You probably remember the commercials. The ones with the iconic Rock of Gibraltar logo, promising a "piece of the rock" and a secure future. For thousands of people who bought into prudential long term care insurance decades ago, that rock feels like it’s shifting.
It’s stressful.
If you’re holding a policy from the late 90s or early 2000s, you’ve likely seen the letters in your mailbox. Rate hikes. Reduced benefits. Options to "buy down" your coverage just to keep the premium affordable. It’s not just you; it’s the entire industry reacting to a massive miscalculation that happened before the iPhone even existed.
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Most people think insurance companies are these omniscient math wizards. But with long-term care (LTC), companies like Prudential—and almost every other major player—got the math wrong. They didn’t realize we’d live this long. They didn't expect interest rates to stay low for so long. And they definitely didn't expect so many people to actually keep their policies.
What happened to the Prudential LTC market?
Prudential was once a titan in the LTC space. They didn't just sell to individuals; they handled massive group contracts, including the Federal Long Term Care Insurance Program (FLTCIP). But if you try to go to their website today to buy a brand-new, standalone long-term care policy, you’ll find a wall.
They stopped selling new individual LTC policies years ago.
This is a huge distinction. If you already have a policy, they have to honor it. You’re in what the industry calls a "closed block" of business. Because no new (younger, healthier) people are entering that specific pool of insurance, the costs for the existing members often climb. This is why you see those 20% or 30% premium increases. It’s a game of catch-up.
The company shifted its focus toward "hybrid" products. These are basically life insurance policies with a long-term care "rider" attached. If you need the care, you eat into the death benefit. If you don't, your heirs get the money. It’s a way for the company to limit their risk while still giving you some version of prudential long term care protection.
The shock of the "Rate Increase" letter
Let’s be real: getting a letter saying your premium is doubling is terrifying when you're on a fixed income.
The math behind this is cold. Back in 2000, insurers assumed maybe 3% of people would drop their policies every year (called "lapse rates"). In reality, people valued these policies so much that almost nobody dropped them. At the same time, the cost of a private room in a nursing home didn't just rise; it exploded.
When Prudential—or any insurer—needs to raise rates, they can’t just do it on a whim. They have to go to state insurance commissioners and prove they are losing money on that specific group of policies. This is why some people in Florida might see a hike while someone in Ohio doesn't. It’s a state-by-state battle.
Hybrid vs. Traditional: The new landscape
Since the "old school" policies are mostly gone for new buyers, the industry has pivoted. The modern version of prudential long term care usually looks like their PruLife products.
Here is how the new logic works:
Traditional LTC was "use it or lose it." Like car insurance. If you never crashed, you got nothing back for your premiums.
Hybrids are different. You’re essentially buying a bucket of money. If you get Alzheimer's or need help with "Activities of Daily Living" (ADLs) like bathing or dressing, you tap the bucket. If you die peacefully in your sleep at 95, your kids get the bucket.
It sounds better, right? Well, it’s a lot more expensive upfront. You’re often looking at a large single premium or very high annual payments compared to the "cheap" policies of the 1990s.
The "Six ADLs" and the gatekeepers
Whether you have an old policy or are looking at a new hybrid, the trigger is usually the same. You have to be unable to perform two out of the six "Activities of Daily Living."
- Eating
- Bathing
- Dressing
- Toileting
- Transferring (moving from a bed to a chair)
- Continence
Cognitive impairment—like dementia—is the other major trigger. Even if you can physically walk and eat, if you aren't safe to be left alone, the policy should kick in. But here is where it gets tricky: the "Elimination Period."
Think of the elimination period as a deductible, but measured in days instead of dollars. Most prudential long term care plans have a 90-day waiting period. You pay out of pocket for the first three months of care before the insurance company sends a dime. Honestly, this is where most families get blindsided. They realize they need help, they call the insurer, and then they find out they have to burn through $25,000 of their own savings before the policy starts paying.
Is your old policy still worth keeping?
Almost always, yes.
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Even with the rate hikes, those old policies are often "gold-plated" compared to what you can buy today. Many had 5% compound inflation protection. That means a policy bought in 1995 with a $100 daily benefit might be worth $300 or $400 a day now. You cannot buy that kind of leverage anymore.
If you get a rate hike notice, look at the options they give you. Usually, they’ll offer to let you keep your premium the same if you shorten the "benefit period" (e.g., from lifetime coverage to 3 years) or if you lower the inflation growth.
- Lifetime coverage is the "holy grail." If you have it, fight to keep it.
- Inflation protection is the most expensive part of the policy. If you’re already 85, you might not need 5% compound growth anymore. If you’re 60, you absolutely do.
The reality of claims: The "Paperwork War"
Prudential is a massive bureaucracy. When it’s time to file a claim, don’t expect it to be easy.
You’ll need a "Plan of Care" from a licensed healthcare practitioner. You’ll need invoices. You’ll need daily logs from the home health agency. Many families find the process of getting the first check to be a full-time job.
One thing people get wrong: they think they can just hire the neighbor to help them and the insurance will pay. Nope. Most policies require a "Federally Qualified" caregiver or a licensed agency. Check your policy language for the words "Independent Provider." If it doesn't allow them, you're stuck using an agency, which is always more expensive.
The "Medicaid" misconception
I hear this a lot: "I'll just let the government pay for it."
Bad plan.
Medicaid (not Medicare—Medicare doesn't pay for long-term care) requires you to be basically broke. We’re talking $2,000 or less in countable assets in most states. Prudential long term care insurance isn't just about paying for a nursing home; it’s about stay-at-home care. It’s about keeping your dignity and not being forced into the one facility in town that accepts Medicaid beds.
What to do if you're looking for coverage now
If you don't have a policy and you're worried about the "gray wave" of aging, you have to be realistic. The standalone LTC market is small. You’re likely looking at a "Linked Benefit" or "Hybrid" policy.
- Check the AM Best Rating: You want a company that will be there in 30 years. Prudential consistently holds strong ratings (usually A+), which matters when you’re buying a promise that might not be redeemed for decades.
- Look at the "Extension of Benefits": Some hybrid policies only pay out your death benefit. The best ones have an "extension" that keeps paying even after the life insurance part is used up.
- Consider "Shared Care": If you're married, some policies let you share a pool of benefits. If one spouse needs 5 years of care and the other needs none, the survivor can use the whole pot.
Actionable Steps for Policyholders
If you currently own a prudential long term care policy:
- Locate your "Schedule of Benefits." This is the one-page summary. Don't just look at the 50-page booklet of legalese. Find the page that says exactly what your "Daily Benefit Amount" is today, including inflation.
- Audit your "Elimination Period." Do you have enough cash in a high-yield savings account to cover 90 or 180 days of private care? If not, that's your new savings goal.
- Update your "Third-Party Notice." Most policies let you name a child or friend to be notified if you miss a payment. Do this. If you develop cognitive issues and forget to pay the bill, the policy could lapse, and you lose everything. A third-party notice is your safety net.
- Review the "Bed Reservation" benefit. If you're in a nursing home and have to go to the hospital for a week, will the policy pay to keep your spot at the facility? Knowing this now saves a crisis later.
The landscape of long-term care has shifted from a predictable insurance product to a complex exercise in asset protection. Prudential might not be selling the same plans they did in 1998, but the ones they have on the books remain some of the most valuable financial assets a senior can own. Treat your policy like the "piece of the rock" it was meant to be—even if the cost of holding that rock is getting a bit heavier.