1. In investing, income that is earned through the sale of an option. The writer of an option earns pmium income; the buyer of the option pays the writer a pmium in order to have the right (but not the obligation) to exercise the option at a fixed price and specified date.
2. In insurance, revenues that an insurer receives as pmiums paid by its customers for insurance products. When a customer purchases an insurance product, such as a health insurance policy, the customers cost for a specified term of the policy is called the pmium.
1. An option's original sales price is referred to as its pmium; this is the price that the buyer of a put or call must pay to the seller (writer) of an options contract. Investors can profit by writing covered options contracts when the underlying stock is owned; or by writing a naked option if the underlying is not owned. If the option expires without being exercised, the option writer profits by the full pmium amount.
2. An insurance company's pmium income is revenue that is derived from pmiums paid by customers. Premiums are paid for all types of insurance policies including health, automobile and home. A pmium is the cost paid for coverage under the policy for a certain period of time. This excludes other sources of revenue such as investment income.