approximately $25,250 and ending at approximately $28,420.

          We also lease approximately 13,600 square feet of space in Eddystone, Pennsylvania. We lease this office space under a lease agreement with BPG Officer VI Baldwin Tower L.P. The term of this lease commenced on August 1, 2007, and will expire on December 31, 2012. The monthly rent increases every 12 months, starting at approximately $8,500 and ending at approximately $23,900.

Legal Proceedings

          On August 28, 2008, one of our former employees, the plaintiff, filed a national class action complaint in the Seventeenth Judicial Circuit of Florida, Broward County, case no. 062008 CA 042798 XXX CE, alleging that we breached a contract with employees by failing to provide certain commissions and/or bonuses. The complaint also contained claims for an accounting and for declaratory relief relating to the alleged compensation agreement. The plaintiff purported to bring these claims on behalf of a class of current and former insurance sales agents. We filed a motion to dismiss the complaint. In response, at the hearing on our Motion to Dismiss, the plaintiff stated that he would amend the complaint. The amended complaint is no longer pled as a class action but, instead, includes 64 named plaintiffs. The plaintiffs seek payment from us of all commissions allegedly owed to them, triple damages, attorneys’ fees, costs, and interest. We are in the process of responding to the amended complaint. In addition, the parties are engaging in the exchange of discovery requests and responses. We believe that the plaintiffs’ claims are without merit and intend to vigorously defend the litigation.

     On March 24, 2009, certain of our stockholders filed an action in the Supreme Court of the State of New York, County of New York, Index No. 650174/2009, against us, our board of directors, two of our investors and the investors’ affiliates relating to alleged offers we purportedly received in 2008 and a private placement transaction conducted in January 2009. The plaintiffs alleged that the members of our board of directors breached their fiduciary duties in responding to the offers received in 2008 and in connection with the private placement transaction conducted in January 2009. The complaint also contained claims for unjust enrichment against certain directors whom plaintiffs claim are “interested” and claims for aiding and abetting breach of fiduciary duty and unjust enrichment against our stockholder, Cross Atlantic Capital Partners, Inc., and its affiliates. The plaintiffs sought to rescind and cancel the private placement, enjoin the board of directors from undertaking certain measures and remove certain directors from the board. The plaintiffs also sought money judgments in an amount not less than $10,000,000, plus interest, attorneys’ fees, and accounts and experts’ fees. On May 29, 2009, the defendants moved to dismiss the complaint. The motion was granted on August 13, 2009 on forum non conveniens grounds. On August 14, 2009, a writ of summons was filed in the Court of Common Pleas, Philadelphia County No. 090801764 against us, our board of directors, two of our investors and the investors’ affiliates by the same stockholders who brought the New York action and seven additional stockholders.

     On October 27, 2009 we entered into a agreement with the stockholders who brought the New York action in which they agreed to withdraw from the Philadelphia litigation and provided a general release of all claims against us, our board of directors and the other defendants. These stockholders discontinued their claims against the defendants in the writ of summons filed in August. The terms of this settlement agreement required Co-Investment Fund to purchase all of the shares of common stock held by the settling plaintiffs (which amounted to 6,108,997 shares). Since the settlement did not include all of the plaintiffs in the suit filed in Philadelphia County, that action has not been dismissed.

     On December 21, 2009, five of the remaining shareholders who filed the writ of summons discontinued their claims against the defendants named in the writ of summons. Also on December 21, 2009, Alvin Clemens, a former officer and director of our company, Robert Kaul and Arthur Nagel (both of whom are shareholders of our company) filed a complaint in the Philadelphia action. The complaint brings claims for breach of fiduciary duty against the members of our board of directors for their alleged actions in responding to the offers received in 2008 and in connection with the private placement transaction conducted in January 2009. The complaint also contains claims for aiding and abetting the alleged breach of fiduciary duty and unjust enrichment against our stockholder, Cross Atlantic Capital Partners, Inc., and its affiliates. The plaintiffs seek to rescind and cancel the private placement, enjoin the board of directors from undertaking certain measures and remove certain directors from the board. The plaintiffs also seek money judgment against our board members in an amount in excess of $50,000 and against Cross Atlantic and its affiliates in an amount in excess of $10,000,000, plus interest, attorneys’ fees, and accounts and experts’ fees.

     We are also involved in various investigations, claims and lawsuits arising in the normal conduct of our business, none of which, in our opinion, will harm our business. We cannot assure that we will prevail in any litigation. Regardless of the outcome, any litigation may require us to incur significant litigation expense and may result in significant diversion of our attention.

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Overview

          The current operations of Health Benefits Direct Corporation (the “Company”, “we”, “us” or “our”) consist of InsPro Technologies LLC and Insurint Corporation.

          InsPro is a comprehensive, web-based insurance administration software application. InsPro was introduced by Atiam Technologies, L.P. (now our InsPro Technologies, LLC subsidiary) in 2004. InsPro clients include health insurance carriers and third party administrators. Unlike our Insurint platform, we market InsPro as a licensed software application, and we realize revenue from the sale of the software licenses, application service provider fees, software maintenance fees and consulting and implementation services.

          Insurint™ is a proprietary, professional-grade, web-based agent portal that aggregates real-time quotes and underwriting information from multiple highly-rated carriers of health and life insurance and related products. We market Insurint using a Software as a Service (SaaS) model instead of software licensing model, which offers easy web-based distribution and pay-as-you-go pricing. We market Insurint primarily to insurance agents, agencies, and other organizations selling health insurance products to families and individuals. Unlike existing health insurance quote engines, Insurint also enables an agent to input responses to a set of questions about the health of proposed insureds, which enables the agent to place an insurance policy faster and more accurately. In addition, Insurint offers a suite of sales tools that agents can use to increase their overall sales production.

Critical Accounting Policies

          Financial Reporting Release No. 60, which was released by the Securities and Exchange Commission (the “Commission”), encourages all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements. The Company’s consolidated financial statements include a summary of the significant accounting policies and methods used in the preparation of the consolidated financial statements. Management believes the following critical accounting policies affect the significant judgments and estimates used in the preparation of the consolidated financial statements.

