What is Actuarial Science?

Learn about Actuarial Science with First Daughter

Movie Case Study

The scene that you saw shows a conversation between Samantha (played by Katie Holmes) and James (played by Marc Blucas). They are having a conversation about James’s major area of study. He tells Samantha that he pursuing Actuarial Science.

Learning Perspectives blog will explore the meaning of Actuarial Science.

What is Actuarial Science?

Actuarial Science is a field of study that deals with risk management in the financial domain. James mentions Actuarial Science is statistics, probability, and assessment of risk, and he is correct. Actuarial Science used mathematical & statistical models to evaluate risk. This is done in insurance, pension, and investments.

Many colleges & Universities offer programs in Actuarial Sciences. These programs are available at both graduate and postgraduate levels. One can explore career opportunities in the field of health care financing, risk management, pension funds, life, and general insurance, and education. The role or profile of an Actuarial expert can be selected for risk valuation, product pricing models, premium advice, consultants, etc.

Understand Actuarial Science with a Video

One is taught diverse subjects while pursuing Actuaries. This includes Economics, math, Statistics, Finance, and Insurance. Insurance is studied in detail covering health, life, and general. Pension is also included in the course structure.

Understanding Application of Actuaries:

Insurance

Under life insurance, money needs to be kept aside to pay death claims. This requires forecasting and predicting future events. Estimating mortality rate of age and developing mathematical techniques for discounting the value of funds. Using predictive modeling to drive analytics in claims and in underwriting. Actuarial science can also help in developing policies for annuities and endowment policies. Under health insurance, analysis of the rate of mortality, morbidity, fertility, and other contingencies. Designing benefit structures for the Government standard for the health care cost.

Pension

In the pension industry, actuarial methods are useful in designing, maintaining, and redesigning of pension funds. Pension funds are further invested in different instruments. Actuaries help in this calculation so that the fund doesn’t run out of money.