Becoming an actuary requires dedication, mathematical aptitude, and successful completion of a rigorous series of professional examinations administered by the Society of Actuaries (SOA). This comprehensive guide will walk you through each exam, their requirements, and the recommended order of completion.
The journey to becoming a Fellow of the Society of Actuaries (FSA) begins with the preliminary exams, advances through the Associate of the Society of Actuaries (ASA) designation, and culminates in fellowship-level examinations.
Contents
Preliminary Examinations
The preliminary exams establish your foundational knowledge in probability, financial mathematics, and basic actuarial concepts. These exams should be taken in the following order:
Exam P: Probability
Exam P tests your understanding of basic probability concepts, random variables, probability distributions, and basic calculus-based probability. Topics include univariate and multivariate probability distributions, moment generating functions, and probability calculations. This exam consists of 30 multiple-choice questions completed in a three-hour sitting. Many students begin their actuarial journey with this exam, as it closely aligns with college-level probability courses.
Exam FM: Financial Mathematics
Financial Mathematics focuses on the fundamental concepts of financial mathematics, time value of money, annuities, loans, bonds, and general cash flow applications. The exam covers interest rate measurement, yield rates, present and accumulated value calculations, and basic financial instrument pricing. Like Exam P, it consists of 30 multiple-choice questions in a three-hour period. Students often take FM as their first or second exam, depending on their background.
Exam IFM: Investment and Financial Markets
Building upon FM, this exam delves deeper into investment and financial markets, covering topics such as derivatives, options, asset pricing models, and portfolio management. The exam consists of 30 multiple-choice questions in a three-hour period. IFM should be attempted after completing both P and FM.
ASA Requirements
After completing the preliminary exams, candidates must fulfill additional requirements for the ASA designation:
Exam STAM: Short-Term Actuarial Mathematics
STAM focuses on loss frequency and severity modeling, aggregate loss models, risk measures, construction and selection of parametric models, and credibility theory. This exam consists of 35 multiple-choice questions completed in four hours. It builds upon the probability concepts from Exam P and should be taken after completing the preliminary exams.
Exam LTAM: Long-Term Actuarial Mathematics
LTAM covers long-term insurance and annuity models, including survival models, life tables, multiple state transition models, and pension plans. This five-hour exam includes both written-answer and multiple-choice components. LTAM requires a strong foundation in probability and financial mathematics, making it appropriate to take after P, FM, and preferably STAM.
Fellowship Track Requirements
After achieving ASA status, candidates choose a specialty track for FSA designation. Each track has its own set of examinations:
Individual Life and Annuities Track
This track includes two fellowship exams focusing on individual insurance products, pricing, valuation, and risk management. The exams are typically five hours long and combine written-answer and multiple-choice questions. Topics include product development, regulatory requirements, and investment strategies for life insurance and annuities.
Retirement Benefits Track
The retirement track examines pension plans, retirement benefits, and social insurance programs. Two fellowship exams cover funding methods, regulatory requirements, plan design, and investment policies for retirement programs. These exams emphasize both theoretical knowledge and practical applications in pension management.
Group and Health Track
This track focuses on health insurance and employee benefits. Two fellowship exams cover healthcare systems, medical expense insurance, disability insurance, and long-term care insurance. Candidates learn about healthcare financing, provider reimbursement methods, and managed care concepts.
Additional Requirements
Beyond examinations, candidates must complete:
- Validation by Educational Experience (VEE) in economics, accounting, and mathematical statistics
- Technical Skills Course (TSC)
- Decision Making and Communication (DMAC) Module
- Professional Development Component
Study Time and Preparation
Each exam typically requires 300-400 hours of study time. Many candidates spend three to four months preparing for each exam while working full-time. The entire journey from beginning to FSA typically takes 5-7 years, though individual progress varies significantly based on study dedication and work commitments.
Professional Resources
The SOA provides study notes, sample questions, and detailed syllabi for each exam. Additionally, several third-party providers offer study manuals, video lessons, and practice exams. Most employers support actuarial candidates by providing study time and covering exam fees and study materials.
Success in actuarial exams requires not only mathematical ability but also strong time management skills and persistent dedication to studying. Each passed exam brings you closer to a rewarding career in actuarial science, where you’ll apply your expertise to solve complex financial and risk management challenges.
