Actuarial science is a discipline employed by the insurance industry for the purpose of assessing the risk on events being considered for the issuance of insurance policies (a process referred to as "underwriting.") By applying methods of mathematics and statistics, actuaries (professionals qualified in the field of actuarial science) apply complicated risk models to life events and determine a probability factor with which those events will occur. That probability factor is used by the insurance company to set a "premium," or insurance policy fee relative to coverage of that event. The higher the probability of a given event occurring, the higher the premium or the more expensive the insurance policy will be to maintain.

In the instance of health insurance, patients with "pre-existing conditions" will face higher premiums due to the higher probability that their condition will reoccur especially in the presence of factors prone to exacerbate said condition. For instance, a middle-aged man who is overweight and who has suffered multiple heart attacks would most probably face higher insurance premiums than a man of 25 who is physically fit and healthy, unless the 25-year-old engages in activities or occupations that involve a high degree of danger.

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