With the actuarial profession outlined and the FSA overviewed, let’s begin with the most popular Fellowship subsection: The individual life and annuities path. People may flock to this path more than general insurance or retirement benefits because of the especially lucrative opportunities, many of which see strong potential for progression within the company.
Furthermore, life and annuity actuaries have both consulting and traditional roles available to them, as the need for their unique skillset exists in both Human Capital Management Consulting* as well as in life-focused insurance companies like this* director position at Prudential.
These actuaries’ ability to mitigate a company’s risk by advising on product pricing and to encourage stability by defining costs despite difficult quantification (“reserving”) make their skills valuable and therefore desirable. Since a life actuary focuses on life (and death) expectancy, they tend to deal with the question “when” as opposed to “what.” For example, if a woman dutifully purchased a life insurance plan at her entry level job out of college, the continued to contribute to it throughout her successfully career, an actuary will have complete, data-backed knowledge of how much her family will receive when she passes as well as how that will impact her insurer. However, the actuary does not know, and therefore will attempt to determine, when she will ultimately die; this uncertainty indicates why the “when” question needs answering regarding life insurance (we will dive into other paths’ what/when in future posts).
Those working for direct life insurers, such as Prudential or New York Life, will consider only their own company’s insureds and the impact a claim (or many claims) will have on the financial stability of the firm. Per the description of the actuarial profession (see posts one and two), risk management takes priority here since a successful actuary will effectively mitigate his or her company’s risk by forecasting death dates and thus advising on adequate preparation for claim influxes. Contrarily, a life actuary at a consulting firm, such as Willis Towers Watson or Pryor Personnel, will manage the risk of client companies by analyzing their data and advising on asset and capital allocation with respect to expected claim rates over time.
To get to this point, however, an actuary needs to pursue the Individual Life and Annuities FSA track, which includes three life pricing and risk specific exams. The Life Pricing and Life Finance and Valuation exams each take 5.5 hours and have an essay-based format. The Life Risk Management exam (or substitutable Enterprise Risk Management exam) takes 2.25 hours and also consists of a business focused essay. Alongside the exams, ILA candidates must pass four modules, with Regulation and Taxation and Financial Economics unique to ILA. Otherwise, the FSA in Individual Life and Annuities has few differences from the other Fellowships, of which we will next delve into Group and Health.