          Use of Estimates — Management’s Discussion and Analysis or Plan of Operation is based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates these estimates, including those related to allowances for doubtful accounts receivable and long-lived assets such as intangible assets. Management bases these estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant estimates in 2009 and 2008 include the allowance for doubtful accounts, stock-based compensation, the useful lives of property and equipment and intangible assets, accrued expenses pertaining to abandoned facilities and revenue recognition. Actual results may differ from these estimates under different assumptions or conditions.

          InsPro Technologies offers InsPro on a licensed and an application service provider (“ASP”) basis. An InsPro software license entitles the purchaser a perpetual license to a copy of the InsPro software installed at a single client location, which may be used to drive a production and model office instance of the application. The ASP Hosting Service enables a client to lease the InsPro software, paying only for that capacity required to support their business. ASP clients access an instance of InsPro installed on InsPro Technologies owned servers located at InsPro Technologies’ offices or at a third party’s site.

          Software maintenance fees apply to both licensed and ASP clients. Maintenance fees cover periodic updates to the application and the InsPro Help Desk.

          Consulting and implementation services are generally associated with the implementation of an InsPro instance for either an ASP or licensed client, and cover such activity as InsPro installation, configuration, modification of InsPro functionality, client insurance plan set-up, client insurance document design, and system documentation.

          Insurint Corporation offers Insurint™, which is a proprietary, professional-grade, web-based agent portal that aggregates real-time quotes and underwriting information from multiple highly-rated carriers of health and life insurance and related products. Insurint typically charges its clients a one time account set up fee, which is recognized as earned when collected and the service has been provided, and recurring access fees, which are typically monthly in frequency and are recognized as the service is provided.

          The Company recognizes revenues from software license agreements is recognized when persuasive evidence of an agreement exists, delivery of the software has occurred, the fee is fixed or determinable, and collectibility is probable. The Company considers fees relating to arrangements with payment terms extending beyond one year to not be fixed or determinable and revenue for these arrangements is recognized as payments become due from the customer. In software arrangements that include more than one InsPro module, the Company allocates the total arrangement fee among the modules based on the relative fair value of each of the modules.

          License revenue allocated to software products generally is recognized upon delivery of the products or deferred and recognized in future periods to the extent that an arrangement includes one or more elements to be delivered at a future date and for which fair values have not been established. Revenue allocated to maintenance agreements is recognized ratably over the maintenance term and revenue allocated to training and other service elements is recognized as the services are performed.

          The unearned portion of InsPro Technologies’ and Insurint’s revenue, which is revenue collected or billed but not yet recognized as earned, has been included in the consolidated balance sheet as a liability for deferred revenue.

          We review the carrying value of property and equipment and intangible assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparison of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property, if any, exceeds its fair market value.

Results of Operations for the Three Months Ended September 30, 2009 Compared to the Three Months Ended September 30, 2008

           Revenues

          For the three months ended September 30, 2009 (“Third Quarter 2009”), we earned revenues of $1,475,696 compared to $1,426,160 for the three months ended September  30, 2008 (“Third Quarter 2008”), an increase of $49,536 or 3%. Revenues include the following:

	•		The decrease in consulting and implementation services in Third Quarter 2009 as compared to Third Quarter 2008 is attributable to a decrease in work modification enhancements and data conversion required for clients. Consulting and implementation services are from seven InsPro clients. Implementation services provided to these clients included assisting clients in setting up their insurance products in InsPro, providing modifications to InsPro’s functionality to support the client’s business, interfacing InsPro with the client’s other systems, automation of client correspondence to their customers and data conversion from the client’s existing systems to InsPro.
	•		In Third Quarter 2009 we earned ASP revenue from seven InsPro clients. The increase in ASP revenue in Third Quarter 2009 as compared to Third Quarter 2008 is due to the implementation of two new ASP agreements. ASP hosting service enables a client to lease the InsPro software, paying only for that capacity required to support their business. ASP clients access InsPro installed on InsPro Technologies owned servers located at InsPro Technologies’ offices or at a third party’s site.
	•		In Third Quarter 2009 we earned maintenance revenues from four clients compared to two clients in Third Quarter 2008.
	•		In Third Quarter 2009 we earned license revenue from a single existing client, which represent the delivery of contractually agreed to modifications to previously installed InsPro modules.
	•		In Third Quarter 2009 we earned Sub-leasing revenue of $9,326 from the sub leasing of space in our Radnor office, which commenced in the first quarter of 2009.

           Total Operating Expenses

          Our total operating expenses for Third Quarter 2009 was $3,705,444 as compared to $3,049,309 for Third Quarter 2008 for an increase of $656,135 or 22% as compared to Third Quarter 2008. The primary reason for the increase in operating expenses is attributable to an increase in InsPro Technologies’ staffing and technology consultants needed to support additional client requirements and planned growth. Total operating expenses consisted of the following:

          In Third Quarter 2009 we incurred salaries, employee benefits and related taxes of $1,805,213 as compared to $1,587,203 for Third Quarter 2008, an increase of $218,010 or 14%. Salaries, commission and related taxes consisted of the following:

	•		Salaries, wages and bonuses were $1,516,573 in Third Quarter 2009 as compared to $1,254,092 in Third Quarter 2008, an increase of $262,481 or 21%. The increase is the result of the hiring of additional staff in InsPro Technologies’ sales and technology departments to promote the growth in revenue and to service an expanding client base.
	•		Share based employee and director compensation expense was $74,976 in Third Quarter 2009 as compared to $169,290 in Third Quarter 2008, a decrease of $94,314 or 56%.

