The error applies to policies taken out between January 2003 and May 2004.
Policyholders who have already cashed in their policy will receive an average of £400 once their payout has been recalculated – affecting around 4,000 in total.
Existing policyholders will receive the correct payout when their policy is encashed.
Clerical is stressing that no customers will lose out, with all current and out of force policies being rectified.
It says the error occurred because it issued customer literature between January 2003 and May 2004 in which information about charges was unclear.
It changed the product literature in 2004 to more clearly describe the charges that would be applied during the term of the product.
The firm says it is writing to customers whose payouts were incorrect when they cashed in their policy and will payout the additional amounts by cheque.
Those customers who have partially encashed or switched their policies will be reimbursed with units added to their policy
IFAs and customers with questions can call the dedicated team that has been put in place, on 0845 124 1415 from Monday to Friday between 8.30am and 6pm.
HBOS Financial Services managing director Rob Devey says: “We are very sorry for this error. Lessons have been learned. We are putting this right and no customer loses out.”