Writing your 1st ACTUARIAL EXAM
How to Pass your Actuarial Exams
An actuary is a professional who works primarily with insurance companies to determine levels of risk management and other financial issues related to insurance coverage. In the United States, most actuaries are licensed by either the Casualty Actuarial Society (CAS) or the Society of Actuaries (SOA).Other countries have their own national actuarial societies which administer the licensing. In nearly all cases, the path to actuarial licensing requires passing a rigorous system of tests. Planning, studying and learning the material for these tests is relatively consistent from one country to the next. This article presents a general outline for successful preparation.
Taking and Passing the Actuarial Exams
Be sure to register in time for the appropriate test.It is entirely your responsibility to know which test you need next, and when it is offered. Find out from the actuarial society website when the exams are offered, and what you need to do to register. Find a location that is convenient to you and register in plenty of time so you will be able to get in.
Arrive early to your testing session.Make sure you allow yourself time to park, to find the room, to register and check in. You want to allow yourself to be in a good frame of mind for the test, and the anxiety of rushing in is not good. If the test location is far from your home, you may even want to consider finding a nearby hotel for the night before the exam. That will allow you to get to the area and get a good night's sleep before the test.
Take a break from studying just before the test.Cramming right through to the test day is not going to be productive. If you have allowed yourself adequate study time in the months before the test, then one more night is not going to make a difference. The final night (or even two) will be better spent getting some good rest.
Pace yourself during the test.If you have used practice tests as part of your study plan, you should have an idea of how fast you need to work through the test. There may be a natural inclination to move quickly, but try to avoid this. Work through the test at a pace that will allow you to complete the test with the time provided.
Read each question very carefully.Then read it again. You don’t want to get an answer wrong just because you misunderstood or misread the question. If you have difficulty understanding the question, try interpreting it with sample numbers in place to see if you can make more sense out of it.
- It may help, as you read the question, to mark important parts of it. Highlight key terms or numbers. Break the question down into separate parts or sub-questions if appropriate. Be sure to answer all parts of the question.
Attempt every question.Read the question, make notes, and try to make sense of what is being asked. At the very least, make sure that you mark down some answer for every question. There is no penalty adjustment to the score for giving incorrect answers, so your score can only improve by filling something in. You may get lucky and guess correctly.
Skip questions if necessary.While you should pace yourself to allow time to answer every single question, there will be some questions that just pose too much trouble. If you find yourself struggling over a particular question, and you cannot seem to find the answer, be prepared to move on.
- Sometimes, questions are presented in “clusters,” with several questions that are based on a single fact scenario. If you find that you have difficulty understanding the scenario, and the first question poses some problems, it would make sense to skip the entire cluster and move on.
- There is no adjustment to your score for incorrect answers, so mark an answer for every question. Make your best guess quickly. Then, if you have time after going through the entire test, come back to the ones you have skipped and spend some extra time on them.
Using Practice Tests as Study Materials
Study released copies of past exams.Many of the actuarial societies release copies of past exams. They do this so you can understand the subject material and use the past tests as a study guide. If you visit the website of the actuarial society in question, you should find a link to certain past exams that have been released. The test administrators are careful to keep some material confidential, but they do understand the value of studying from the actual tests.
Simulate the testing environment.When you are ready to take a practice test, do it under conditions, as much as possible, that simulate the actual testing environment. When you take the actual test, there will not be a television in the background or children running around the house. Find a quiet place to test, with no distractions.
Time your testing session.The actual tests will be timed. Determine what the time limit is on the test that you are practicing, and give yourself that amount of time for your practice test. In the beginning, you may not be able to complete the practice test in that time. If this is the case, then try to work faster. If you find that you finish with too much time left over, then slow down and read the questions more carefully.Learn to pace yourself to use the full amount of time to your best advantage.
- If you happen to get interrupted during a practice test session, make a note of your stopping point and the amount of time left. Then try to pick up where you left off later.
”Grade” your results.After you complete the practice test session, check your results against the answers that are given. Determine the number of correct answers, incorrect answers, and the number of questions that you were unable to complete.
- Do not be put off or worried by low scores in the beginning. This is a long process, and if you continue to study, your scores will improve.
- Keep track of your scores from one test to the next. Chart your improvement.
Study and learn from all your answers.The released tests generally provide not only the correct answers but also explanations for each answer. Read those materials very carefully, for ALL your responses. For the questions you answered incorrectly, you need to learn why you missed them and how you can improve for next time. For the questions your answered correctly, check to make sure that your reasoning was the same as the explanation.
- On the final test, the only thing that matters is getting the right answers, and getting lucky is fine. But during your practice tests, you need to know that you are getting the right answers for the right reasons, so you can duplicate your success.
