The UK's biggest insurer is making its third cut this year to bonuses on long-term savings products.

This is a prudent move to protect the strong financial position of the fund

Mark Wood, head of Prudential UK

Prudential said it was cutting final bonuses on its unitised with-profits policies by up to 7% from Tuesday.

The insurer, which has 2.5million policy holders in unitised with-profits products, said it was because of "the continuing depressed levels of world stock markets".

Insurers have been hit hard by market falls over the last year, leading many to cut the bonus rates on with-profits policies.

Latest cut

The cuts only affect final bonuses, annual bonus rates currently being added to policies will remain unchanged, the insurer said.

With-profits policies are meant to smooth the peak and troughs of stock market volatility, but an increasing number of life assurers have been forced to make cuts on bonuses.

The move will affect both Prudential and Scottish Amicable unitised policies.

The with-profit product areas affected are:

• Investments (Prudential)
• Pensions (Prudential and Scottish Amicable)
• Savings (Prudential and Scottish Amicable)
• Mortgage endowments (Scottish Amicable)

The impact for customers would depend on the type of product and duration of the policy, and will vary from policy to policy.

Someone who had made a one-off investment into a 10-year Prudence Bond would see their final payout cut to �20,916 from �22,415 from Tuesday.

While someone who paid �200 a month into a personal pension for ten years would see the maturity value of their policy drop to �32,487 from �33,707.

Mark Wood, head of Prudential UK an Europe, said: "This is a prudent move to protect the strong financial position of the fund and the interest of our ongoing customers and is the right course of action to take at this time.

"Customers can be reassured that our with-profits funds has outperformed the market and is providing them with solid returns compared to other investment options, even in such demanding market conditions."