NEWARK, N.J. (AP) _ Within two years after a huge class-action settlement with aggrieved policyholders was approved, Prudential Insurance Co. of America has sent $1 billion in checks to 250,000 claimants.

The remainder of the 650,000 claimants who sought compensation for Prudential's admittedly deceptive sales practices, and were found to be eligible, can expect payment by the end of the year, company spokesman Robert DeFillippo said Monday.

Prudential has acknowledged that some of its sales agents persuaded customers to trade in their old life insurance policies for newer, more expensive ones without telling them the old policies would lose their value.

The $1 billion in direct payments does not include the value of other remedies Prudential has given customers, such as paid-off policies.

Prudential has set aside $2.6 billion for compensation to more than 1 million customers and expects to stay within those parameters, DeFillippo said.

All 650,000 of the claimants have been notified of what they can expect in the settlement, the company said in providing figures through April to insurance regulators.

About 20 percent qualified for the highest level of relief, a full refund with interest, or a paid-up policy. The bulk, 64 percent, are to get partial refunds or adjustments to their policy.

Nearly 81,000 claimants, or more than 12 percent, were told they probably will not get anything because they failed to prove they were misled or were victims of the types of abuse the settlement was intended to remedy, Prudential said.

The remainder, about 3 percent, purchased policies during years not covered by the settlement, or products not covered in the deal.

Of the 650,000, some 48,000 have told Prudential they will use the settlement's arbitration provision to appeal their award, while 95,000 have not yet said how they intend to proceed.

The settlement was approved in March 1997 by a federal judge in Newark, where Prudential is based. The payout could be among the largest ever in class-action litigation.

Some 8 million people who bought 10.7 million life insurance policies from 1982 to 1995 were notified that they might qualify for compensation.

Prudential got replies from more than 1 million who thought they had a claim, and 650,000 said they wanted to seek the largest amounts of compensation by demonstrating they were misled. The others were allowed to purchase Prudential products at a discount.

Some policyholders opposed the settlement, but it was upheld on appeal and the U.S. Supreme Court declined to rule on the matter in January.

In addition to the class-action compensation, Prudential has paid about $70 million in penalties to the 50 states and Washington, D.C.