Make note of the types of questions you get right and wrong.Use the practice test as a way to measure your strengths and weaknesses. Look for patterns in the questions that you seem to get right and wrong. Then, after you have completed a few practice tests, focus your studying efforts on the topics that seem to be your weaknesses. This will maximize the impact of your study time.
Practicing Good Study Techniques
Obtain good study materials.If you are enrolled in an organized program of study for the actuarial exams, you will have textbooks that are required. In addition, you should find supplemental study materials for each course. These may range from study guides, to practice tests, to outlines. You can search online for study materials for each test, or contact a bookstore recommended by the actuarial society. The SOA recommends the following sources:
- The Actuarial Bookstore. At this online site, you can find textbooks, flash cards, and access to online seminars and workshops to supplement your studying.
- Mad River Books. This site organizes its available study materials by exam, including references to actuarial societies outside of the U.S.
Plan adequate time to study for each exam.Cramming at the last minute is not a good substitute for allowing yourself adequate time to study, practice, restudy, and completely learn the material. The SOA recommends allowing yourself at least eight weeks for the first exam.
Make productive use of study time.Try to plan study periods of at least an hour. Longer study times of two to three hours would be better, if you can manage that. The following good study habits can help you get the most out of your study time:
- Set a goal or objective for each study session. This may be to finish a particular chapter, or take a practice test. Allow yourself to go beyond the goal, but don’t cut yourself short.
- Limit interruptions.
- Have all the materials you need at hand -- textbooks, flash cards, study guides. You don’t want to be getting up and down to go get materials once you get started.
- Take occasional short breaks, especially if you find yourself getting tired.
Study “actively.” As you read, make notes. Highlight key topics. If you have questions or do not fully understand something, underline or mark it in some way so you can return to it. Do not just accept what you read. Study fully and understand each concept.
Master each concept before moving on.Depending on the topic you are learning, you will want to learn and practice the early concepts before moving ahead. If you try to advance too quickly, you will not have the base of knowledge that you will need later on. Study each topic, practice it with sample problems and practice tests, and then move on to the next topic.
Knowing Your Testing Requirements
Learn the tests that will be required.Each actuarial society will have its own set of tests that you must pass to attain membership. You will need to review the society’s website and study the material about testing and admission.
- For example, the Casualty Actuarial Society in the United States requires a set of nine exams, ranging from Probability in Exam 1 to Financial Risk and Rate of Return in Exam 9.
- In India, the exams are administered by the Institute of Actuaries of India (IAI). Their exams are arranged in four “stages.” Each stage consists of exams that cover from three to nine distinct subject areas.The stages and their contained subjects are outlined on the IAI website.
Find out if the tests must be taken in a particular order.In many cases, the tests will build in increasing difficulty and content matter. In some cases, you must attain a particular level of work experience before you move from one exam to the next. It makes sense to learn the order of the tests, and find out from the actuarial society whether you can substitute work experience for testing.
- The CAS in the United States provides a very handy “map” that illustrates the order of the tests, with a timeline for coursework and work experience that you should accumulate along the way.
- The Society of Actuaries (SOA) in the United States strongly recommends studying for and taking the tests in the prescribed order. They recommend that you attain a passing score on one exam, or are nearly certain of attaining a good score, before moving on to study for the next exam.
Find out if you can modify the course of study.The study outline that is presented on an actuarial society’s website is often a general outline that will apply to most people. However, if your background includes some work experience or college coursework in finance, accounting, or mathematics, you may be able to demonstrate proficiency in certain subjects and save yourself some time and money by avoiding certain tests.
- The Canadian Institute of Actuaries (CIA), as an example, accepts credentials from the CAS or SOA in the United States. However, the CIA website identifies certain exams that may be exempted by demonstrating adequate proficiency or work experience.
- The CAS in the United States notes that it will honor credits from candidates who have passed certain exams in other countries. They specifically cite the Canadian Institute of Actuaries (CIA), the Institute and Faculty of Actuaries (IFA) from the U.K., the Actuaries Institute from Australia, the Actuarial Society of South Africa, and the Institute of Actuaries of India. If you have passed exams from any of those organizations, and are attempting to gain membership into the CAS, you may want to consider this alternative.
- Be consistent. Schedule a consistent time of day to do your flash card reviews and take your practice exams.
- Use the statistics you have collected to figure out when to slow down studying.
- Get a head start on your next exam when your statistics say your progress is slowing down.
- There might come a time when the cost of improving is too high. Ask yourself how many more hours of studying you are willing to put in to improve the probability of passing the exam by 5%. At this point, you have reached your full potential, under the constraints of how you value your time.
- Don't over-study. You shouldn't try to take more than one practice exam a day, since taking a test while you're tired will hurt your scores.
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