We have to manage our business for all our customers, to make sure they are all treated fairly

Axa spokeswoman

French-owned Axa, which has almost 250,000 UK endowment policyholders, has reduced payouts by up to 7% across its life and pension policies.

In addition, bonds have been cut between 2% and 8% from 1 October.

Axa is one of an increasing number of insurers who are cutting terminal bonus payments.

Endowment misery grows

Norwich Union, Prudential, Legal & General and Standard Life are among a number of companies which have cut payouts in recent months, following stock market turbulence.

Liz Pritchard, spokeswoman from Axa, told BBC News Online that the life insurer was responding to these market falls.

"The market has fallen 28% since the beginning of the year, and we have to manage our business for all our customers, to make sure they are all treated fairly."

Not writing to customers

The cut would be the equivalent of nearly £4,000 off a 25-year policy, worth £73,701 on 1 September.

If the policy had matured on a 1 October, it would have been reduced by 5.3% and be worth £69,816.

Axa said it had not written to customers about the decision.

Instead, it said independent financial advisers and sales staff were telling customers.