			The decrease is primarily attributable to the vesting of stock grants and options to directors and employees. Share based employee and director compensation consist of stock option and restricted stock grants, which are valued at fair-value at the date of the grant and expensed over the stock option’s vesting period or the duration of employment, whichever is shorter.
	•		Employee benefits and payroll taxes increased as a result of the hiring of additional staff in InsPro Technologies. Our employee benefit cost consists of the company paid portion of group medical, dental and life insurance coverage and partial company matching of employee contributions to a 401(k) plan. The increase was the result of an increase in InsPro Technologies’ and Insurint’s staffing.

          Advertising and other marketing in Third Quarter 2009 was $90,814 as compared to $6,171 in Third Quarter 2008. The increase was due to the use of outside agencies for services rendered in connection with the development of InsPro Technologies’ marketing strategy including creating the corporate brand and message and redesign of all sales and marketing material, company web site, brochures and sales presentation.

          Depreciation and amortization expense consisted of the following:

•

In Third Quarter 2009 we incurred amortization expense for the intangible assets acquired from InsPro Technologies on October 1, 2007. Intangible assets acquired from InsPro Technologies were assigned the following values:

	o		value of client contracts and relationships other than license with an assigned value of $1,089,223 amortized straight line over five years
	o		value of purchased software for sale and licensing value with an assigned value of $644,449 amortized straight line over five years
	o		employment and non-compete agreements acquired with an assigned value of $364,000 amortized straight line over three years.
	o		In Third Quarter 2009 we incurred amortization expense for software development cost for external marketing pertaining to InsPro Technologies’ InsPro system.

	•		In Third Quarter 2009 we incurred amortization expense of $67,042 as compared to $55,797 in Third Quarter 2008 for software and website development for internal use pertaining to Insurint.
	•		In Third Quarter 2009 we incurred depreciation expense of $87,847 as compared to $59,166 in Third Quarter 2008. The increase was due to equipment acquired for use in InsPro Technologies’ operations.

          In Third Quarter 2009 we incurred rent, utilities, telephone and communications expense of $201,700 as compared to $149,299 in Third Quarter 2008, an increase of $52,401 or 35%. Rent, utilities, telephone and communications expenses consisted of the following:

•

In Third Quarter 2009 we had an increase in rent, utilities and other occupancy due to the leasing of additional space to accommodate the increase in staffing in InsPro Technologies’ Eddystone office.

          In Third Quarter 2009 we incurred professional fees of $942,010 as compared to $715,080 in Third Quarter 2008, an increase of $226,930 or 32%. Professional fees consisted of the following:

•

In Third Quarter 2009 we had an increase in legal fees as compared to Third Quarter 2008, which was primarily due to legal costs incurred in connection with the settlement of litigation with the shareholders who brought action against the Company in New York in which the plaintiffs agreed to withdraw from the litigation and provided a general release of all claims against the Company, its board of directors and the other defendants.

	•		In Third Quarter 2009 we had an increase in technology fees as compared to Third Quarter 2008, which was attributable to an increase in technology consultants needed to support additional InsPro client requirements.
	•		All other consulting consists of recruiting, investor relations and general management consulting expense, which decreased as a result of expense reduction actions in all three areas.

          In Third Quarter 2009 we incurred other general and administrative expenses of $372,011 as compared to $337,786 in Third Quarter 2008, an increase of $34,225 or 10%. Other general and administrative expenses consisted of the following:

	•		In Third Quarter 2009 office expense increased compared to Third Quarter 2008 due to costs associated with additional leased space at InsPro Technologies’ Eddystone office.
	•		We incur travel and entertainment expense in connection with marketing, sales and implementation of InsPro at client locations.
	•		We incur computer processing fees associated with ASP hosting services. InsPro Technologies has a hosting services contract with a third party, which can be terminated with notice and payment of a termination fee. This third party provides InsPro Technologies with hosting services for our client’s ASP production and test environments. In Third Quarter 2009 computer processing fees increased compared to Third Quarter 2008 due to the implementation of two additional ASP hosting agreements.

           Loss from operations

          As a result of the aforementioned factors, we reported a loss from operations of $2,229,748 or $0.05 loss from operations per share in Third Quarter 2009 as compared to a loss from operations of $1,623,149 or $0.04 loss per share in Third Quarter 2008.

           Gain (loss) on discontinued operations

          Results from discontinued operations were as follows:

          During the first quarter of 2009, we ceased the direct marketing and sale of health and life insurance and related products to individuals and families in its Telesales call center. We also discontinued the sale of health and life insurance and related products to individuals and families through our non employee ISG agents. During the first quarter of 2009 our Telesales business segment eliminated 43 positions including all of its licensed employee sales agents along with other Telesales service and support personnel and eliminated another 20 positions in Telesales through attrition.

          On February 20, 2009, we completed the sale of our Telesales call center produced agency business to eHealth, an unaffiliated third party.

          Under the terms of our sale to eHealth, we transferred to eHealth broker of record status and the right to receive commissions on certain of the in-force individual and family major medical health insurance policies and ancillary dental, life and vision insurance policies issued by Aetna, Inc., Golden Rule, Humana, PacifiCare, Inc., Assurant and United Healthcare Insurance Co. on which we were designated as broker of record. Certain policies and products were excluded from the transaction, including our agency business generated through our ISG agents, all short term medical products and all business produced through carriers other than those noted above. In addition, we also transferred to eHealth certain lead information relating to health insurance prospects.

          The aggregate initial amount of consideration paid by eHealth to us during the first quarter of 2009 was approximately $1,280,000. In addition, eHealth assumed from us certain liabilities relating to historical commission advances on the transferred policies made by the specified carriers in an aggregate amount of approximately $1,385,000. eHealth has also agreed to pay to HBDC II, Inc., a Delaware corporation and our wholly-owned subsidiary, a portion of each commission payment received by eHealth and reported by the specified carrier relating to a transferred policy for the duration of the policy, provided that eHealth remains broker of record on such transferred policy.

          Simultaneous with the sale to eHealth, we also entered into a Marketing and Referral Agreement with eHealth. Pursuant to the terms of this agreement, eHealth agreed to construct one or more websites for the purpose of selling health insurance products and to pay to HBDC II a portion of all first year and renewal commissions received by eHealth from policies sold through the Referral Sites that result from marketing to prospects using the lead database or other leads delivered by us to eHealth. This agreement is scheduled to terminate in August 2010 and is terminable by us or eHealth upon material breach by the other party.

