The Llodys TSB deal will see £0.8bn paid out to 1.6m eligible members with a further £4.9bn going out to 900,000 eligible with-profits members.
Lloyds TSB is also paying £1.5bn out over time as "policy holder benefits". Widows has recently attracted criticism over the levels of bonus its with profits policies have been paying out.
Lloyds TSB already owns the primarily direct salesforce unit linked operator Abbey Life.
Speculation that Widows would do a deal leading to demutualisation has been rife over the past few months.
The windfalls are some of the biggest ever paid out by a mutual company and is bound to leave question marks hanging over the UK's remaining mutual life offices including Equitable Life, Scottish Life, Royal London, National Mutual, Scottish Provident and even Standard Life.