Is Actuarial Science a Good Major? A Look at the Pros and Cons

Actuarial science is an interesting major that not many students know about. As an actuarial science major myself, I often get asked – is actuarial science a good major? The answer is not straightforward. Actuarial science has some great advantages but also some potential drawbacks to consider. In this article, I’ll go over the pros and cons of majoring in actuarial science to help you determine if it’s a good fit for you.

What is Actuarial Science?

First, let’s start with an overview of what actuarial science is for those unfamiliar with the field. Actuarial science applies mathematical and statistical methods to assess risk in the insurance and finance industries. Actuaries quantify, model and manage risk and uncertainty. They help companies assess the risk of certain events happening and how much money they need to hold in reserve to pay for claims if those events occur. Actuaries are essential for the business operations of insurance companies, pension funds, banks, investment firms and other corporations.

Some of the major areas actuaries work in include:

• Life and health insurance – Analyzing mortality rates, morbidity rates and longevity to price insurance policies.

• Property and casualty insurance – Estimating the likelihood of accidents, natural disasters and other claims.

• Finance and investment – Quantifying investment risk and structuring portfolios to optimize return

• Pensions – Projecting pension plan assets and liabilities to determine funding levels.

To become an actuary, you must pass a series of rigorous actuarial exams covering probability, statistics, finance, economics, and actuarial science. The path to becoming a fully credentialed actuary can take 5-10 years after college.

The Pros of an Actuarial Science Major

So now that you know what the major entails, let’s look at some of the key advantages of studying actuarial science:

1. Great job prospects

Actuarial science consistently ranks as one of the top majors for employability. Jobs are plentiful for qualified actuaries. According to the U.S. Bureau of Labor Statistics (BLS), the job outlook for actuaries is projected to grow 24% from 2016 to 2026, much faster than average.

As technology develops and companies take on more complex risks, demand for actuaries continues to increase. Most actuarial students receive job offers before graduation. Even during recessions, actuarial science majors enjoy relatively low unemployment.

2. High pay

In addition to good job prospects, actuarial science also offers very high compensation. Actuaries have consistently ranked among the top 5 highest paid professions in the United States, with a median salary of over $100,000 according to the BLS.

Entry level salaries start reasonably high and increase quickly as you gain credentials and experience. Consulting firms and financial services companies tend to pay the highest salaries for actuaries. Geographic location also impacts salaries, with major metro areas paying more. However, even in lower cost areas, actuaries make well above average incomes.

3. Interesting and challenging work

Actuarial work applies advanced mathematics to real world business problems. If you enjoy math, statistics, and technical problem solving, it provides an outlet to use those interests in a practical way. The work provides intellectual stimulation by requiring creative analytical thinking.

Since actuaries gain exposure to multiple industries, the job also offers variety. Actuaries get to investigate different types of risks, work on diverse issues, and develop novel solutions. Every day presents new and thought-provoking challenges.

4. Good work-life balance

Compared to some other high paying majors like engineering or computer science, actuarial science offers relatively good work-life balance.

Actuaries tend to work around 40-50 hours per week on average. There are busy periods around certain deadlines, but most of the time the hours are reasonable. It’s possible to maintain a healthy work-life balance, especially once you gain some experience.

Actuarial careers also provide flexibility. Many actuaries have options to work remotely, set flexible schedules, or take extended leaves if desired. Overall, the work-life balance is better than many other lucrative majors.

5. Prestige

While little known to the general public, actuaries have prestigious careers within the finance and insurance industries. They gain advanced technical skills to evaluate and price risk for multi-million dollar companies.

Actuaries are highly valued for their expertise. They have opportunities to take on leadership roles and influence key corporate decisions. The field offers intellectual challenge and the ability to command high levels of compensation.

Overall, achieving the actuary credentials conveys a high level of achievement and sophistication. Within business and analytics circles, the actuarial profession is very well respected.

Potential Downsides to Consider

While actuarial science certainly has some great advantages, there are also a few potential downsides to contemplate:

1. Intense exams

The actuarial exams require intense preparation and have relatively low pass rates. Getting through exams like Probability, Financial Mathematics and Models for Financial Economics while also handling a full course load takes discipline and time management skills.

Attempting these difficult exams every few months on top of your studies can contribute to burnout. The motivated self-study and pass rates under 50% for some exams means they shouldn’t be taken lightly.

2. Competitive job market at entry level

While actuarial jobs are plentiful overall, the entry level market can be quite competitive. The number of students graduating with actuarial science majors has increased over the past decade.

Top students coming from strong programs will have a much easier time landing jobs right after college. For those without internship experience or from non-target schools, breaking into the field may require persistence.

3. Potential for outsourcing

Some actuarial work, especially basic data analysis and modeling tasks, has been increasingly outsourced to foreign markets. Outsourcing allows companies to reduce costs for routine work.

However, most credentialed actuaries in the US still feel very secure in their jobs. The outsourcing trend has primarily impacted entry level positions thus far. But it does mean students have to differentiate themselves and develop skillsets difficult to replicate overseas.

4. Advancement requires credentials

Within the actuarial field, advancing your career is tightly linked to passing exams. You need to achieve certain credentials to take on leadership roles or work in specific practice areas.

Even with a strong educational foundation, you will find limited career progression without dedicating time outside of work to pass actuarial exams. The exams require hundreds of hours of rigorous self-study and cost over $1000 to take which can be barriers.

5. Potentially dry subject matter

Actuarial science involves lots of statistical analysis and mathematical modeling. The work can be very technical at times without much interpersonal interaction.

If you prefer working directly with people or creative self-expression, the highly analytical nature of the work could become tedious over time. Actuaries need to find fulfillment in intellectual challenges and quantitative problem solving.

Is Actuarial Science a Good Major for You?

Overall, actuarial science offers some outstanding benefits but also requires certain skills and temperaments to thrive. It’s best suited for students who:

• Love math, statistics, and analytical problem solving

• Are extremely disciplined with time management

• Enjoy technical challenges and learning complex concepts

• Can tolerate work involving data analysis and modeling

• Have interest in business, finance and risk management

If that profile describes you and you’re willing to put in the exam preparation hours, actuarial science can be a highly rewarding major. The field offers strong employment potential combined with excellent compensation.

Before committing, research the actuarial exams, career paths, and work environment in depth. Make sure you have a realistic perspective on the workload and subject matter. Also speak with current actuarial students and professionals to gain insights about the pros and cons of the career.

With diligent preparation and passion for the work, a major in actuarial science can set you up for a secure, lucrative and prestigious career. Just weigh the costs and benefits carefully based on your own strengths and interests.