           Revenue Recognition for Discontinued Operations

          Our Telesales business segment generates revenue primarily from the receipt of commissions paid to us by insurance companies based upon the insurance policies we sell to consumers. These revenues are in the form of first year, bonus and renewal commissions that vary by company and product. We recognize commission revenue primarily from the sale of 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. Insurance premium commission revenues are recognized pro-rata over the terms of the policies. 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 or with respect to certain types of products. The unearned portion of premium commissions has been included in the consolidated balance sheet as a liability for unearned commission advances.

          The length of time between when we submit a consumer’s application for insurance to an insurance company and when we recognize revenue varies. The type of insurance product, the insurance company’s premium billing and collection process, and the insurance company’s underwriting backlog are the primary factors that impact the length of time between submitted applications and revenue recognition. Any changes in the amount of time between submitted application and revenue recognition, which are influenced by many factors not under our control, create fluctuations in our operating results and could affect our business, operating results and financial condition.

          We receive bonuses based upon individual criteria set by insurance companies, which vary over time and generally do not extend beyond the current calendar year. We recognize bonus revenues when we receive notification from the insurance company of the bonus due to us.

          We receive fees for the placement and issuance of insurance policies that are in addition to, and separate from, any sales commissions paid by insurance companies. As these policy fees are not refundable and we have no continuing obligation, all such revenues are recognized on the effective date of the policies or, in certain cases, the billing date, whichever is later.

          We also generate revenue from the sub-lease of our leased New York City office and a portion of our leased Deerfield Beach Florida office, which are both leased under operating leases. The terms of the sub-lease of our New York City office is under similar terms as our lease. We sub-lease portions of our Deerfield Beach office to two unaffiliated parties through January 31, 2010. Sub-lease revenue includes base rent, additional rent representing a portion of occupancy expenses under the terms of the sub-leases and certain technology and facility services provided. We recognize sub-lease revenue when lease rent payments are due in accordance with the sub-lease agreements. Recognition of sub-lease revenue commences when control of the facility has been given to the tenant. We record a provision for losses on accounts receivable equal to the estimated uncollectible amounts. This estimate is based on our historical experience and a review of the current status of our receivables.

          We recorded a liability for severance payments due to employees of discontinued operations of $278,030 and $266,740 at September 30, 2009 and December 31, 2008, respectively.

          For Third Quarter 2009 we earned revenues in discontinued operations of $1,401,341 compared to $4,289,859 in the Third Quarter 2008, a decrease of $2,888,518 or 67%. Revenues include the following:

	•		During the Third Quarter 2009 we recognized commission and other revenue from carriers of $251,023 as compared to $4,100,158 in Third Quarter 2008. The decrease is primarily the result of the execution of the agreement with eHealth whereby we no longer receives commission revenue on transferred policies effective on or about February 1, 2009. We continue to receive commissions from carriers other than specified carriers and commissions on policies other than transferred policies.
	•		During the Third Quarter 2009 we recognized $606,424 from commission payments from eHealth subsequent to the sale of our agency business. We recognize as revenue commission payments received from eHealth upon our notification by eHealth of such amounts.

	•		During the Third Quarter 2009 we recognized a gain on disposal of property and equipment of $217,601. On July 1, 2009 we entered into a sub-lease agreement with a third party, effective July 15, 2009 which terminated an existing sub-lease agreement for approximately 8,000 square feet of our Deerfield Beach office and replaced it with a sub-lease agreement for approximately 29,952 square feet. This new sub-lease terminates on February 28, 2011. As part of the sub-lease agreement, we also agreed to lease certain personal property to the sub-lessee for the term of the lease. The sub-lessee agreed to pay us 20 monthly payments of $10,890 for such personal property and we have agreed to deliver to the sub-lessee a bill of sale for the leased personal property at the end of the term. We have accounted for this personal property sub-lease arrangement as a sale.
	•		During the Third Quarter 2009 we earned no lead sale-revenue as compared to $103,798 in Third Quarter 2008. We re-sold certain Telesales leads that we purchase in order to recoup a portion of our lead cost. The decrease in lead sales revenue is a result of the cessation of direct marketing in the Second Quarter of 2009.

•

During the Third Quarter 2009 we earned sub-lease revenue of $326,393 as compared to $85,903 in Third Quarter 2008 relating to the sub-lease of a portion of our Florida office and our former New York sales office. Sub-lease revenue includes base rent, additional rent pertaining to utilities and occupancy costs and certain telephony, technology and facility services provided by us to certain of our sub-tenants.

	o		On February 21, 2008 we entered into a sub-lease agreement with a third party whereby the third party sub-leased approximately 5,200 square feet of our Deerfield Beach office space beginning March 1, 2008 through February 28, 2009. This sub-lease agreement was amended and restated on October 3, 2008 to increase the sub-leased square footage to 13,900 and extend the lease term through January 31, 2010.
	o		On October 1, 2008 we entered into a sub-lease agreement with a third party whereby the third party sub-leased approximately 8,000 square feet of our Deerfield Beach office space beginning October 15, 2008 through January 31, 2010. In accordance with this sub-lease agreement we recognize base rent, additional rent representing a portion of certain actual occupancy expenses for our Deerfield Beach office and certain telephony, technology and facility services provided to our sub-tenant. On July 1, 2009 we entered into a sub-lease agreement with a third party effective July 15, 2009, which terminated an existing sub-lease agreement for approximately 8,000 square feet of our Deerfield Beach office and replaced it with a sub-lease agreement of approximately 29,952 square feet.
	o		On April 17, 2008 we entered into a sub-lease agreement with a third party whereby the third party agreed to sub-lease our New York office space for the balance of our sublease agreement and pay our sub-lease payments essentially equal to our costs under the sublease agreement. The third party commenced paying sub-sublease payments to us in September 2008; however the third party failed to pay its December 2008 and subsequent rent when due. We were a beneficiary to a letter of credit in the amount of $151,503, which we had drawn against as a result of the third party’s failure to pay its rent when due. On July 23, 2009 we entered into a settlement agreement with the third party whereby we cancelled the sub-lease, the third party surrendered the sub-leased premises back to us and we and the third party agreed to release each other from all claims.

