About 1.1 million Norwich Union with-profit policyholders are to share a bonus of £2.1bn, while shareholders are due to get £230m.
The payout will be made in instalments over three years and will add 10% to policy values, parent firm Aviva said.
The deal follows earlier disputes on how the money, part of a £5.5bn "surplus" in Aviva's investment funds, should be divided.
Negotiations are continuing on how the rest of the money should be split.
Mark Hodges, chief executive of Norwich Union Life, said: "This special bonus is a major boost to policy values."
Windfall
The company announced that with-profits policyholders in its CGNU Life and CULAC with-profits funds - typically people holding endowment policies, pension policies and with-profits bonds - would be in line for the bonus.
Those funds underlie the policies sold by the former Commercial Union and General Accident insurance companies, both of which have subsequently become part of Aviva.
The payout will come in three annual instalments from this year, paid in the form of bonuses added to the value of policies.
Under the bonus scheme, a policyholder with a typical with-profit bond - based on a £30,000 investment in 2001 - would have £4,500 added to their policy over three years.
A 25-year endowment policy taken out in 1985 with a £50 monthly premium should get a bonus of £3,735 over three years, the company said.
Those who are eligible will receive letters in the next few weeks giving detailed information.
Policyholder advocate Claire Spottiswoode, an independent expert appointed to represent policyholder interests, said she was pleased that policyholders would get the bulk of the initial surplus payout.
"I am disappointed, however, that the payment is to be made over a three-year period. The surplus funds are available now yet policyholders whose policies mature before the end of the three years will not be paid the full amount," she said.
Negotiations continue
Negotiations are continuing on how the remainder of the £5.5bn surplus should be divided up.
Aviva has made an offer to Ms Spottiswoode and has asked for a response by the end of February.
Consumer group Which? said the company should no longer hold on to the surplus.
"While this may seem like a generous gesture by Norwich Union, the fact remains that this isn't even half of the inherited estate," said the consumer group's personal finance campaigner Dominic Lindley.
The "inherited estate" is the term used to describe the surplus assets in a with-profits fund which have built up over many years.
Which? said some of the return from the investments in the fund is kept back in good years and added back to top-up returns during periods of poor performance.
Inherited estates largely build up because companies hold back too much money.
An Aviva spokesman explained that a similar number of policy holders in with-profits funds under the Norwich Union name would not be offered any bonus as their inherited estate had already been distributed to them.
That took place at the time of the company's conversion from a mutually owned society when it floated on the stock market flotation in 1997.
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