Actuaries are the finance, statistics, and business gurus of the insurance world. So if you want to become one, you’re probably wondering what you should major in that’ll give you the background you need to be successful.
Surprisingly, you don’t actually need any degree to be an actuary! Employers really just care that you’re able to pass exams.
But I wouldn’t recommend going into an actuarial career without some sort of degree since it will help you in your career and with exams, as well as increase your employability if you choose the right one.
The best majors for someone looking to become an actuary are either economics, finance, math or statistics. That’s quite a few options so in this post I’m going to go into the pros and cons of each major as it relates to becoming an actuary and how you can choose which major is right for you.
Majoring in Economics
Economics is a popular choice for someone looking to become an actuary. Students that study it learn about the production, distribution and consumption of goods and services.
You’d get a lot of insight into how decisions are made, how markets fluctuate, how financial markets and instruments work, the equilibriums between supply and demand, as well as a good background in financial topics like interest, opportunity costs and diminishing returns.
This is very valuable knowledge for an actuary because interest rates, market supply and demand, as well as financial markets play a big role in the assessment of risk and uncertainty. In fact, 2 of the first 3 actuarial exams (Exam FM and IFM) require an understanding of these topics.
So by majoring in economics, you’d get a very good background in the finance and business side of being an actuary. If you decide to major in it then you’d want to fill some of your electives with courses in statistics, probability so that you get exposure to the other side of the actuarial skillset. A couple computer science courses would be helpful too.
Majoring in Finance
Some of the topics that you’d cover with a finance degree would overlap with those taught in an economics degree. They’re very similar in many ways.
However, a finance degree would put more focus on money, financial markets, and investing. You’d learn in depth about bonds, stocks, equity, swaps, calls and puts, and other financial instruments. You’d even get into assessing risk and putting a value on these instruments.
Many actuarial roles require an in-depth knowledge of these topics. Insurance companies are only able to provide the protection that they do because they make hundreds of investments into financial instruments.
So, although actuaries likely will not be the ones purchasing and selling the company’s investments, they do need to know how these actions will affect the company’s asset portfolio for pricing and valuation purposes.
Similar to economics, a degree in finance will give you background in the finance and business side of being an actuary but you’d have to take some courses in statistics, probability and computer science as electives in order to expand your knowledge in those areas for your career.
Majoring in Statistics
Statistics and probability are the other side of being an actuary. With a degree in statistics you’ll learn how to collect and analyse data. You’ll learn how to get valuable information from it that you can use to make predictions or to get better insight into a specific group of people.
This type of knowledge is critical for an actuary to have. In an actuarial role you’ll need to be able to analyse large amounts of data, find trends, and determine good assumptions to use in order project the data into the future or in order to apply it to a different demographic.
Pricing roles in particular will require these skills because you’d need to be able to gain insight from historic data in order to set your pricing assumptions.
But, as I’ve mentioned in previous sections statistics and probability is only one side of the the actuarial expertise. To be a well rounded candidate you should take courses in finance and/or economics, as well as computer science, for some of your elective courses.
Majoring in Mathematics
As a mathematics major you’ll get exposure to a wide variety of different math related areas. Calculus, algebra, statistics, probability, graphing, problem solving, number theory and optimization will all be included in your required course load. Of course you won’t go into as much depth in areas like statistics and probability that you would as a Statistics major.
These areas of study will certainly help you on actuarial exams. Exam P, for example, requires knowledge in many of these areas. It’s usually one of the first exams aspiring actuaries write.
But since there is such a wide range of topics to be learned by majoring in mathematics you may not learn as much about the application of these mathematical concepts as you would in some other majors.
In fact, concepts like calculus and algebra aren’t typically used in an actuarial position at all. You would, however, be able to use your statistics and probability knowledge in the same way talked about in the ‘Majoring in Statistics’ section above.
Majoring in mathematics is a perfectly fine major but you may find that much of what you learn isn’t very helpful for actuarial exams or on the job. Some of your electives should be in finance and/or economics as well as computer science if they aren’t already included in your mathematics degree requirements.