          Total operating expenses of discontinued operations for Third Quarter 2009 was $594,550 as compared to $4,408,407 for Third Quarter 2008 for a decrease of $3,813,857 or 87% as compared to Third Quarter 2008. The primary reason for the decrease in operating expenses of discontinued operations is attributable to the cessation of direct marketing and selling activities in the first quarter of 2009.

           Gain (loss) from discontinued operations

          As a result of the aforementioned factors, we reported a gain from discontinued operations of $806,791 or $0.02 loss from discontinued operations per share in Third Quarter 2009 as compared to a loss from discontinued operations of $118,548 or $0.00 loss from discontinued operations per share in Third Quarter 2008.

           Other income (expenses)

          Interest income was attributable to interest-bearing cash deposits resulting from the capital raised in private placements. The decrease in interest income is the result of a decline in interest rates and to a lesser extent a decline in cash balances.

          Interest expense pertains to imputed interest on certain employee obligations.

           Net loss

          As a result of these factors discussed above, we reported a net loss of $1,446,599 or $0.03 loss per share in Third Quarter 2009 as compared to a net loss of $1,739,008 or $0.04 loss per share in Third Quarter 2008.

Results of Operations for the Nine Months Ended September 30, 2009 Compared to the Nine Months Ended September 30, 2008

           Revenues

          For the nine months ended September 30, 2009 (“2009 To Date”), we earned revenues of $4,733,406 compared to $4,120,950 for the nine months ended September 30, 2008 (“2008 To Date”), an increase of $612,456 or 15%. Revenues include the following:

	•		Consulting and implementation services are from seven InsPro clients. The increase in consulting and implementation services in 2009 To Date as compared to 2008 To Date is attributable to an increase in work modification enhancements and data conversion required for additional clients. Implementation services provided to these clients included assisting clients in setting up their insurance products in InsPro, providing modifications to InsPro’s functionality to support the client’s business, interfacing InsPro with the client’s other systems, automation of client correspondence to their customers and data conversion from the client’s existing systems to InsPro.
	•		In 2009 To Date and 2008 To Date we earned 87,500 and $115,000, respectively from sales of software licenses from a single InsPro client.
	•		In 2009 To Date we earned ASP revenue from seven InsPro clients as compared to five in 2008 To Date. ASP hosting service enables a client to lease the InsPro software, paying only for that capacity required to support their business. ASP clients access InsPro installed on InsPro Technologies owned servers located at InsPro Technologies’ offices or at a third party’s site.
	•		In 2009 To Date we earned maintenance revenues from four clients compared to two clients in 2008 To Date.
	•		In 2009 To Date we earned Sub-leasing revenue of $21,326 from the sub leasing of space in our Radnor office.

          In 2009 To Date we incurred salaries, employee benefits and related taxes of $6,151,608 as compared to $5,156,072 for 2008 To Date, an increase of $995,536 or 19%. Salaries, commission and related taxes consisted of the following:

	•		Salaries, wages and bonuses were $4,707,944 in 2009 To Date as compared to $3,285,053 in 2008 To Date, an increase of $1,422,891 or 43%. The increase is the result of the hiring of additional staff in InsPro Technologies’ sales and technology departments and Insurint’s sales departments to promote the growth in revenue and to service an expanding client base and $150,000 of bonuses to certain executives.
	•		Share based employee and director compensation expense was $385,667 in 2009 To Date as compared to $1,287,351 in 2008 To Date, a decrease of $901,684 or 70%. The decrease is attributable to expense pertaining to an option grant to Mr. Alvin Clemens, who is our former CEO, in the Second Quarter 2008, and due to the vesting of an option grant to a director and options to directors and employees. Share based employee and director compensation consist of stock option and restricted stock grants, which are valued at fair-value at the date of the grant and expensed over the stock option’s vesting period or the duration of employment, whichever is shorter.
	•		Commissions to employees represents commissions paid to InsPro Technologies and Insurint sales personnel.
	•		Employee benefits expense increased as a result of the hiring of additional staff in InsPro Technologies and Insurint. Our employee benefit cost consists of the company paid portion of group medical, dental and life insurance coverage and partial company matching of employee contributions to a 401(k) plan. The increase was the result of an increase in InsPro Technologies’ and Insurint’s staffing.
	•		Payroll taxes expense increased as a result of the hiring of additional staff in InsPro Technologies and Insurint partially offset by a greater number of salaries exceeding the maximum FICA contribution limit.

•

Severance and other compensation increased primarily as a result of the Separation of Employment and General Release Agreement with Mr. Eissa.

          Advertising and other marketing in 2009 To Date was $231,923 as compared to $29,971 in 2008 To Date. The increase was due to the use of outside agencies for services rendered in connection with the development of InsPro Technologies’ marketing strategy including creating the corporate brand and message and redesign of all sales and marketing material, company web site, brochures and sales presentation.

          Depreciation and amortization expense consisted of the following:

•

In 2009 To Date we incurred amortization expense of $351,060 for the intangible assets acquired from InsPro Technologies on October 1, 2007. Intangible assets acquired from InsPro Technologies were assigned the following values:

	o		value of client contracts and relationships other than license with an assigned value of $1,089,223 amortized straight line over five years
	o		value of purchased software for sale and licensing value with an assigned value of $644,449 amortized straight line over five years
	o		employment and non-compete agreements acquired with an assigned value of $364,000 amortized straight line over three years.

