Actuarial Equivalent

DEFINITION of 'Actuarial Equivalent'

Actuarial equivalent is generally used for applying some measurement to two benefit plans to see if the resulting values are sufficiently close. Often, two or more payment streams of the benefit plans end up having the same present value based on the actuarial assumptions.

For example, actuarial equivalence measurements can be used to compare one specific benefit plan to a standard plan, to see if the plan is comparable in terms of coverage.

BREAKING DOWN 'Actuarial Equivalent'

Actuarial equivalence calculations are done on an average basis, not on an individual basis, and therefore, certain individuals will likely face different out-of-pocket costs under different plans.

RELATED TERMS
  1. Actuarial Valuation

    An actuarial valuation is a type of appraisal which requires ...
  2. Present Value - PV

    The current worth of a future sum of money or stream of cash ...
  3. Out-Of-Pocket Expenses

    An expense incurred and paid for by an individual for personal ...
  4. Kurtosis

    A statistical measure used to describe the distribution of observed ...
  5. Metrics

    A wide variety of tools that managers and executives can use ...
  6. IRR Rule

    A measure for evaluating whether to proceed with a project or ...
Related Articles
  1. Personal Finance

    Insure Your Future with a Career as an Actuary

    If you've got excellent math skills, they can add up to a lucrative career as an actuary.
  2. Home & Auto

    A Look At Single-Premium Life Insurance

    Want to provide for your dependents and finance your own long-term care? Learn more here.
  3. Insurance

    15 Insurance Policies You Don't Need

    Learn how to save money by saying "no" to unnecessary coverage.
  4. Home & Auto

    Long-Term Care Insurance: Who Needs It?

    No one is immune to the possibility of one day needing long-term care - and the costs can deplete a life savings.
  5. Investing

    How to Prepare for the Low Return Environment Ahead

    Learn about the big takeaway from this week’s chart: Investors aiming for higher returns over the next five years should be prepared to stomach more volatility.
  6. Active Trading Fundamentals

    SandRidge's 3 Key Financial Ratios (SDOC)

    Learn more about SandRidge Energy, Inc., a history of the company's performance and financial stability through key financial ratios and its future outlook.
  7. Economics

    A Statistic About the U.S. Economy that May Surprise You

    Learn why many commentators seem to be pessimistically focused on the U.S. economy’s weak wage growth and manufacturing sector trouble.
  8. Economics

    The Current Probability of President Donald Trump

    Predict the current odds of a Donald Trump presidency, and understand the factors that have kept him on top and the looming challenges he faces.
  9. Fundamental Analysis

    Calculating the Coefficient Of Variation (CV)

    Coefficient of variation measures the dispersion of data points around the mean, a statistical average.
  10. Markets

    The Market Chart You Need to See This Week

    This week’s chart helps show why current low levels of stock market volatility look unsustainable and why now is a good time to prepare portfolios for a rockier road ahead.
RELATED FAQS
  1. Do plane tickets get cheaper closer to the date of departure?

    Read about when to buy flights. See how statistics can predict optimal pricing. Read about price volatility over time. Learn ... Read Answer >>
  2. Is Colombia an emerging market economy?

    Learn the definition of an emerging market economy, and understand how Colombia, while not yet developed, meets the standards ... Read Answer >>
  3. What assumptions are made when conducting a t-test?

    Learn what a t-test is, and discover the five standard assumptions that are made regarding the validity of sampling and data ... Read Answer >>
  4. What are some of the more common types of regressions investors can use?

    Learn about the most common types of regressions investors use to model asset prices including linear regressions and multiple ... Read Answer >>
  5. What types of assets lower portfolio variance?

    Learn what type of assets reduce portfolio variance and how modern portfolio theory uses correlation coefficients. Read Answer >>
  6. When is it better to use systematic over simple random sampling?

    Learn when systematic sampling is better than simple random sampling, such as in the absence of data patterns and when there ... Read Answer >>
Hot Definitions
  1. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  2. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  3. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  4. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  5. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  6. Economies Of Scale

    Economies of scale is the cost advantage that arises with increased output of a product. Economies of scale arise because ...
Trading Center