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ACTUARY definition in the Cambridge English Dictionary

Life insurance and pension plans are the two main applications of actuarial science. However, actuarial science is also applied in the study of financial organizations to analyze their liabilities and improve financial decision-making. Actuaries employ this specialty science to evaluate the financial, economic, and other business applications of future events.

  1. Such an analysis is input in the decision-making process for major new initiatives.
  2. Learn more about the daily lives and responsibilities of actuaries in various practice areas from life and health to retirement and predictive analytics.
  3. Actuaries analyze mathematical models to predict or forecast the reasonableness of an event occurring so that an insurance company can allocate funds to pay out any claims that might result from the event.
  4. To qualify for certification, an aspiring actuary must complete coursework in economics, applied statistics, and corporate finance.
  5. Certain percentages are assigned to the extent of the disability to determine the payout from disability insurance.

Additionally, economic conditions and trends in the financial markets can impact the probability of a pension plan remaining funded. Overall, there are many more accountants than actuaries in the U.S. The BLS estimates that actuarial jobs will grow 24% between 2020 and actuary meaning 2030, while the number of accounting jobs is projected to grow 7% during that time. In many countries, actuaries must demonstrate their competence by passing a series of rigorous professional examinations focused in fields such as probability and predictive analysis.

Superb Owl Words

Learn more about the daily lives and responsibilities of actuaries in various practice areas from life and health to retirement and predictive analytics. Learn how education, research, global issues and advancing the profession impacts how actuaries deliver value. The last hour of the workday might be spent peer-reviewing a colleague’s draft presentation for a client board meeting and discussing recommended changes to make the presentation clearer. Then, at 3 p.m., the consultant might contact the attorney of another client to discuss recommended retirement plan changes, such as a new profit-sharing formula to reward successful stores and divisions. At 2 p.m., the consultant might prepare a profit-sharing and cash-balance plan design illustration for a prospective client, such as a law firm, to show them how they can maximize their deductible retirement plan contributions.

She usually works on two or three projects at a time while also attending meetings, sitting in on training sessions, and occasionally traveling to field offices. She spends three to four hours daily performing analyses such as loss and premium trends, estimating catastrophe exposure, and assessing the rates for different classes or groups of risk. It updates other analyses semiannually, such as comparing losses and assessing rates for different classes of risk within a state or region. Actuaries often have a background in probability, statistics, and financial mathematics. Most often, an actuary will assess the probability of an event happening, then apply statistical methods to determine what the financial impact of that outcome will be. Actuaries usually do not use calculus at work, though calculus may be a prerequisite to meeting other course requirements.

Actuarial science is the study of mathematically predicting the probability of something happening in the future and assigning that outcome a financial value. Companies, pension funds, and insurance agencies rely on actuaries to develop models to assess areas of risk and devise policies to mitigate potential future challenges. Actuarial science is the discipline that applies mathematical and statistical methods to assess risk in insurance, pension, finance, investment and other industries and professions. More generally, actuaries apply rigorous mathematics to model matters of uncertainty and life expectancy. In the 18th and 19th centuries, computational complexity was limited to manual calculations. The calculations required to compute fair insurance premiums can be burdensome.

A significant portion of his work involves supporting his clients’ periodic financial reporting and their state and federal regulatory reporting requirements. He prepares Medicare Part C and Part D bids, National Association of Insurance Commissioners (NAIC) quarterly and annual statement reports, detailed annual revenue reports, and claims projections to support client budgets. “These analyses are constantly changing due to items such as technology advances and the evolving nature of the insurance industry and marketplace,” she said. Amy Fontinelle has more than 15 years of experience covering personal finance, corporate finance and investing.

They communicate their findings and recommendations to non-technical stakeholders, providing insights and guidance for informed decision-making. Actuaries voicing their ideas and advice on opportunities for actuaries, what’s next for the actuarial profession, industry trends and actuaries as business professionals. Actuarial exams usually last between 3 and 5 hours, and each requires rigorous preparation. Candidates must often have a bachelor’s degree, and it make take up to a decade for a candidate to complete all training and exams.

As a pricing actuary, Ford says she is able to maintain a work-life balance and does not have one season with intense deadlines, so she is able to schedule vacations easily. “Sometimes we work additional hours to meet a project’s deadline, but our schedules are fairly flexible,” she said. Use the word comparison feature to learn the differences between similar and commonly confused words. Take our free career test to find out if actuary is one of your top career matches.

Examples of actuarial

With this, they help businesses grow and provide value to their customers. Actuaries help leaders make strategic decisions and consumers prepare for their future. For most, it may take up to a decade or longer to become an actuary. A bachelor’s degree in actuarial science may take between 3 to 5 years, and it may take at least another several years to pass rigorous professional actuarial exams.

Actuarial science related to modern financial economics

He typically leaves the office between 6 and 7 p.m., unless a client or regulatory deadline requires him to work later. He says his typical work week is just under 50 hours, but it can range from 40 to 60 hours. He has the flexibility to shift his time around to attend his three young children’s events.

This information is critical for organizations to make informed decisions about managing risk and protecting against potential financial losses. Actuaries are involved in strategic planning and play a crucial role in shaping insurance products, financial policies, and risk management strategies. They contribute to the company’s financial stability and long-term success by ensuring that insurance premiums align with risks and that pension funds are adequately funded. The workplace of an actuary can vary depending on their specific role, industry, and employer. Actuaries are commonly employed by insurance companies, pension funds, consulting firms, government agencies, and financial institutions. The majority of actuaries work in office settings, where they collaborate with colleagues, use advanced software and tools, and have access to large datasets for analysis.

Their primary role is to conduct independent and unbiased assessments of financial statements and internal controls. The goal of auditing is to provide assurance to stakeholders that financial information is reliable and trustworthy. The Society of Actuaries (SOA) certifies those qualified to work in life insurance, health insurance, investments, and finance. Certification with the SOA is offered in six tracks that range from individual life and annuities to corporate finance.

As a result, actuarial science can help develop policies for financial products such as annuities, which are investments that pay a fixed income stream. Actuarial science is also used to determine the various financial outcomes for investable assets held by non-profit corporations as a result of endowments. AuditorAuditors are professionals who review and examine an organization’s financial records and processes to ensure accuracy, transparency, and adherence to accounting standards and regulatory requirements.

Explore your options in one of twenty practice areas and watch as Jennifer Gerstorff, FSA, MAAA, shares her journey to becoming an actuary. The actuarial profession has been consistently ranked for decades as one of the most desirable. Other factors impacting a pension plan’s viability include benefit arrangements, collective bargaining, the employer’s competitors, and changing demographics of the workforce. Tax laws and the policies of the Internal Revenue Service (IRS) regarding the calculation of pension surpluses also impact the finances of a pension plan.


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