	•		In 2009 To Date we incurred amortization expense of $65,361 as compared to $21,787 in 2008 To Date for software development cost for external marketing pertaining to InsPro Technologies’ InsPro system.
	•		In 2009 To Date we incurred amortization expense of $201,126 as compared to $143,070 in 2008 To Date for software and website development for internal use pertaining to Insurint.
	•		In 2009 To Date we incurred depreciation expense of $241,556 as compared to $243,367 in 2008 To Date. The decrease was due to the impairment of assets on discontinued operations.

          In 2009 To Date we incurred rent, utilities, telephone and communications expense of $613,017 as compared to $469,541 in 2008 To Date, an increase of $143,476 or 31%. Rent, utilities, telephone and communications expenses consisted of the following:

•

In 2009 To Date we had an increase in rent, utilities and other occupancy due to the leasing of additional space to accommodate the increase in staffing in InsPro Technologies’ Eddystone office and annual rent increases in our Radnor office.

          In 2009 To Date we incurred professional fees of $2,449,555 as compared to $1,773,352 in 2008 To Date, an increase of $676,203 or 38%. Professional fees consisted of the following:

	•		In 2009 To Date we had an increase in legal fees as compared to 2008 To Date, which was primarily due to legal costs incurred in connection with the settlement of litigation with the shareholders who brought action against the Company in New York in which the plaintiffs agreed to withdraw from the litigation and provided a general release of all claims against the Company, its board of directors and the other defendants.
	•		In 2009 To Date we had a decrease of $44,666 in accounting and auditing fees as compared to 2008 To Date, which was attributable to reduced consulting costs associated with Sarbanes Oxley.
	•		In 2009 To Date we had an increase of $664,725 in technology fees as compared to 2008 To Date, which was attributable to an increase in technology consultants needed to support additional InsPro client requirements.

•

All other consulting consists of executive recruiting, investor relations and management consulting expense, which decreased as a result of expense reduction actions in all three areas.

          In 2009 To Date we incurred other general and administrative expenses of $1,088,244 as compared to $1,129,044 in 2008 To Date, a decrease of $40,799 or 4%. Other general and administrative expenses consisted of the following:

	•		In 2009 To Date office expense decreased due to the reduction in staff in our Florida office.
	•		We incur travel and entertainment expense in connection with marketing, sales and implementation of InsPro at client locations.
	•		In 2009 To Date computer processing, hardware and software expense increased due to an increase in InsPro ASP clients to seven in 2009 compared to five in 2008. We incur computer processing fees associated with ASP hosting services. InsPro Technologies has a hosting services contract with a third party, which can be terminated with notice and payment of a termination fee. This third party provides InsPro Technologies with hosting services for our client’s ASP production and test environments. In 2009 To Date computer processing fees increased compared to 2008 To Date due to the implementation of two additional ASP hosting agreements.

           Loss from operations

          As a result of the aforementioned factors, we reported a loss from operations of $6,660,044 or $0.16 loss from operations per share in 2009 To Date as compared to a loss from operations of $5,196,314 or $0.13 loss per share in 2008 To Date.

           Gain (loss) on discontinued operations

          Results from discontinued operations were as follows:

          During the first quarter of 2009, we ceased the direct marketing and sale of health and life insurance and related products to individuals and families in its Telesales call center. We also discontinued the sale of health and life insurance and related products to individuals and families through our non employee ISG agents. During the first quarter of 2009 our Telesales business segment eliminated 43 positions including all of its licensed employee sales agents along with other Telesales service and support personnel and eliminated another 20 positions in Telesales through attrition.

          On February 20, 2009, we completed the sale of our Telesales call center produced agency business to eHealth, an unaffiliated third party.

          Under the terms of our sale to eHealth, we transferred to eHealth broker of record status and the right to receive commissions on certain of the in-force individual and family major medical health insurance policies and ancillary dental, life and vision insurance policies issued by Aetna, Inc., Golden Rule, Humana, PacifiCare, Inc., Assurant and United Healthcare Insurance Co. on which we were designated as broker of record. Certain policies and products were excluded from the transaction, including our agency business generated through our ISG agents, all short term medical products and all business produced through carriers other than those noted above. In addition, we also transferred to eHealth certain lead information relating to health insurance prospects.

          The aggregate initial amount of consideration paid by eHealth to us during the first quarter of 2009 was approximately $1,280,000. In addition, eHealth assumed from us certain liabilities relating to historical commission advances on the transferred policies made by the specified carriers in an aggregate amount of approximately $1,385,000. eHealth has also agreed to pay to HBDC II, Inc., a Delaware corporation and our wholly-owned subsidiary, a portion of each commission payment received by eHealth and reported by the specified carrier relating to a transferred policy for the duration of the policy, provided that eHealth remains broker of record on such transferred policy.

          Simultaneous with our sale to eHealth, we also entered into a Marketing and Referral Agreement with eHealth. Pursuant to the terms of this agreement, eHealth agreed to construct one or more websites for the purpose of selling health insurance products and to pay to HBDC II a portion of all first year and renewal commissions received by eHealth from policies sold through the Referral Sites that result from marketing to prospects using the lead database or other leads delivered by us to eHealth. This agreement is scheduled to terminate in August 2010 and is terminable by us or eHealth upon material breach by the other party.

          For 2009 To Date we earned revenues in discontinued operations of $7,258,319 compared to $14,377,526 in the 2008 To Date, a decrease of $7,119,207 or 50%. Revenues include the following:

	•		During 2009 To Date we recognized commission and other revenue from carriers of $1,972,178 as compared to $13,847,293 in 2008 To Date. The decrease is primarily the result of the execution of the agreement with eHealth whereby we no longer receive commission revenue on transferred policies effective on or about February 1, 2009. We continue to receive commissions from carriers other than specified carriers and commissions on policies other than transferred policies.
	•		During 2009 To Date we recognized a gain upon the execution of the Agreement of $2,664,794, which is the sum of the aggregate initial amount of consideration paid by eHealth to us and eHealth’s assumption of certain liabilities relating to historical commission advances on the transferred policies.
	•		During 2009 To Date we recognized $1,383,279 from commission payments from eHealth subsequent to the sale of our agency business. We recognize as revenue commission payments received from eHealth upon our notification by eHealth of such amounts.

