What Is Actuarial Science? Discover Courses, Jobs, and Salary

If you've always had a knack for mathematics and enjoy applying statistical analysis to solve real-world problems, then a career in actuarial science might be perfect for you. 

Actuarial science relies heavily on advanced statistical analysis software to analyze complex data sets and model future scenarios, making proficiency with these tools a critical component of the role.

But before you dive in with both feet, let's see what a role in actuarial science looks like and what the road to a career will be like.

If you’re interested in this line of work, know that you’ll have to bunker down, hit the books, and get ready to do some serious studying.

Actuarial science degree

If you’re a person entering college who loves math, finance, statistics, and business, an actuarial science degree may be right for you.

Because of this, college students should major in either economics, finance, math, or statistics. There’s also the option of majoring in actuarial science, which seems like the obvious route, but know that you have options. It’s also wise to take a few computer science courses to expand your knowledge and be more well-rounded in the field.

Educational pathways

A career in actuarial science typically requires a combination of formal education and professional certification:

• Undergraduate degrees: Many actuaries start with a bachelor's degree in actuarial science, mathematics, statistics, or a related field.
• Graduate degrees: Advanced positions may require a master's degree or even a PhD in actuarial science or a related discipline.
• Professional certifications: Certifications such as the Associate of the Society of Actuaries (ASA) and Fellow of the Society of Actuaries (FSA) are crucial for career advancement. These certifications require passing a series of rigorous exams and meeting other professional requirements.

Actuarial science exams

In addition to getting a degree, to be an actuarial scientist, you need to pass a series of 10 exams that will provide you with a certification. Depending on the exam, they’re timed between three to five hours and take most people between five and 10 years to finish.

These exams will test those interested in becoming an actuary on their mathematical skills and overall understanding of how insurance works. There are currently seven preliminary exams that go over probability, time value of money, statistics, and more. Once you pass all seven, you will be called an associate. Then, you’ll move on to take three additional exams to become a fellow.

Preliminary exams usually last between 3 - 3.5 hours and are either taken on the computer or written, depending on the test. Fellowship exams are 100% written and can take anywhere from 2.5 hours to 5.5 hours to complete.

These exams are scored on a scale of 0 to 10, and you’ll need to get at least a 6 to pass.

If you’re studying for either a preliminary or fellowship exam and could use some assistance studying, check out our roundup of the best study tools on the market.

While your employer may pick up the tab for your exams, it’s likely that you’ll need to pay for the first two or three out of pocket. The first few cost roughly $225, while fellowship exams can cost over $1,000 to take. You also should consider the cost of study materials and any necessary guidance, which could range from $200 to $1,000.

Actuarial science jobs

If you’ve ever been asked, “What can you do with an actuarial science degree?” I’m here to answer that question.

The primary goal after you have your degree is to become an actuary, who is usually someone who works at an insurance company and is a specialist at quantifying risk. Using a skill set of math and statistical concepts, they can determine the probability of certain events happening in the future.

They then will calculate the amount of money a business should set aside so they have enough to pay for the event, if and when it takes place. As an example, when you purchase a new car insurance policy, you expect the insurance company to pay for the damage if and when you get into an accident in the future.

Regardless of your role, some typical duties of an actuary include:

• Compile statistical data for further analysis
• Estimate the probability and the cost of an event - such as death, sickness, a natural disaster, or an accident
• Design and test insurance policies, investments, pension plans, and other strategies to lessen risk and boost profit
• Explain calculators and proposals using charts, tables, and various reports
• Further elaborate on findings to company executives, government officials, clients, and shareholders

Actuarial science salary

The starting salary for an actuary who has two actuarial exams passed, can expect to make between $46,000 and $71,000.

Once you’ve passed all ten exams and have at least six years of job experience, you can expect to make between $125,000 and $190,000. Those with over 20 years of experience can reach a salary of $500,000 or more.

If you’re looking to climb up the salary ladder as quickly as possible, it’s going to depend on how quickly you pass the actuarial exams. Most companies will offer salary increases just for passing an exam.

For early actuarial exams, like Exam P and FM, you can expect an increase between $1,500 and $3,000. As you pass the most difficult exams, especially your fellowship exams, you could see an increase between $5,000 and $7,000.

Of course, this will depend on the company you choose to work for, whether you have switched companies in the past, and your experience.

Applications of actuarial science

Actuarial science is applied in various industries, each with unique roles and responsibilities:

• Insurance: Actuaries assess risks and determine premium rates for life, health, property, and casualty insurance.
• Finance: In banking and investment firms, actuaries analyze financial risks and develop strategies to mitigate them.
• Healthcare: Actuaries help design and manage health insurance plans and assess the financial impact of healthcare policies.
• Pensions and Retirement: Actuaries manage and evaluate pension plans, ensuring their financial stability and sustainability.

No risk, no reward

When you’re a professional in the actuarial science field, it’s all about calculating the risk. It’s a rewarding job, but before you start, it’s important to consider all of the hard work that will need to be done along the way.

Learn the different statistical analysis methods that can help improve how you discover and understand data patterns.

This article was originally published in 2019. It has been updated with new information.