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Quick Answer

An actuary uses data to analyze and evaluate risk. They commonly work with insurance companies, businesses, and government entities.

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Detailed Answer

Actuaries use mathematics, statistics, and financial theory to study uncertain future events. Many businesses hire actuaries to analyze, manage, and reduce financial liabilities. Their skills are great for making informed decisions about finances. 

Actuaries work especially closely with insurance and pension programs. In Long-Term Care Insurance, actuaries help with many important aspects of policy design. 

These responsibilities include: 

  • Estimating the probability of needing long-term care. Actuaries use age, sex, health status, and family history to set fair prices for policyholders and insurers. 

  • Projecting the cost of long-term care. Actuaries assess long-term care cost data to predict future costs and set premiums that are sufficient to cover the increasing cost of care. 

  • Designing Long-Term Care Insurance products. Actuaries design products with different coverage and benefit levels to meet the needs of different people. 

  • Regulating LTC Insurance. Actuaries work with government agencies to develop regulations and consumer protections. They also help insurance companies get the regulatory information they need to get approval for or change their products. 

Actuaries also determine premium prices and increases. They'll use historical and current company and economic data to set fair prices. It's their job to make sure policies aren't under or overpriced. 

When a Long-Term Care Insurance company wishes to get approval for a premium increase, the company's actuary prepares a request. Then an independent actuary reviews the request on behalf of the state's insurance department. 

Their main goal when evaluating premium increases is to ensure it's necessary. The company's request will only gain the state's approval if actuaries prove a significant need to raise prices. For more information, you can read our article on Long-Term Care Insurance premium increases

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