Premium definition

What does Premium mean?

The premium is money paid to an insurer by the insured, in consideration for being insured under a insurance'>contract of insurance.


(1) For securities selling above par, the difference between the price of a security and par. (2) An amount that must sometimes be paid above par in order to call an issue, ie a call premium. (3) Occasionally used and interchangeable with margin or spread when the latter two refer to a percentage above a given amount or rate. (4) The price paid for an asset. (5) The additional price an investor is prepared to pay for an asset with attractive characteristics. (6) The cost of life cover; usually paid monthly but can be paid annually and sometimes quarterly. For most policies the plan will come to an end if the premium is not paid for one month.

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