•

During 2009 To Date we recognized a gain on disposal of property and equipment of $227,728. On July 1, 2009 we entered into a sub-lease agreement with a third party, effective July 15, 2009 which terminated an existing sub-lease agreement for approximately 8,000 square feet of our Deerfield Beach office and replaced it with a sub-lease agreement for approximately 29,952 square feet. This new sub-lease terminates on February 28, 2011. As part of the sub-lease agreement, we also agreed to lease certain personal property to the sub-lessee for the term of the lease. The sub-lessee agreed to pay us 20 monthly payments of $10,890 for such personal property and we have agreed to deliver to the sub-lessee a bill of sale for the leased personal property at the end of the term. We have accounted for this personal property sub-lease arrangement as a sale. During 2009 To Date we earned lead sale-revenue of $2,442 as compared to $391,193 in 2008 To Date. We re-sold certain Telesales leads that we purchase in order to recoup a portion of our lead cost. The decrease in lead sales revenue is a result of the cessation of direct marketing in the first quarter of 2009.

•

During 2009 To Date we earned sub-lease revenue of $1,007,898 as compared to $138,940 in 2008 To Date relating to the sub-lease of a portion of our Florida office and our former New York sales office. Sub-lease revenue includes base rent, additional rent pertaining to utilities and occupancy costs and certain telephony, technology and facility services provided by us to certain of our sub-tenants.

	o		On February 21, 2008 we entered into a sub-lease agreement with a third party whereby the third party sub-leased approximately 5,200 square feet of our Deerfield Beach office space beginning March 1, 2008 through February 28, 2009. This sub-lease agreement was amended and restated on October 3, 2008 to increase the sub-leased square footage to 13,900 and extend the lease term through January 31, 2010.
	o		On October 1, 2008 we entered into a sub-lease agreement with a third party whereby the third party sub-leased approximately 8,000 square feet of our Deerfield Beach office space beginning October 15, 2008 through January 31, 2010. On July 1, 2009 we entered into a sub-lease agreement with a third party effective July 15, 2009, which terminated an existing sub-lease agreement for approximately 8,000 square feet of our Deerfield Beach office and replaced it with a sub-lease agreement of approximately 29,952 square feet. This sub-lease terminates on February 28, 2011. In accordance with this sub-lease agreement we recognize base rent, additional rent representing a portion of certain actual occupancy expenses for our Deerfield Beach office and certain telephony, technology and facility services provided to our sub-tenant.
	o		On April 17, 2008 we entered into a sub-lease agreement with a third party whereby the third party agreed to sub-lease our New York office space for the balance of our sublease agreement and pay us sub-lease payments essentially equal to our costs under the sublease agreement. The third party commenced paying sub-sublease payments to us in September 2008; however the third party failed to pay its December 2008 and subsequent rent when due. We were a beneficiary to a letter of credit in the amount of $151,503, which we had drawn against as a result of the third party’s failure to pay its rent when due. On July 23, 2009 we entered into a settlement agreement with the third party whereby we cancelled the sub-lease, the third party surrendered the sub-leased premises back to us and we and the third party each released each other from all claims.

          Total operating expenses of discontinued operations for 2009 To Date was $6,834,555 as compared to $16,623,118 for 2008 To Date for a decrease of $9,788,563 or 59% as compared to 2008 To Date.

	•		The primary reason for the decrease in operating expenses of discontinued operations is attributable to the cessation of direct marketing and selling activities in the first quarter of 2009.
	•		During the first quarter of 2009 we determined certain long term assets were impaired as a result of the cessation of direct marketing and sales in the Telesales call center. We recorded expense in 2009 to write-off the value of these long term assets, which included property and equipment net of depreciation of $416,764, intangible assets net of accumulated amortization acquired from ISG of $1,200,428 and the value of internet domain name www.healthbenefitsdirect.com net of accumulated amortization of $22,389.

•

During the second quarter we recorded $2,031,210 rent expense related to the non-cancelable lease for the abandoned portion of the Deerfield Beach office. Effective September 30, 2009, we have accrued $1,951,504 related to the non-cancelable lease for the abandoned portion of the Deerfield Beach office, which is net present value of our future lease payments through March 31, 2011 and consideration for early termination due under the lease plus management’s estimate of contractually required expenses pertaining to the Deerfield Beach office, which are estimated to be $3,210,938, less a portion of the Deerfield Beach office used in operations, which is estimated to be $107,971, less future sub-lease revenue, which is estimated to be $1,148,727.

           Gain (loss) from discontinued operations

          As a result of the aforementioned factors, we reported a gain from discontinued operations of $423,764 or $0.01 gain from discontinued operations per share in 2009 To Date as compared to a loss from discontinued operations of $2,245,592 or $0.06 loss from discontinued operations per share in 2008 To Date.

           Other income (expenses)

          Interest income was attributable to interest-bearing cash deposits resulting from the capital raised in private placements. The decrease in interest income is the result of a decline in interest rates and to a lesser extent a decline in cash balances.

          Interest expense pertains to imputed interest on certain employee obligations.

           Net loss

          As a result of these factors discussed above, we reported a net loss of $6,281,647 or $0.15 loss per share in 2009 To Date as compared to a net loss of $7,402,697 or $0.19 loss per share in 2008 To Date.

