Premium: Definition, Meanings in Finance, and Types

A premium is a sum of money paid regularly to an insurance company in exchange for coverage against a specific loss. The premium is based on the insured's age, gender, health status, and the type of coverage desired.

In the context of insurance, a premium is the amount of money paid to an insurance company in exchange for coverage against a specific loss. The premium is based on the insured's age, gender, health status, and the type of coverage desired.

There are two main types of premiums:

• Level premiums: These premiums remain the same for the entire life of the policy.
• Increasing premiums: These premiums increase over time, usually in line with inflation.

The type of premium that is best for you will depend on your individual circumstances. If you want to know more about insurance premiums, you can speak to an insurance agent.

In addition to insurance, the term "premium" can also refer to:

• A reward or bonus given to an employee for good performance.
• A higher price paid for a product or service that is considered to be of higher quality.
• A fee paid to a broker or dealer for executing a trade.

It is important to understand the different meanings of the term "premium" so that you can use it correctly in your conversations and financial transactions.