Majoring in Actuarial science
Majoring in actuarial science is seems to be the most obvious choice for most people. It’s basically the all-in-one major for anyone serious about becoming an actuary.
By majoring in actuarial science, you’ll get exposure to all sorts of different topics, including insurance, economics, finance, statistics, probability, and computer science. It’s literally gives you some background in everything an actuary will need to be successful.
Beyond that, one of the biggest benefits of being an actuarial science major is that you’ll take courses that are specifically designed to teach you the topics on the preliminary exams. This means that you may be able to spend less time studying for the exams since much of the material will be familiar to you.
In Canada, you can even get exemptions from some exams by getting good enough grades in certain courses.
But majoring in actuarial science has one primary downfall. Since actuarial science is such a specialized career path it means that if you decide not to become an actuary after all then the degree doesn’t hold the same value in other professions. Many employers outside of the insurance industry won’t even know what an actuary (or actuarial science) is.
So it is a bit of risk majoring in this. There are numerous reasons that you may decide not to become an actuary in the future. It could be that exams are too hard or that you don’t want to put in the amount of commitment it requires. It could be that you have a hard time finding a job. Or maybe somewhere along the way you’ll decide you don’t like the work that actuaries do.
Because of this one pitfall I wouldn’t recommend majoring in actuarial science even if you’re very confident you want to be one. This one disadvantage outweighs the advantages.
Majoring in Computer Science
If you major in computer science you’ll get a really good understanding of computer coding. But you’ll also take core math related courses (like calculus and algebra) as well as courses in algorithms, data structures and optimization.
While this can be a very interesting major for many people, it probably won’t help much in terms of actuarial exams. It may be somewhat beneficial in an actuarial position (more so in some than others) but you likely won’t be using these skills learned on a day-to-day basis as an actuary.
Because of that, I wouldn’t recommend majoring in computer science if you’re serious about becoming an actuary. It is somewhat related to the career but the other majors mentioned above would provide you knowledge that will be more useful in your career.
Of course, you should take some computer science courses, but do them as electives instead of majoring in it.
However, if you’re extremely interested in computer science and would rather do that more than any of the other major options I’ve talked about above then you should certainly go for it. Like I said in the introduction, your major doesn’t matter all that much. What employers really care about is that you can pass exams.
How to choose your major
Choosing your major really comes down to which of these areas of study sounds most interesting to you. You should do some more in-depth research about the ones that stand out to you. The information I’ve provided here is just a very general overview of what you’d learn under each major.
In the end, any of these majors will certainly help you in your actuarial career. And employers aren’t going to value one major over another.
But if none of these sound interesting to you then you may want to consider another career option. All these areas of study make up the foundation of the actuarial career so if you can’t find interest in any of them then you likely won’t enjoy being an actuary.
Going back to school to major
Fortunately the major that you have as an actuary really doesn’t matter, like I’ve said previously. So, if you’re considering becoming an actuary but don’t already have one of these majors then you don’t need to go back to school to get one.
You may need to do some self-study and review of certain topics through various sources online (here are my favorite calculus review). But by going back to school you’re spending years of your life learning topics that are explained in depth online. And the schooling isn’t even going to give you a better chance of getting a job!
The other nice thing is that there are actuarial study materials for the exams that are really well designed for beginners. It may take you longer to study than some others, but you can still do it without spending all that time and money on getting a degree.
I can even help guide you down the right actions to take at each step of the way while you’re studying for your first exam. Just join the Actuary Accelerator Community.
We’re lucky enough to live in an age where there’s so much available to us, often for free, online. It can save you tons of time, money and stress!
Are online degrees OK?
Since employers aren’t really concerned about your major, it is OK to get a degree online. Many employers probably wouldn’t even know that your degree was achieved entirely online unless you told them.
In fact, on your journey to becoming an actuary you’ll have to complete several online courses, called modules.
As long as you pass 2-3 actuarial exams, actuarial employers will feel comfortable in your ability to understand actuarial math so the degree you get and the method of getting that degree is a personal choice.
But one thing to keep in mind here is that an online degree may not be acceptable for any career. So while an online degree would be OK for an actuarial career you may want to think about what would happen if you decide not to pursue this route.