Premium - Definition and Overview

A Premium can be either

• an expression that something is 'better' than something else; a 'premium product' being considered better than a 'standard product'
• the additional amount paid for something over and above its fair value, in order that it possession can be assured; for example in order to rent a shop there may be a 'premium' paid for goodwill over the actual value of the real estate and premises concerned.

These combine in usage such as Premium rate telephone numbers, the UK Premium Bond, and Premium outlet.

In finance, a Risk premium is the monetary difference between the guaranteed return and the possible return on an investment.