How to Explain What an Actuary Is to Kids

For all its perks -- high pay, almost zero unemployment and interesting work -- actuaries are relatively unknown, even though the field was rated by as the No 1. 1 job of 2013 13. According to the U.S. Bureau of Labor Statistics, actuaries use a variety of types of math to figure out how likely events are to happen 24. Explaining to your child what an actuary does is significantly simpler than performing an actuary's job.

Put the object and $1 bill in front of your child and ask him the following questions: "Do you think the object is going to turn into a bird and fly away?" "Do you think this object will catch on fire in our house?" "If you took the dollar outside and left it on the sidewalk, do you think someone else would take it?" "You can buy a small pack of gum with this dollar today. If the price of gum goes up a little bit every year, do you think you will be able to buy a pack of gum with this dollar when you are 45 years old?"

Help your child to critically think about the answers. For example, "This dollar will probably not just catch on fire by itself, so how would it catch fire? By being close to fire. We use fire in the kitchen, so would it be more likely to catch fire if it were close to the fire or far away? If it is in the living room where we never have a fire do you think it would be more likely to catch fire than if it were in the kitchen? In our house, the dollar is safer in the living room than it is in the kitchen."

Explain that an actuary is someone who assesses the probability of certain events happening based on what are called "risk factors." For example, "We just thought about this dollar and answered questions about things that might happen to it. An actuary is a person who does the same thing. He uses risk factors to answer the questions. Risk factors are what might be dangerous to something. When I asked you about the object catching fire, one of the risk factors was whether fire was being used in the same room as the object."

Explain to your child that people and companies want to know how likely it is that events might happen so they can decide how much to charge for things such as insurance. They also need to know how much money should be set aside now to pay for something in the future, such as with retirement plans or pensions.

2016 Salary Information for Actuaries

Actuaries earned a median annual salary of $100,610 in 2016, according to the U.S. Bureau of Labor Statistics 24. On the low end, actuaries earned a 25th percentile salary of $74,480, meaning 75 percent earned more than this amount. The 75th percentile salary is $140,190, meaning 25 percent earn more. In 2016, 23,600 people were employed in the U.S. as actuaries.