The term premium is an insurance term and is defined as the money that an individual business owner or an ordinary people must be paid for his insurance policy. In the aspect of insurance, the term premium was known as the insurance premium. Once the premium insurance was earned, it was in the form of the insurance company’s income. This premium insurance was also represented as a liability that is why the leasing company was required to supply the range of the claims that was made against the policy. The definition of the term premium on the dictionary of Oxford, it was defined as the amount of money that is worth for the coverage of a particular policy. When the term premium was read as a noun, then its meaning was the money you must pay every time the month ends. The money that is collected from you will go to your car insurance. When the word premium was read as an adjective, then the meaning of the term will be different to its purpose when it was read as a noun. When the term was adjective, the term will indicate something that is in high quality that is why it needs a higher cost of money.