What Does an Actuary Do? A Guide to the Types of Actuaries
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- Actuaries calculate the economic cost of risk by blending math and business.
- Actuaries can earn high salaries and are consistently in demand.
- The field offers several specializations, including roles in insurance and finance.
Actuaries specialize in risk. They use mathematical and statistical tools to determine the probability of property damage, medical needs, and financial downturns. Actuaries then propose ways to minimize risk and maximize profits. Actuarial science plays a key role in insurance and finance.
Compared to other business careers, actuaries have a strong career outlook. According to the Bureau of Labor Statistics (BLS), actuaries earned a median annual salary of $105,900 in May 2021. The organization projects jobs for these professionals will grow 24% between 2020 and 2030. Actuaries can enter the field with a bachelor's degree. Our guide walks through the general responsibilities of an actuary and actuarial science career paths.
Actuaries use statistics to calculate the economic impact of risks. By drawing on probability, statistics, and financial theory, actuaries calculate the likelihood of events. After analyzing financial information, actuaries create presentations and reports to help their clients account for risk.
Many actuaries work in the insurance industry. They help insurance companies create life insurance and health insurance policies. Actuaries also work in business and finance, recommending strategies to executives to minimize risk and increase profits. Finally, some actuaries work in the public sector, managing benefits plans like Social Security.
"As an actuary, I assess the financial consequences of risk and uncertainty," explains actuary Steven Walker. "I assess the risk of potential events using mathematics, statistics, and financial theory, and I assist businesses and clients in developing policies that reduce the cost of that risk. My work is critical to the insurance part of the company."
Day in the Life of an Actuary
Actuaries work for insurance companies, financial institutions, and consulting firms. Their daily tasks vary depending on their specialty.
Common daily tasks for an actuary include:
- Analyzing financial data to recommend strategies
- Creating reports and presenting data to clients or executives
- Testing investment strategies to calculate risk
- Calculating the probability of events that increase costs
In Walker's actuarial role, tasks include analyzing data and presenting his findings. "I value insurance policies and advise businesses on how to meet regulatory requirements and balance capital. I have a busy professional life and may review, prepare, and present reports to clients and executives whose financial well-being depends on the results of actuarial science daily."
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Types of Actuaries
Life Insurance Actuary
Life insurance actuaries create life insurance policies that cover individuals and groups. They do so by examining demographic data and life expectancy tables. These actuaries account for factors like health, age, and risk behaviors to set premium rates for life insurance. They also calculate annuity policies.
Property and Casualty Actuary
Property and casualty actuaries create insurance policies related to property loss and liability. Their scope may cover policies related to natural disasters, automobile accidents, fires, and other types of accidents. These actuaries analyze the probability of property-damaging events or accidents that create liability to set insurance premiums.
Health Insurance Actuary
Health insurance actuaries estimate the likelihood that individuals or groups will need medical treatment to create health insurance policies. They also predict the cost of healthcare to determine what the policy will cover. These actuaries consider factors like age, family medical history, and occupation to create health insurance policies.
Enterprise Risk Actuary
Enterprise risk actuaries help corporations minimize the cost of risks such as economic volatility, regulation changes, or geopolitical unrest. They evaluate how these risks might impact the company to help executives make strategic decisions. These actuaries also recommend strategies to limit the financial harm of risks.
Savings and Retirement Actuary
Savings and retirement actuaries evaluate company benefits plans, including pensions and 401(k)s. They test benefits plans to make sure the company can cover costs. Pension actuaries must report their findings to the government. These actuaries may also offer retirement planning strategies for individual clients.
Public Sector Actuary
Public sector actuaries ensure that government benefits plans can cover recipients. For example, they may specialize in Social Security or Medicare, where they project the federal government's financial obligations or test proposed changes. Public sector actuaries may also regulate insurance company rates.
Investment actuaries specialize in the financial risk of investment strategies. They recommend risk management approaches to organizations. Some investment actuaries also manage investments. These actuaries research market volatility and propose strategies to minimize risk when investing.
How to Become an Actuary
Professionals must possess bachelor's degrees for entry-level actuary roles. While some major in actuarial science, prospective actuaries can also major in other fields.
"Getting into an actuarial career can begin with any bachelor's degree. Most actuaries major in mathematics, actuarial science, statistics, or another analytical field," says Walker. A bachelor's in business administration, finance, or economics can also lead to opportunities as an actuary.
After earning bachelor's degrees, actuaries pursue professional certification in their focus areas. The Casualty Actuarial Society (CAS) and the Society of Actuaries (SOA) certify actuaries, with CAS focusing on property and casualty specialties and SOA focusing on finance and insurance.
"Professional certification requires coursework in economics, statistics, and corporate finance," explains Walker. Candidates also pass 7-10 certification exams depending on the credential.
Certified actuaries must meet continuing education requirements to maintain an associate certification or earn fellowship certification. While completing the certification process, which can take several years, actuaries often gain work experience. They can also pursue a master's in actuarial science or a master's in finance to advance in their career.