Results of Operations for the Year Ended December 31, 2008 Compared to the Year Ended December 31, 2007

           Revenues

          For the twelve months ended December 31, 2008, we earned revenues of $5,675,689 compared to $1,141,028 for the twelve months ended December 31, 2007, an increase of $4,534,661 or 397%. The increase in revenues is primarily attributable to an increase in InsPro Technologies’ revenues. We acquired InsPro Technologies on October 1, 2007. The results of InsPro Technologies’ operations prior to our October 1, 2007 acquisition have been excluded from our financial statements. The results of our InsPro Technologies subsidiary have been included in the Company’s statement of operations as of October 1, 2007. Thus InsPro Technologies segment’s results from operations for years ended December 31, 2008 and 2007 are not comparable. Revenues include the following:

          In 2008, we earned revenues from seven InsPro Technologies clients as follows:

	•		Consulting and implementation services revenues are from seven InsPro clients. Implementation services provided to these clients included assisting clients in setting up their insurance products in InsPro, providing modifications to InsPro’s functionality to support the client’s business, interfacing InsPro with the client’s other systems, automation of client correspondence to their customers and data conversion from the client’s existing systems to InsPro.
	•		In 2008, we earned ASP revenue from five InsPro clients. ASP hosting service enables a client to lease the InsPro software, paying only for the capacity required to support its business. ASP clients access InsPro installed on InsPro Technologies owned servers located at InsPro Technologies’ offices or at a third party’s site.

	•		In 2008, we earned software license revenue from a single InsPro client.
	•		In 2008, we earned maintenance revenues from four clients.
	•		In 2008, we earned revenues of $97,177 relating to Insurint technology fees. Our Insurint subsidiary provides a proprietary, professional-grade, web based agent portal to support and assist insurance agents in the business of marketing and selling health insurance and related products. Insurint’s technology fees commenced in the second quarter of 2008.

           Total Operating Expenses

          Our total operating expenses in 2008 were $12,583,752 as compared to $7,861,894 for 2007, for an increase of $4,721,858 or 60%, which was primarily the result of InsPro Technologies. We acquired InsPro Technologies on October 1, 2007. The results of InsPro Technologies’ operations prior to our October 1, 2007 acquisition have been excluded from our financial statements. The results of our InsPro Technologies have been included in the Company’s statement of operations as of October 1, 2007. Thus the Company’s InsPro Technologies’ results from operations for years ended December 31, 2008 and 2007 are not comparable.

          Total operating expenses consisted of the following:

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Salaries, commission and related taxes consisted of the following:

	•		Salaries and wages were $4,800,916 in 2008 as compared to $3,072,212 in 2007. The increase is primary attributable to increased InsPro Technologies staffing and the exclusion of InsPro Technologies expense prior to the Company’s October 1, 2007 acquisition of InsPro Technologies. InsPro Technologies had 31 and 18 employees at December 31, 2008 and 2007, respectively.
	•		Share-based employee and director compensation expense was $1,448,836 in 2008 as compared to $1,562,712 in 2007.

	•		The decrease in 2008 as compared to 2007 was in part the result of an expense in 2007 pertaining to the modification of the expiration dates and vesting of two former executives’ options in the amount of $212,426 and vesting schedules of stock options issued in 2006.
	•		Share-based employee and director compensation consists of stock option and restricted stock grants, which are valued at fair-value on the date of the grant and expensed over the stock option’s vesting period or the duration of employment, whichever is shorter.

	•		Employee benefits expense was $230,441 in 2008 as compared to $60,980 in 2007. The increase is primary attributable to increased InsPro Technologies staffing and the exclusion of InsPro Technologies expense prior to the Company’s October 1, 2007 acquisition of InsPro Technologies. Our employee benefit cost consists of the company-paid portion of group medical, dental and life insurance coverage and partial matching of employee contributions to our 401(k) plan.
	•		Payroll taxes expense was $396,657 in 2008 as compared to $156,083 in 2007. The increase is primary attributable to increased InsPro Technologies staffing and the exclusion of InsPro Technologies expense prior to the Company’s October 1, 2007 acquisition of InsPro Technologies.
	•		Other compensation expense was $88,509 in 2008 as compared to $14,308 in 2007. The increase was the result of increased severance expenses.

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Depreciation and amortization expense consisted of the following:

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In 2008, we incurred amortization expense of $468,081 for the intangible assets acquired from InsPro Technologies. The InsPro Technologies acquisition was effective October 1, 2007. Intangible assets acquired from InsPro Technologies were assigned the following values:

	•		value of client contracts and relationships (other than licenses) with an assigned value of $1,089,223, amortized straight line over five years
	•		value of purchased software for sale and licensing value with an assigned value of $644,449, amortized on a straight line basis over five years

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employment and non-compete agreements acquired with an assigned value of $364,000, amortized on a straight line basis over three years.

	•		In 2008, we incurred amortization expense of $198,181 for software development cost for internal use as compared to $111,666 in 2007, which pertains to the Insurint web-based agent portal.
	•		In 2008, we incurred amortization expense of $43,574 for software development cost for external marketing.
	•		In 2008, we incurred depreciation expense of $307,696 as compared to $98,452 in 2007. The increase is primary attributable to the exclusion of InsPro Technologies expense prior to the Company’s October 1, 2007 acquisition of InsPro Technologies.

	•		Rent, utilities, telephone and communications expenses were $648,208 in 2008 as compared to $339,909 in 2007. The increase is primary attributable to increased InsPro Technologies staffing and associated office space requirements, the exclusion of InsPro Technologies expense prior to the Company’s October 1, 2007 acquisition of InsPro Technologies and increases in costs associated with our Florida office used in operations.
	•		In 2008, we incurred professional fees of $2,407,073 as compared to $1,517,663 in 2007. The increase was primarily attributable to InsPro Technologies outsourced system development costs and to a lesser extent employee recruiting services. InsPro Technologies expense prior to the Company’s October 1, 2007 acquisition of InsPro Technologies has been excluded from the Company’s results.
	•		In 2008, we incurred other general and administrative expenses of $1,436,250 as compared to $689,171 in 2007. The increase was primarily attributable to InsPro Technologies computer processing fees associated with ASP hosting services. InsPro Technologies has a hosting services contract with a third party, which can be terminated with notice and payment of a termination fee. This third party provides InsPro Technologies with hosting services for our client’s ASP production and test environments. InsPro Technologies expense prior to the Company’s October 1, 2007 acquisition of InsPro Technologies has been excluded from the Company’s results.

           Gain (loss) on discontinued operations

          Results from discontinued operations were as follows: