How to Become an Actuary
This article provides in-depth information into What is an Actuary? What Actuary do? Degrees for Actuary, Steps to become Actuary and much more.
An actuary is a business proficient who ascertains money related risks through probability, statistics and information on business and financial matters. They utilize predictive analysis of statistics and patterns to tell the probability of an occasion happening. An accountant is somebody who endeavors to value the present. An actuary is somebody who endeavors to value the future.
What does an Actuary do ?
Actuaries analyze data to estimate the probability and likely cost to the company of an event such as death, sickness, injury, disability, or loss of property. Actuaries also address financial matters, such as how a company should invest resources to maximize return on investments, or how an individual should invest in order to attain a certain retirement income level.
Analyses the probability of an event happening in future.
Outlining better approaches to lessen the probability of unfortunate occasions.
Diminishing the effect of unwanted events.
They outline a solution that benefits the interest of every party.
They research and create strategies.
Reserve Analysis of Funds.
They periodically review the rates of insurance premiums.
They price products according to the market trend.
Steps for becoming an Actuary
Get A Bachelor’s Degree
A student does not have to take any particular program to become an Actuary; however, students take Maths, Economics, Finance, Business or Statistics. Few schools also have a special program designed for actuaries that offer major in Actuarial Science. Understanding the qualifications for actuaries helps in preparing better and choosing the courses.
Complete Additional Courses
Undergraduates finishing a degree in an irrelevant field should supplement their undergrad profession with business and statistics courses. Every single imminent statistician will profit by picking up programming languages, for example, SQL, C++, and VBA. Arts understudies need to take the most number of side subjects, including some actuarial arithmetic courses.
Get A Job In Related Field
You should finish at least 2 actuarial exams before finishing your four-year college education to expand your odds of landing a position in the related field. Pursing this career path needs you to be aware about the timeline to determine how long it takees to become an actuary. Managers by and large don't lean toward hopefuls who don't have at least two certificates. Likewise, during your bachelor's program, you should do at least 2 summer internship. Ideally, you should do one internship at an insurance agency and a second internship at a consultancy.
Get An Associate Certification
There are two associations who provide professional certification for actuaries The Society of Actuaries (SOA) and the Casualty Actuary Society (CAS). The first level of certification awarded is Associate. For the Society of Actuaries, a student has to pass a series of five examinations in order to be approved for membership. For the Casualty Actuary Society provides a similar path. A prospective associate has to pass a series of six examinations to get a membership.
Get A Fellowship Certification
After getting the associate membership if an associate wants to earn the title of fellow, in the case of Society of Actuaries (SOA) he has to go through a series of more advanced examination and choose one of six tracts to specialize in. And for Casualty Actuary Society an associate needs to take 3 additional exams to earn the title of fellow.
According to the bureau of labour statistics, the average salary offered to the actuary in the United States is about $70,620 and typically falls between $62,442 and $77,977. The salary depends on the education, certification, additional skills, the years of experience of the candidate.
The employment opportunities for an Actuary is projected to increase to about 20 percent during the period of 2018 to 2028 which is faster than the average growth of the job. It is also estimated that there will be an addition of 5,000 more jobs over the period of 10 years while the actuaries develop skills and progress in their fields.
Actuary Degree Levels
Actuaries must have a strong technical background in mathematics, statistics, and business. They various degree level you can pursue to become an actuary are,
There is no need for a specific program or specific major to become an Actuary. You can choose any major but you need to take additional courses in statistics, probability, math, finance, economics, and business to be eligible to take the exams. The bachelor's degree is a four years program that gives 120-160 credit hours where you could choose the related field and complete your coursework.
The Master of Science (MS) in Actuarial Science is a two years program that gives you the abilities to be an effective Actuary. You'll pick up a strong academic foundation through particular courses in actuarial science, finance, statistics, and related fields. You will likewise profit by the viable introduction to business and financial standards.
Doctorate in actuarial science considers a scope of hypothetical and connected issues in annuities, life and general protection, and medicinal services. Specific roads of research incorporate protection dissolvability, mortality, and lifespan displaying, chance administration, evaluating in focused markets, reliance between dangers, the effect of reasonable esteem bookkeeping on protection and the financing of social care.
Academic Concentration to be considered for an actuary
Choosing relevant fields and the coursework gives you the strong basic skills to become an actuary. Here are some courses offered in the bachelor's degree.
This course helps in collection of samples from the data and interpreting the results that can be implemented to make suitable decisions. Students can also learn the forecasting methods, programming language and the predictive analysis.
- Collection of Data
- Interpretation of Data
- Organization and presentation of Data
This course is necessary to develop strong foundational skills to understand the business operations, supply and demand, fiscal policy and the international trade
- Reviews the creation and utilization of products and services
- Awareness of global economics environment
- Understand fundamental and technical concepts of economics
This course helps in understanding present net value, valuing riskless cash flows and market efficiency.
- Management of money matters
- Various degrees of vulnerabilities and risks
- Analyze and interpret financial data
Master’s degree helps in advancement of your career with in-depth knowledge of the subjects. The courses offered in this degree level are,
Students get to understand the Regulations on the insurances, marketing and distribution of insurance and to control the risks and premium auditing.
- Understanding and Quantifying Risk
- Financial Consequences of Risk
- Basic Purpose and Scope of Risk Management
Mathematical finance is an advanced course which is educated on the price-yield relationship, estimate volatility and Ito's lemma and its applications.
- Scientific modeling of financial markets
- Use appropriate technology for problem-solving
- Apply logical thinking
Every profession requires the knowledge of the computer systems and the actuaries learn in the computer softwares and programming languages such as the C++, SQL, VBA, to name a few which helps them perform better, faster and with accuracy.
- Analyze data statistically
- Interpret results of experiments
- Draw reasonable conclusions
Doctorate degree helps becoming a professional to teach or to conduct research on the fields of your interest.The courses offered under this degree level are,
The course gives an in-depth knowledge on the principles of Risk and Insurance, package design, pricing, and analysis with the understanding on the governance Structure
- Understanding needs of low-income households
- Structure of microinsurance products
- Success factors
This course helps in gaining knowledge on the heuristics and biases, risk preferences and the changing behavior in an organization.
- Psychological insights into human behavior
- Economic decision-making
- Psychological aspects of economic theories
Predicting the results and simulation of tests can help in better understanding of the progress and failures. Understanding the logistic regression, time series analysis and decision trees.
- Use of data mining and probability to forecast outcomes
- Write advanced SQL queries
- Create predictive models
The certifications and educations you complete can open opportunities to explore other job opportunities such as,
Accountant and auditor:
An accountant and auditor is a professional who is responsible for preparing the financial statements and examining the reports to make suitable recommendations and advice regarding the finance. They require a bachelor's degree to choose this job and the average earning is about $70,500 per year.
The budget analyst is expertised in preparing the budget reports and handles the expenditures. They mainly assist the private as well as the public organisations to manage their finance. They require a bachelor's degree and their median earnings is about $76,220.
The cost estimators work on collection and analysis of data to estimate the time, money, workforce, and material required to carry out the operations to provide the service or manufacture the product. They generally work in the industry or development of products. They require a bachelor's degree and the average earning offered to this role is about $64,040 per year.
Economists are financial experts who collect, analyse, research on the market activity, evaluate the economic issues concerned with goods and services, advising business and federal organizations to make economic decisions with effective forecasting techniques. You could become an economist on earning a masters degree and this job could fetch you about $104,340 annually.
The financial analyst is a trained professional who provides guidance on the internal and external clients on the clients. They also analyse the financial status of the clients, researching, investments analysis, rating analysis to make better decisions for the organization. You require a bachelor's degree to pursue this career and you could earn about $85,660 per year.
Stand out skills for an Actuary
You can advance in your career not only with the education you obtain, but with the skills you develop over time. The necessary skills for the profession helps you stand out from others in the same job. Hence the skills required are,
Analytical skills: analytical thinking is helpful for actuaries to analyse the data and interpret the results with complex trends and to identify the patterns of data. Logical and analytical thinking allows them to learn of the various factors that affect certain events.
Communication skills: As an actuary, there are various technical concepts and complex data to be explained. Reporting and documentation is also a necessary part of their roles. Hence they must have clear ideas on what to convey and how to put the ideologies in a clear way.
Computer skills: Computer knowledge is key in this profession. It helps in critical analysis. Learning the programming languages, developing spreadsheets, databases, and use of statistical tools to predict results helps in better advancement of career.
Interpersonal skills: the interpersonal skills such as leadership, confidence and others are gained with time and experience. Handling the team, initiating and volunteering to take up responsibilities makes you achieve success sooner in your career.
Math skills: with the calculative mind, the actuaries must be well versed in mathematics and related concepts such as principles of calculus, statistics, and probability which helps in quantifying the risks.