The Two Types of Actuaries: Life and Non-life
Actuaries play a crucial role in the financial industry, managing risk and uncertainty to help individuals and companies make better decisions. There are two main types of actuaries: life and non-life. In this article, we will dive deeper into what each type of actuary does and the differences between the two.
FAQs
What are the two types of actuaries?
Most traditional actuarial disciplines fall into two main categories: life and non-life.
What do life actuaries do?
Life actuaries, which include health and pension actuaries, primarily deal with mortality risk, morbidity risk, and investment risk. They work with insurance companies, pension funds, and other organizations that provide financial protection to individuals and families.
What do non-life actuaries do?
Non-life actuaries, also known as property and casualty actuaries, work with insurance companies and other organizations that provide coverage for events that are not related to mortality or morbidity. They deal with risks such as natural disasters, accidents, and product liability.
What is the difference between life and non-life actuaries?
The main difference between life and non-life actuaries is the types of risks they deal with. Life actuaries focus on mortality risk, morbidity risk, and investment risk, while non-life actuaries focus on other types of risk such as natural disasters, accidents, and product liability. Additionally, life actuaries tend to work with insurance companies and pension funds, while non-life actuaries work with a wider range of organizations that provide different types of coverage.
Life Actuaries
Life actuaries work primarily in the life insurance and pensions industries. They are responsible for managing risks associated with life insurance policies, including mortality risk and morbidity risk. Mortality risk refers to the likelihood that a policyholder will die before the policy expires, while morbidity risk involves the probability of a policyholder becoming disabled or seriously ill before the policy expires.
Health actuaries are a subcategory of life actuaries and are responsible for assessing and managing the financial risks associated with healthcare. They work with health insurance companies, government agencies, and other organizations to develop health insurance policies and manage the costs associated with medical care.
Pension actuaries, on the other hand, work with pension funds to manage the financial risks associated with providing retirement benefits. They assess the likelihood that the fund will have enough money to pay out benefits to retirees and make recommendations on how to manage the fund to ensure it remains financially stable.
Non-life Actuaries
Non-life actuaries, also known as property and casualty actuaries, work with insurers and other organizations to manage the risks associated with accidents, natural disasters, and other events that could result in financial losses. Property and casualty actuaries assess the risks associated with insuring property, such as homes and businesses, and work with underwriters to determine appropriate premiums. They also assess the risks associated with other types of insurance, such as car insurance and liability insurance.
Other areas where non-life actuaries work include risk management for corporations, banks, and government agencies. They are responsible for developing and implementing strategies to manage risk and ensure financial stability.
How to Become an Actuary
Becoming an actuary typically requires a strong background in mathematics, statistics, and computer science. Most actuaries have a bachelor’s degree in a relevant field, such as actuarial science, mathematics, or statistics.
After completing a degree program, aspiring actuaries must pass several exams to become certified. The number of exams required can vary depending on the type of actuary and the employer. For example, life insurance actuaries typically must pass a series of exams offered by the Society of Actuaries, while non-life insurance actuaries may need to pass exams offered by both the Society of Actuaries and the Casualty Actuarial Society.
In addition to passing exams, aspiring actuaries may also need to complete internships or gain work experience in related fields, such as accounting or finance.
Conclusion
Actuaries play a critical role in helping individuals and organizations manage risk and make better financial decisions. The two main types of actuaries, life and non-life, each deal with different types of risks and work with different types of organizations. Becoming an actuary requires a strong background in mathematics and passing a series of exams, as well as gaining relevant work experience. If you have an interest in mathematics and finance, becoming an actuary may be a fulfilling career option.