PRUDENTIAL OFFERS TO SETTLE SUIT : FIRM COULD END UP PAYING $1 BILLION.

Byline: Daily News Wire Services

In the latest chapter in a long-running dispute over the sales practices of the country's largest life insurer, Prudential Insurance Co. of America said Tuesday it would pay policyholders at least $410 million in an attempt to put the matter behind it.

The settlement comes on top of the $35 million fine Prudential agreed to pay in July.

But Melvyn Weiss, a New York lawyer who negotiated the settlement on behalf of policyholders, indicated that it would probably be well into next year before anyone sees a dime.

To take effect, the deal must be approved by insurance commissioners in all 50 states and the District of Columbia as well as by U.S. District Judge Alfred Wolin in Newark, N.J., where Prudential is based. In addition, the holders of as many as 10.7 million policies will have a chance to express objections at a hearing early next year.

Before it's all over, the size of the settlement could grow to more than $1 billion.

It is unclear whether scores of policyholders and at least half a dozen whistle-blowers who are suing Prudential separately will choose to join in the settlement reached by Weiss or continue to fight for compensation on their own.

Officials in seven states expressed concern that negotiations between Weiss and Prudential would leave the burden of proving wrongdoing with the policyholders.

In July, after a joint investigation that had lasted more than a year, a group of state insurance departments concluded that for more than a decade - a period during which it sold nearly 11 million life insurance policies - Prudential had improperly urged some customers to cash in or borrow against existing policies to buy new, often more expensive, ones.

It was the latest insurance sales spat. In the past few years, John Hancock Mutual Life Insurance Co., Metropolitan Life Insurance Co. and New York Life Insurance Co. have agreed to compensate policyholders for similar ``churning'' practices.