What Is an Actuary All About? Career, Salary & More;- The actuary profession is one of the few professions that is in high demand and the number of jobs available is only expected to increase. Actuaries’ roles center around the use and application of mathematical, statistical, and financial theory to assess risk and uncertainty.
The actuary is a career that is often underrated, but offers plenty of benefits. This profession deals with the assessment of risk and uncertainty. The job involves solving problems in order to help people manage finances and lower the financial risks they take on. A great education will be key to success in this field.
What Is an Actuary All About? Career, Salary & More
Actuaries, in general, operate in teams with managers and other finance professionals such as underwriters, accountants, and financial analysts. However, actuaries typically work in managerial roles, delegating tasks and providing advice to senior management, as well as testifying before government authorities about proposed laws that affect their industry.
Actuaries are typically employed by insurance businesses, where they develop policies and determine lucrative yet competitive premiums. Actuaries, on the other hand, are usually specialists in the insurance industry.
They may specialize in fields such as one of the following:
The Health insurance actuaries
The health insurance actuaries are the individuals that analyze the likelihood of risk to determine the premium cost. This is important because they serve as a balancing force between a company’s revenue and its expenses. The actuaries are in charge of adding up all of the possible losses, estimating how many people might need medical care, and then figuring out how much will be deducted for each person.
According to Truity, “long-term care and health insurance policies are developed by projecting predicted expenses of delivering care under the conditions of an insurance contract.” They make their forecasts based on a variety of criteria including family history, locality, and occupation.
Life insurance actuaries
The actuaries are the most important people for a life insurance company. They use complex mathematics to figure out how much money the company would need to pay out to beneficiaries if everyone were to die at the same time. This is called the mortality table. All this information goes into an actuary table, which has a lot of charts, graphs and numbers.
According to Truity, life insurance actuaries “assist in the development of annuity and life insurance plans for people and groups by calculating how long someone is projected to live based on risk factors such as age, gender, and cigarette usage.”
Property and casualty insurance actuaries
A property and casualty insurance actuary is an individual who deals with the estimation of risk in property and casualty insurance. They determine financial consequences of risks, such as the probability of a damage event, the potential cost to repair or replace a damaged item, and the time period before a building can be reoccupied.
According to Truity, property and casualty insurance actuaries “assist in the development of insurance policies that protect policyholders against property damage and liabilities as a result of accidents, natural disasters, fires, and other catastrophes.”
Pension and retirement benefits actuaries
Actuaries play a major role in pension funds and retirement benefits. They project the future risk of an organization based on current information. Actuaries are an important part of the economic system because they can project how much money an organization will need to pay out to its employees in the future.
According to Truity, actuaries for pension and retirement benefits “create, test, and analyze corporate pension plans to assess if the estimated funds available in the future will be sufficient to ensure payment of future benefits.” They must then report the outcomes of their evaluation to the federal government. They may also assist corporations in developing other forms of retirement plans, such as 401(k)s, as well as assist firms in developing retiree healthcare plans and providing individual retirement planning services.
What is the average starting salary for an actuary?
As of May 2017, the median annual income of an actuary was $101,560, according to data from the United States Bureau of Labor Statistics (BLS). This equates to an hourly wage of $48.83 on average. Experienced actuaries, on the other hand, might earn anywhere from $150,000 to $250,000 per year.
Of course, not many actuaries begin their careers with such a high pay. According to ZipRecruiter, the average starting salary for actuaries is $56,202 per year. Of course, this will be determined by criteria such as experience, training, geography, and others.
How do you become an actuary?
School, a certification process, and training are all required to become an actuary.
Actuaries often have a bachelor’s degree in mathematics, actuarial science, statistics, business, or another analytical field, and some students may also have completed coursework in applied statistics, corporate finance, calculus, economics, accounting, management, and other subjects.
Many students will take computer science courses to assist them prepare for a future as an actuary, including as programming languages, spreadsheets, databases, and statistical analysis tools.
The Certified Actuarial Analyst (CAA) is the highest credential awarded by the Society of Actuaries.The CAA is awarded to individuals who have demonstrated a high level of competence in all the subject areas needed to perform actuarial work. It includes passing multiple examinations in various fields, such as mathematics, statistics, economics and financial markets.
Many students will go on to gain experience through internships, but most employers will expect students to have passed at least one of the actuary exams required for professional certification — which brings us to the certification process.
An actuary can obtain professional certification from one of two professional societies:
The Casualty Actuarial Society (CAS): This organization certifies actuaries who work in property and casualty insurance, such as automobile, homeowners’, medical malpractice, and workers’ compensation.
The Society of Actuaries (SOA) is a professional organization that certifies actuaries who work in the fields of life insurance, retirement benefits, investments, finance, and health insurance. This is the more popular of the two certification programs, as it is used by the majority of actuaries in the United States.
Both of these programs (which are typically sponsored by businesses) lead to professional status, with two levels of certification available upon completion and passing of exams.
The CAS requires actuaries to pass seven exams for the associate certification, while the SOA requires actuaries to pass five exams for the associate certification. Both the CAS and the SOA require actuaries to also take seminars on professionalism and take mandatory e-learning courses.
How long does it take to become an actuary?
Actuaries often take four to six years to obtain a CAS or SOA certification because each exam requires hundreds of hours of preparation over months of study. However, certain actuaries with other responsibilities may require more than four to six years to become certified in their field.
Then it takes another two to three years (or more) to get fellowship status, which can be achieved in a variety of methods. The CAS does not provide a specialist fellowship study track, but the SOA does: life and annuities, group and health benefits, retirement benefits, investments, and finance/enterprise risk management. It is up to each individual to determine which path they wish to take, which will, of course, have an impact on their future career.
In the real world, most actuaries will begin their careers as trainees under the supervision of more experienced actuaries who will function as mentors. They’ll usually start out as assistants while learning the ropes. Then, as they advance through the certification process, they may be eligible for a bonus or raise based on the completion and passing of each exam. They’ll eventually work their way up to being able to mentor the following generation of trainees.