Information About Actuarial Science
An actuary is an expert in the study of risk and its application to markets such as life insurance. The skills can also be used in relation to other financial products. In many countries, a prospective actuary must pass examinations run by a professional body, though some countries offer specific actuarial science degrees. A qualified actuary will usually work in a major city and will potentially have high earnings.
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Actuarial Science
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Actuarial science is the study of risk using mathematics and statistics. In a professional context, it involves applying this study to financial areas such as life insurance and pensions in order to determine the likely costs to the provider and thus the premiums it should charge. While a wide range of statistics are used, the most common are death rates, which can help forecast when life insurance will need to be paid out, and for how long a pension will have to be paid.
Variations
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Actuarial science is used in a wider range of financial contexts. For example, it can be used to predict the likelihood of somebody with health insurance making a claim. It can also be used in reinsurance, in which insurers take out coverage to protect themselves against making more payouts than expected. Unlike with pensions and life insurance, these calculations will tend to be recalculated each year to determine the new annual premium.
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Professional Bodies
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Many counties have one or more professional bodies for actuaries. While membership of these bodies is not always mandatory, most employers will require it of a job candidate. Examples include the Society of Actuaries and Casualty Actuary Society in the United States; Institute of Actuaries in the United Kingdom; and the Institute of Actuaries of Australia. These bodies will often have their own examinations which must be passed to acquire membership.
Prerequisites
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Within the United States, prospective actuaries are recommended to study calculus, statistics, economics, finance and business communications in college. It is not required to take a specific math-related degree and it is possible to become an actuary without getting a degree at all. In some countries, notably the U.S., it is possible to take a specific undergraduate degree in actuarial science which incorporates some or all of the professional exams. Most such degree courses require good grades in mathematics A level courses (taken by students aged 16 to 18).
Working Life
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Most actuary jobs are in locations where major financial firms are based, usually major cities. As well as jobs for private firms, actuaries can also be employed by government, for example, in planning Social security spending requirements. The combination of a relatively limited number of qualified actuaries and the value they bring to an employer means the potential earnings can run well into six figures.
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References
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