Pros and Cons of Becoming an Actuary
- Many actuaries benefit from six-figure salaries. According to the BLS, actuaries earned a median annual salary of $105,900 in May 2021.
- The BLS projects jobs for actuaries will grow much faster than average between 2020 and 2030.
- The many specialization options in the field give actuaries many paths for career advancement.
- Actuaries blend statistics and business, which gives them many options for career changes.
- The certification process to become a professional actuary takes years and requires up to 10 certification exams.
- In addition to certification, actuaries may need a two-year master's degree for many roles.
- As risk management specialists, actuaries need to make exceptional predictions and stay on top of trends. The dangers of miscalculating risks can be high.
- While actuaries work as part of a team, much of their job requires analyzing data alone, which can be isolating for some.
In the words of an actuary…
"Actuaries are thought to be extremely intelligent and numerate," says Walker. "Financial salespeople are usually more cautious around me because they know my background in actuarial science means their sales pitch won't easily dupe me. People will generally hold me in higher regard when it comes to numbers and finances."
How Much Money Can I Make as an Actuary?
What is the median actuarial science salary? According to the BLS, actuaries earned a median annual salary of $105,900 in May 2021. The lowest-paid actuaries earned over $63,000, while the highest-paid actuaries earned more than $206,000.
In several states, actuaries reported average salaries of over $140,000, including Georgia, New Hampshire, New York, and Connecticut.
Is a Career as an Actuary Right for Me?
Should you become an actuary? If you have strong analytical skills and you're interested in business careers, an actuary science role might be a good fit.
Walker identifies key skills for successful actuaries, which include "excellent business sense with knowledge of finance, accounting, and economics." Actuaries also benefit from "sharp analytical, project management, and problem-solving skills." Walker notes hard skills in math and computing, along with soft skills like written and oral communication, help actuaries.
In addition to these skills, actuaries also must be creative. Analyzing data, recommending strategies, and coordinating with a team benefit from creative thinking. If you're more interested in the computing side of actuarial science, you might wonder, "Can I become an actuary with a computer science degree?" In fact, strong computer science skills help actuaries a great deal.
A career as an actuary could be right for you if…
- You have strong attention to detail and excellent analytical skills and enjoy statistics.
- You possess strong communication skills and work well in collaborative environments as well as alone.
- You enjoy using statistical software and creating proposals backed by data analysis.
- You do well in business, finance, and math classes — and you're interested in a career with continuing education opportunities.
Frequently Asked Questions About Being an Actuary
Do I need a master's degree to become an actuary?
Actuaries can enter the profession with a bachelor's degree. Majoring in actuarial science, math, business, finance, statistics, or another analytical field can prepare graduates for actuarial science careers. For some current or prospective actuaries, a master's degree can lead to career advancement.
For example, prospective actuaries who majored in an unrelated field can join the profession with a master's degree in actuarial science. Current actuaries can add specialized skills or pursue leadership roles with a master's degree. A master's in actuarial science typically takes two years for full-time students. Some universities may offer accelerated one-year programs.
Do I need to be certified to be an actuary?
Yes, actuaries pursue certification from two main organizations: the Casualty Actuarial Society (CAS) and the Society of Actuaries (SOA). CAS and SOA offer certifications in specialty areas like automobile, life, finance, and health insurance. To become certified, candidates must pass a series of exams. Most actuary certifications require seven exams, though some require more.
Actuaries spend several years passing these examinations. During this time, actuaries gain work experience. Many employers sponsor actuaries during the certification process by covering the cost of the exams. After gaining associate status, certified actuaries can pursue fellow status.
How long does it take to become an actuary?
Becoming an actuary can take as few as 2-4 years. A bachelor's degree meets the minimum requirement for entry-level actuary jobs. Professionals with a bachelor's degree in a non-analytical field can enter the profession with a master's in actuarial science.
After completing an actuary science degree, professionals begin working as actuarial associates or actuarial analysts. For several years, actuaries gain professional experience while passing certification exams. This process may take as long as 7-10 years. Actuaries then move into senior and leadership roles.
How much does an actuary make?
According to BLS data, the median pay for actuaries in May 2021 was $105,900 per year. Actuary salaries vary depending on a person's industry, experience, location, and degree. For example, actuaries working in the public sector reported a median salary of $110,590, while those in finance and insurance made around $110,000.
The lowest-paid actuaries earned over $63,000 in May 2021, while the highest-paid actuaries reported a median salary of nearly $207,000 annually. Actuaries can increase their earning potential by completing their certification exams or pursuing fellow status through their certifying organization. A master's degree can also lead to higher salaries.
Can I become an actuary with an online degree?
Yes, you can become an actuary with an online degree. Accredited online colleges offer majors in actuarial science, mathematics, statistics, finance, and other majors that lead to actuary careers. During these programs, distance learners complete coursework requirements in a virtual format.
Online students can also pursue internships in their local area to gain hands-on experience. After completing an online degree from an accredited school, graduates can pursue entry-level actuary roles like actuarial analyst or actuarial associate. Many universities offer graduate-level programs in actuarial science, mathematics, master's in project management, and finance.