A more thorough explanation:

Premium

A premium is the amount of money paid by someone to an insurance company for protection against certain risks. This payment can be made in one lump sum or in smaller installments over the life of the insurance contract.

For example, if you want to insure your car, you would pay a premium to the insurance company. The amount of the premium would depend on factors such as your driving record, the type of car you have, and the level of coverage you want.

Another example would be if you wanted to insure your home. You would pay a premium to the insurance company to protect against risks such as fire, theft, or damage from natural disasters.

The examples illustrate how a premium is the amount of money paid to an insurance company for protection against certain risks. The amount of the premium is based on factors such as the level of coverage and the likelihood of the risk occurring. By paying the premium, the person seeking insurance is transferring the risk to the insurance company in exchange for financial protection.