Premium has several meanings in finance. Most commonly, it refers to:

1. Generically, a security trading above its intrinsic or theoretical value is trading at a premium (in contrast to a discount). The difference between the price paid for a fixed-income security and the security's face amount at issue is referred to as a premium if that price is higher than par.
2. The purchase price of an insurance policy or the regular payments required by an insurer to provide coverage for a defined period of time.
3. The total cost to buy an option contract (often synonymous with its market price).