- Actuarial Assumption
- An actuarial assumption is an estimate of an uncertain variable input into a financial model, normally for the purposes of calculating premiums or benefits. For example, a common actuarial assumption relates to predicting a person's lifespan, given their age, gender, health conditions and other factors. Actuaries use large tables of statistical data which correlate the uncertain variable to a variety of key predictive variables. Given the values for the predictive variables a sound actuarial assumption can be made for the uncertain variable.
Actuarial assumptions are important because they allow for the equitable transfer of risk in many situations. For instance, when underwriting life insurance policies, it is important to understand the probability that the insured might pass away during the policy period. Given an accurate actuarial assumption for this probability, it is easy to calculate a fair premium for such a policy. Without the ability to accurately figure these probabilities, very few people would be willing to provide insurance. If they were, it would have to be more expensive to allow room for unexpected losses.

*Investment dictionary.
Academic.
2012.*

### Look at other dictionaries:

**Actuarial science**— are professionals who are qualified in this field through examinations and experience. Actuarial science includes a number of interrelating subjects, including probability and statistics, finance, and economics. Historically, actuarial science… … Wikipedia**Actuarial notation**— 1. net single premium of insurance (benefit 1 unit) 2. paid at the moment of death 3. for x year old person, for n years 4. life insurance 5. deferred (m year) 6. with double force of interestActuarial notation is a shorthand method to allow… … Wikipedia**de Moivre's law**— For the identity connecting complex numbers and trigonometric functions, see de Moivre s formula. De Moivre s Law is a survival model applied in actuarial science, named for Abraham de Moivre.[1][2][3] It is a simple law of mortality based on a… … Wikipedia**Germany**— /jerr meuh nee/, n. a republic in central Europe: after World War II divided into four zones, British, French, U.S., and Soviet, and in 1949 into East Germany and West Germany; East and West Germany were reunited in 1990. 84,068,216; 137,852 sq.… … Universalium**Professional Oversight Board**— The Professional Oversight Board (POB), formerly known as the Professional Oversight Board for Accountancy, is a UK regulatory body specializing in the accounting, auditing and actuarial professions. It is a part of the Financial Reporting… … Wikipedia**Analysis of variance**— In statistics, analysis of variance (ANOVA) is a collection of statistical models, and their associated procedures, in which the observed variance in a particular variable is partitioned into components attributable to different sources of… … Wikipedia**Survival analysis**— is a branch of statistics which deals with death in biological organisms and failure in mechanical systems. This topic is called reliability theory or reliability analysis in engineering, and duration analysis or duration modeling in economics or … Wikipedia**Doomsday argument**— World population from 10,000 BC to AD 2000 The Doomsday argument (DA) is a probabilistic argument that claims to predict the number of future members of the human species given only an estimate of the total number of humans born so far. Simply… … Wikipedia**Annuity (European financial arrangements)**— An annuity can be defined as a contract which provides an income stream in return for an initial payment.Immediate annuityAn immediate annuity is an annuity for which the income stream begins at a time after the initial payment which is less than … Wikipedia**100-year flood**— For other uses, see 100 year flood (disambiguation). A one hundred year flood is calculated to be the level of flood water expected to be equaled or exceeded every 100 years on average. The 100 year flood is more accurately referred to as the 1%… … Wikipedia