Research house Dexx&r predicts growth opportunities for life insurance savings plans as retirement income products become more popular.

Its superannuation market projections report says changes to super proposed in the federal budget will force those members exceeding account balances to consider retirement strategies.

Potential inflows for products such as insurance bonds may also come from self-managed super funds selling down real estate because they exceed the balance caps.    

“Life companies stand to benefit from renewed interest in tax-advantaged ordinary insurance bonds,” the report says. “Particularly from those [members] on higher incomes with a marginal tax rate in excess of the tax rate applying to life companies.

“Any reduction in the company tax rate that applies to life company products will increase the tax advantage offered by these products.”

Dexx&r says if the budget proposals take effect – which is dependent on the election outcome – there may be an additional $18 billion to be captured by life insurance companies and fund managers in 2017/18.

Austock Life Head of Independent Financial Adviser Product and Relationships Richard Atkinson says it is too early to know how many people will exceed the $1.6 million account balance cap.

“It is hard to quantify until we know all the numbers and the demographics exceeding the cap,” he told insuranceNEWS.com.au. “Once we know the numbers, we can look at strategies to capture some of those monies.”

Mr Atkinson says Austock Life has noted more interest in retirement products from advisers.     

“After the budget we started getting more emails seeking information about our insurance bonds,” he said. “The advisers are definitely looking at bonds again because we have lower tax, so there is interest with clients on a higher tax rate.”

Austock is positioning itself for changes in super, and increasing educational support for advisers.

“We have had 1000 advisers attend our insurance bond masterclasses,” Mr Atkinson said.

“Austock believes there are some great opportunities in the retirement income market for insurance bonds, and we are positioning ourselves for changes in the regulations.”