What is the actuarial value?

Actuarial science has helped a lot in the field of economics to predict many actions that are intended to be carried out. Specifically, the term actuarial value is based on the actuarial calculation, which tries to predict or make estimates about the occurrence of certain economic events. To do this, it is based on its possible consequences and scenarios that could be generated, as well as the costes that such consequences would entail.

In order to use this calculation and obtain the actuarial value, it is necessary to have knowledge statistics (especially probability, as well as financial mathematics). In addition, it is especially useful in different areas in which the economy and finance play an important role: insurance companies; banks for mortgages or pension plans; as well as all those areas in which a risk assessment has to be made.

What is the actuarial value calculation for?

The use of statistics and probability assumes that the results or assumptions obtained are thanks to working with random variables (usually there are several, in order to see the influence of different variables that may influence). This serves, as we have indicated, to make projections or create estimates for different scenarios.

Banks, as we have already said, usually play a lot with this value. It is used to calculate a multitude of payments that must or have to be made and that, through the estimates, calculate the exact value that corresponds to your individuals. The correct calculation of these values ​​helps those responsible to obtain good decisions and avoid saving some costs, which is what really matters.

For this reason, when these types of projections are made, the cost is taken into account, which indicates whether or not what is desired to be carried out with greater accuracy is appropriate. Public administrations are also an example of this, for the payment of some of their subsidies or aid.

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