Actuarial science

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Actuarial science became a formal mathematical discipline in the late 17th century with the increased demand for long-term insurance coverages such as Burial, Life insurance, and Annuities. These long term coverages required that money be set aside to pay future benefits, such as annuity and death benefits many years into the future. This requires estimating future contingent events, such as the rates of mortality by age, as well as the development of mathematical techniques for discounting the value of funds set aside and invested. This led to the development of an important actuarial concept, referred to as the Present value of a future sum. Pensions and healthcare emerged in the early 20th century as a result of collective bargaining. Certain aspects of the actuarial methods for discounting pension funds have come under criticism from modern financial economics.

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