The £500m payments could be received by policyholders in November
About one million policyholders with the insurance group Aviva are being sent voting packs about the proposed "reattribution" of its surplus funds.
The company is asking them to accept payments of at least £200 to renounce any future share of the surplus money.
Those who vote "yes" should receive their payments in November 2009.
The deal, which has been recommended by the policyholders' advocate, affects those with polices in two with-profits funds - CGNU Life and CULAC.
Aviva says 90% of those in line for a payment will receive between £200 and £1,150, tax-free.
The policyholders should receive their voting packs in the next few weeks.
As well as a voting form and an individual indication of how much the payment will be worth, the pack will include a 48-page guide from Aviva, formerly Norwich Union, and a 27-page analysis by the policyholders' advocate Claire Spottiswoode.
She said the offer was in the best interests of all eligible policyholders.
"You have a cash offer that for the great majority is more than you might reasonable expect to receive from future special distributions from the inherited estates," said Ms Spottiswoode.
The surplus funds, known as inherited states, have been built up over many decades in the "with-profits" funds of life insurance companies.
The industry has been under pressure for some years to devise a fair way of dividing up the surplus between policy-holders and company shareholders.
The deal will see Aviva use its shareholders' money to buy out the ability of policy-holders to claim a share of the surplus funds in the future.
A payout worth £1bn was first proposed by Aviva last July.
But because of falling investment values it was later withdrawn, and then revised last month.
The new offer is now worth half the original amount, at a minimum of £500m, but could rise if the value of the with-profit funds' increases between June and August this year.
"This offer will depend on the value of the policy, the type of policy held and how long the policy has left to run," said the company.
"This is not a majority vote and those customers who vote "no" or don't vote at all will not receive the payment," it added.
Policyholders need to respond by 21 August.
Aviva has also set up a special website and help-line to answer their questions.
The proposed payout is in addition to a special bonus payment which started last year, worth £2.1bn, which is being made in three instalments to policyholders, two of which have already been received.