PREMIUM (Lat. praemium, profit, reward, prae+emere, to buy), in general, a reward or prize; a consideration. In the law of insurance, the sum of money or consideration (either annual or in a lump sum) which the insured pays the insurers in order to gain a certain amount in the event of some specific loss happening is termed a premium. The word is applied to the fee paid in consideration of being taught a trade or profession. It is also used in the sense of " bonus," as something beyond or additional, as in the phrases, " premium bonus system," " premium system," where a bonus or sum is given in addition to wages in proportion to the value of the work done. On the stock exchange, when a security has not yet been fully paid up, it is customary to quote its price at par, or so much premium or discount. Par represents the amount actually paid up on it, while if it is above the level it is said to be at a premium of so much, or if below at a discount.
Note - this article incorporates content from Encyclopaedia Britannica, Eleventh Edition, (1910-1911)