HLA - Cash Builder: Clause 12

iLast month I bought the HLA cash builder and was hoping all the guarantees will be captured in the policy. In my opinion this is the best deal, so far, in the market. See here for more detail HLA - cash builder/retirement plan. HLA took more than a month to deliver the policy to me because of CNY break.

First of all, the policy did include all the guarantees that my agent briefed me before I sign up. Second it also include the spreadsheet (where it shows how much guaranteed interest, minimum/maximum dividend/surrender value for each year until 35 years) that my agent shows me before I sign up (first time in my experience in buying insurance where it include such spreadsheet in the policy). Furthermore the policy does not have any fine print line.

Looks good right? Well, there is one setback, clause 12. This is what clause 12 says:

“No alteration or waiver of any provision in the Policy shall be valid unless such variation or waiver is made by a Policy endorsement and signed by the Company’s authorised officer. The Company may request for the Policy to be sent to the Company to effect the Policy endorsement. No Company’s agent has the authority to make any alteration to or to waive any of the terms and conditions in the Policy.”

At first glace, it doesn’t sound much but look again. First line it read:

“No alteration or waiver of any provision in the Policy shall be valid unless such variation or waiver is made by a Policy endorsement and signed by the Company’s authorised officer”

This is how I interpret, as long as the Company’s authorised officer signed on the variation or waiver then it is consider a valid deal. So is that mean HLA can change the benefits and guarantee in the policy anytime they want to?

Second line:

“The Company may request for the Policy to be sent to the Company to effect the Policy endorsement”

This is how I interpret, when HLA change the policy, it may or may not request the original Policy to effect the new terms. Is that mean they do not need the policy owner consent to effect the change?

I have asked my agent to get a confirmation letter from HLA to reassure me that HLA will not use clause 12 to change the benefits and guarantees currently stated in the policy. All I want is to lock down the benefits and guarantees. But instead what I received is a letter explaining the intention of the clause.

Their explanation is that clause 12 is to use in situation where the policy owner wish to request for alteration or waiver of any provision in the policy. So I tell my agent that I am exercising my rights in clause 12 to change the provision in such a way that the benefits and guarantees will be locked down. And you know what? My agent told me is not that easy!

So think about it, clause 12 is meant to protect the policy owner but at the same time make it difficult for the owner to exercise it. So what is the true intention of clause 12 then? An escape clause for HLA?

My agent tried very hard to convince me that I do not have to be worried about the clause, how Bank Negara approved the policy (since when Bank Negara disallow escape clause?) and how strong is HL group. Well, all I know is no one can tell the future. Look at Enron, Lehman Brothers and AIA (in USA). If it can happen in other countries do you think it will happen here, back in Malaysia?

Seriously all I request for is just a reassurance from them, and it has been more than a week and yet a simple request like this can’t be delivered. I am tired of all their self- reassurance and excuses and decided to return the policy before the cooling off period.

Disclaimer: Above is solely based on my own interpretation, assumption and understanding. I might be entirely inaccurate and wrong on the interpretation. For those that are worried please get your own lawyer to interpret the clause and please DO NOT rely on my interpretation to make decision as I am NOT a lawyer.