Like many other careers, actuaries need to pass professional exams that test their knowledge and skill. Actuaries that successfully pass their professional exams are able to move ahead in their career, achieve a higher salary, and obtain more prestigious positions. Actuaries have the option of either taking the professional exams written by the Casualty Actuarial Society (CAS) or the exams written by the Society of Actuaries (SOA). Actuaries wishing to pursue a career in the Property-Casualty industry should take the exams written by the CAS, while actuaries wishing to pursue a career in the Life, Health, and Pension industry should take the exams written by the SOA. Because of the similar content, the first several exams by both the CAS and SOA are interchangeable. Students do not have to worry about choosing either the CAS or SOA path until later in college.
The initial exams are all multiple choice. The exams are pass or fail, with no grades or scores given to anyone other than the individual who took the exam. The exams are significantly more difficult than classroom exams, and a minimum of four weeks of studying should go into preparing for an actuarial exam. The University of Illinois Actuarial Science program has several courses that teach the specific material for the first several exams. In addition, there are weekly review sessions that work though previous actuarial exams and host several mock exams to help students develop a further understanding of the topics they learn in class. Taking these review sessions is highly recommended.
The importance of passing exams cannot be overstated. It is very difficult to obtain a summer internship position without an exam, and it is difficult to obtain a full-time position without two exams. The first exams that you should take include:
Course 1(CAS)/P(SOA) Exam - Probability:
Exam 1/P material covers probability and statistics. Students should ideally take Math 408: Actuarial Statistics I to prepare for this exam, although there are substitutions. Also, students should take the Math 370 Section X review session for further preparation.
Course 2(CAS) /FM(SOA) Exam - Financial Mathematics:
Exam 2/FM material includes interest theory and financial mathematics. Students should take Math 210: Theory of Interest for this exam. However, Exam 2/FM covers additional material on Derivatives Markets, which is not covered in Math 210. Students are encouraged to either study independently or take the Math 370 Section Z review session to cover this additional material.
Course 3L(CAS)/MLC(SOA) Exam - Actuarial Models-Life Contingencies:
Exam 3L/MLC material includes life insurances and annuities, survival models, markov chain models and poisson processes. Calculus, theory of interest and probabilities are fundamental to the exam. Student should take Math 471, 472: Actuarial Theory I and II. Math 210 and Math 408 are prerequisites. Students may wish to take the Math 370 Section Y review session as part of their study process. Additional study time is recommended to pass the exam.
Course 3F(CAS)/MFE(SOA) Exam - Actuarial Models-Financial Economics:
Exam 3F/MFE covers interest rate models, rational valuation of derivative securities, stock price model simulations, and risk management techniques. A thorough knowledge of materials in Exam 2/FM is assumed. Student should take Math 476: Actuarial Risk Theory.
Course 4(CAS)/C(SOA) Exam - Construction and Evaluation of Actuarial Models:
Exam 4/C material includes construction and evaluation of frequency models, severity models, aggregate models, empirical models and parametric models, analysis of credibility and models simulation. A thorough knowledge of calculus, probability, and mathematical statistics is assumed. Student should take Math 478: Actuarial Modeling. Math 408 is prerequisite. Additional study time is recommended to pass the exam.
Validation by Educational Experience (VEE):
As of 2005, certain topics are no longer tested on particular exams. Instead, students must show comprehension of this material through their educational experience. Most students will simply be able to earn VEE credit by obtaining a B- or better in certain college courses approved by the societies, while other options do exist. To see a complete list of the courses approved for the University of Illinois Champaign-Urbana, click here. However, anyone who did pass Exam FM/2 before 2005 was given credit for VEE-Economics and VEE-Corporate Finance topics while anyone who did pass Exam C/4 before 2005 was given credit for VEE-Applied Statistical Methods. To learn more about VEE and different options to obtain VEE credit, visit the Process for Validation by Educational Experience of the Society of Actuaries.
For more information about the exams and greater detail on what is covered on each exam, visit the Syllabus of Basic Education website.
UIUC Exam/Course Comparison:
Exam 1/P: Math 408
Exam 2/FM: Math 210
Exam MLC: Math 471 and 472
Exam MFE: Math 476
Exam 4/C: Math 478