Actuarial Science free essay sample

I will be going over what an actuary does on the job, how that translate to our life, and how it became the study it is today. An actuary, or statistician is a person who computes insurance and pension rates and premiums on the basis of the experience of people sharing similar age and health characteristics. Actuaries must have analytical, statistical, and probability skills. Actuaries help business make sound financial decisions to protect it from loss. Actuaries are statisticians who provide expert data analysis of risk assessment and risk management for the financial services sector. Actuaries specialize within the insurance industry. They also prepare and evaluate data for banks, retirement and pension fund administrators, or they can be self-employed as consultants. Such as advising and determining the best choices for investments and other financial decisions. Actuaries are able to calculate these tables by using past information and projections of mortality rates indicate that the life expectancy of an individual. We will write a custom essay sample on Actuarial Science or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Mortality tables are usually used as the bases for calculating estimated insurance premiums or monthly retirement annuities. When used by expert witnesses, actuarial tables are acceptable evidence to show life expectancy. Juries may award damages(money) to plaintiffs (person who is suing the defendant) for compromised life expectancy resulting from the alleged crime of the defendant. An actuarial valuation is a type of appraisal (official valuation) which requires making economic and demographic (structure of population) assumptions in order to estimate future liabilities (being responsible for). The assumptions are usually based on a mix of statistical tables and experienced judgment. Because assumptions are often derived (obtained) from long-term data. Unusual short-term circumstances or unanticipated trends can occasionally cause problems. A common example where an actuary directly affects someone’s personal life is in the valuation of a pension fund. It is usually easy to value the assets of a pension fund because it primarily holds liquid (accessible) securities such as stocks or bonds because it is just a mathematical valuation. However, it can be very difficult to value the liabilities of a pension fund, because assumptions must be made to etermine the total value of pension payouts that must be made in the future. Assumptions must also be made as to the expected growth of the funds assets (properties) which will allow it to meet those obligations. If either set of assumptions proves to be significantly wrong then there might be too little (or too much) funds in the future to pay pension benefits. Actuarial science uses probability and statistics to a nalyze and solve financial implications. Conventional actuarial science is based on the analysis of mortality, the production of life tables, and the application of compound interest. Life insurance and pension plans are the two major applications of actuarial science. Although, actuarial science is also applied in the study of financial organizations to analyze their liabilities and ameliorate (improve) financial decision-making. Actuaries employ this specialty science to evaluate the financial, economic and other business applications of future events. The American Academy Of Actuaries or AAA is an elite group that provides analysis to aid the public is policy creation, advances the status of the actuarial profession, and sets standards of integrity and competence for actuaries. The American Academy of Actuaries (AAA) has five public policy councils in the areas of casualty, health, life, risk management and financial reporting , and pensions. These councils lobby (influence) Congress on actuarial issues with national implications, such as Social Security and Medicare. Members of the AAA must have approved actuarial education qualifications, must have relevant work experience, and must maintain the group’s code of professional conduct. Actuaries commonly work in financial services, where they use math, statistics, and financial analysis to evaluate issues. Many colleges and universities offer degrees in actuarial science, which consists of a solid foundation course in mathematics, statistics and economics and on all types of investments. â€Å"Actuaries are well compensated. Experienced fellows have the potential to earn from $150,000 to $250,000 annually, and many actuaries earn more than that. †? Majoring in college in actuarial science is not exactly necessary but majoring in some type of math, financial, or both is common and practical. To earn an actuarial credential, you must complete a series of actuarial examinations, e-Learning components and other requirements through an actuarial membership organization such as the Casualty Actuarial Society (CAS) or the Society of Actuaries (SOA). †? Actuaries usually have desk jobs and work in an office environment. They work at least 40 hours a week. Consulting actuaries, have to travel to meet with clients, and actuaries who work in the investment banking field may experienc e a more unpredictable schedule and be expected to work more (or less) than 40 hours per week.