# What subjects are needed to become an actuary?

If you’re considering becoming an actuary, you probably want to know the courses you’ll be required to take in college or university in order to get a job.

**Essentially, the subjects you’ll need to be an actuary are:**

**Calculus****Algebra****Statistics****Probability****Computer Science****Finance****Economics****Business****Actuarial Science (if available)**

Now, let’s look into each of these subjects a bit more closely to understand what they are any how they’ll come in useful in your actuarial career.

## Calculus

Calculus applies mathematical concepts in order to calculate the rate of change of certain quantities.

Calculus courses are often one of the most difficult for aspiring actuaries. The mathematical concepts can be quiet complex. It’s recommended that you take Calc 1 (differential calculus), Calc 2 (integral calculus) and Calc 3 (multi-variate calculus).

As an actuary working in the field, you won’t need to use calculus but it is really important to understand for actuarial exams (learn everything about them here). One of the first actuarial exams is Exam P, and it involves tons of calculus.

Here are some places online where you can learn calculus for free.

## Algebra

Algebra is all about solving for unknown values using formulas and equations.

This course is one that could come in useful in a workplace scenario, but you’ll definitely need it for actuarial exams. All the preliminary exams (the first 7 exams) require you to know some basic algebra.

A common use of algebra in the workplace, as an actuary, is to come up with quick estimations of the impact that one factor may have on another.

For example, if interest rates go up by .05% then reserves decrease by 50,000,000. So we may be able to assume (for the purposes of estimation) that if interest rates go up by 0.1% then reserves decrease by X.

The equation being solved here would be 0.05%/50,000,000 = 0.1%/X. If we solve for X using simple algebra (and trust me, this is a very simplified example) we get that X = 100,000,000.

## Statistics

Statistics is a course that teaches how to collect and analyse data in order to make inferences about a certain population.

An actuary couldn’t get by without having some background in statistics. It’s an absolute must. It’s used on actuarial exams (especially the fellowship exams) and in the workplace.

As an actuary, you’ll need to use your analytical skills and statistical knowledge to determine assumptions that can be used for pricing, valuation, and much more. Calculating accurate and credible assumptions are very important tasks that an actuary is responsible for.

If assumptions are set incorrectly, it can result in insurance premiums that aren’t high enough to cover all the insurance claim payments, company expenses, and profit. Assumptions that result in pricing that is too high may lead to uncompetitive pricing and millions of dollars in lost sales.

## Probability

Probability courses will teach you how to determine the likelihood of an event. You’ll learn about probability distribution functions, cumulative distribution functions, percentiles and more.

This is another course, like statistics, that you’ll use both on your exams and in the workplace. Actually, a lot of the calculus that you learn will be applied to the calculation of probabilities on actuarial exams.

In the workplace, you’re working with probabilities everyday. For example, an vehicle insurance pricing actuary would need to know the probability of people getting in accidents each month.

The probabilities will change depending on the person and the season.

For example, there’s a higher probability that a Canadian driver will get in an accident during the winter when there’s snow on the ground. The seasons affect the probabilities.

All else being the same, males have a higher probability of getting in an accident, and a young 18 year old driver has a higher probability of getting into an accident than a 42 year old driver.

## Computer Science

In a computer science course, you’ll learn how to write code that can be used to automate computer processes.

At first, you may not understand why an actuary would need this, but computer programming skills are actually very important in an entry-level actuarial position.

As you may or may not know, entry-level actuaries use Excel almost everyday. There are times when the same process needs to be repeated over and over again thousands of times.

Well, that would be extremely time consuming and tedious work for someone to do manually, so automating the task would beneficial. Luckily, with computer programming knowledge you can.

For Excel, the coding language is called VBA, and it allows you to automate anything in Excel. It can save you hours of work, and the number of errors in the work drops dramatically.

If you want to know more about how much programming actuaries do, read this post all about it.

## Finance

In a finance course, you’ll learn about financial markets, interest rates, and financial instruments like bonds, shares, equities and real estate work. You’ll also understand how they’re priced and exchanged. Hopefully you’ll also get some exposure to budgeting, income statements, balance sheets and source of earnings documents.

This is another absolute must for an aspiring actuary.

Again, these courses will come in useful on actuarial exams and in the workplace. Exam FM (the financial mathematics exam) is all about determining present values of annuities and loans. It’s important to understand how interest rates work, and the concept of compound interest.

At work, actuaries need to be able to analyse financial statements. They need to understand how financial markets work and how current events may impact the insurance company financially.

## Economics

Economics is the study of production, distribution and consumption of goods and services. You’ll learn about opportunity cost, and the concepts of supply vs. demand.

Knowledge used in economics courses will be very helpful later in your actuarial career and on the fellowship exams (exams 8 through 10).

In a workplace setting, actuaries need to be knowledgeable in these areas in order to make financially sound decisions for the company. They need to understand the full impact of the company’s actions may affect the demand for their product, and even how it may affect supply.

## Business

Business courses will teach you all about corporate structure, business operations, communication, decision making and marketing.

A course in business won’t hurt, but it doesn’t need to be top priority.

As an actuary, you likely won’t need these skills until later in your career. They’re not used much for actuarial exams and entry-level actuaries won’t be relying on them. It’s management that make the big decisions that have to do with the corporate structure and business operations.

So, this is a good course to have if you’re able to, but prioritize all the others first as they’ll help you earlier on in your career and on exams.

## Actuarial Science

Actuarial science courses teach you how to apply concepts from other courses, such as probability and finance, in an actuarial context. You’ll learn about life contingencies and loss models, as well as how to calculate premiums for life insurance and annuities in a simplified context.

It’s safe to say that courses in actuarial science will be used both on exams and in the workplace. Having a general understanding of these will allow you to get through exams faster and depending on your first entry-level position, you may even be able to apply some of the concepts early on in an actuarial position.

## Conclusion

Aspiring actuaries require a very wide scope of knowledge due to the type of work they’ll do. So, if any of these types of courses aren’t included in your degree requirements you should certainly consider choosing them as your elective courses.

If you’re done school already and are missing some of these courses, there are tons of helpful resources where you could learn some of this content, both on YouTube.com and KhanAcademy.org.

The Actuary Accelerator Community also offers Exam P video lessons and tons of other resources to help you kickstart your actuarial career!