PREMIUM

  1. The total cost of an option.
  2. The difference between the higher price paid for a fixed-income security and the security's face amount at issue.
  3. The specified amount of payment required periodically by an insurer to provide coverage under a given insurance plan for a defined period of time. The premium is paid by the insured party to the insurer, and primarily compensates the insurer for bearing the risk of a payout should the insurance agreement's coverage be required.