The Beijing-based financial holding firm has hired Citigroup to run the sale and second-round binding bids are expected in coming weeks, the people said, declining to be named as the process is confidential.
Earlier this year, local media reports had indicated that JD Group could be looking to offload a part of FTLife.
A sale of the whole business, if completed, will be one of the top five insurance M&A deals ever in Hong Kong, a key market for insurers due to rapidly growing wealth and demand for insurance products from Chinese investors, Refinitiv data shows.
"This is one of the very few large insurance business that you will see coming on the block, so the interest is expected to be good," said one source, who is involved in the process.
"It's not easy to get a new insurance licence in Hong Kong and the wait time could be long. It's a good opportunity for someone looking to bet on the sustainable premium growth in this market," the source added.
Hong Kong is home to a developed life insurance market, with a life and health insurance premium to GDP ratio of 17.94 percent in 2017, the second-highest in Asia after Taiwan, according to insurer Swiss Re.
JD Group acquired FTLife for HK$10.7 billion ($1.4 billion) in 2016 from Belgian insurer Ageas, underscoring Chinese companies' strong appetite to grow through acquisitions in the Hong Kong financial sector.
Potential bidders for FTLife are expected to include Hong Kong conglomerate Chow Tai Fook and Asian private equity firm PAG, two of the people said.
JD Group could decide to retain a minority stake in FTLife, one of the sources said, adding the sale could also attract a bid from a Japanese insurer looking to tap the rapidly growing Hong Kong insurance market.
JD Group, also known by its Chinese name of Jiuding Group, FTLife and PAG did not immediately respond to requests for comments. Chow Tai Fook and Citigroup declined to comment.
JD Group, which has brokerage, trust, mutual funds and private equity businesses, was once the most valuable company on the Chinese National Equities Exchange and Quotations, the country's most active over-the-counter equity exchange.
It had invested in more than 200 companies, of which about 60 are either listed or in the process of going public, according to the company website.
FTLife was the 12th-largest individual life insurer in Hong Kong by annualised premium equivalent, with a 1.4 percent market share at end-2017, according to a September Fitch ratings report on the company.
The insurer has more than 2,800 financial consultants and staff, as per its website.
JD Group is looking to exit FTLife at a time when China is cracking down on privately-owned financial holding firms, whose sprawling business shareholdings and overseas investments have raised some concerns amid a wider deleveraging exercise.
China's acquisitive conglomerate Anbang Insurance [ANBANG.UL] was this year put into government control.
The group is undergoing a shareholding restructuring and planning to sell overseas assets including real estate, hotels and insurance companies.
Another financial group, Tomorrow Holdings, is also in the process of divesting some of its businesses after its chairman, Xiao Jianhua, a billionaire with links to China's Communist Party elite, was put under investigation last year.
(Reporting by Kane Wu, Julie Zhu and Sumeet Chatterjee; Editing by Himani Sarkar)
By Kane Wu and Sumeet Chatterjee