With so many variations on a theme, it is often very difficult to decide which policy offers the best value. Fortunately, providers are becoming increasingly flexible, and the day when you can completely customise your policy is not too far away.

As it stands, the cost of your income protection will depend on a variety of factors:

• The annual level of income you need it to provide. This can range from 50% to 65% of your previous year's income.
  
• The length of time you need it to pay out for. Most policies will pay out for a fixed term (the cheapest), until normal retirement age, or for the rest of your life (the most expensive).
  
• Age. The older you are, the more you are likely to pay. You will not normally be able to get cover beyond normal retirement age.
  
• Sex. Believe it or not, women are statistically much more likely to be off work due to illness. Therefore, if all else is equal a woman's premiums are usually higher than a man's.
  
• Occupation. People who work in extremely stressful or dangerous professions such as firemen may have to pay higher premiums.
  
• Health and medical history. Sometimes you can be refused cover if you have pre-existing medical conditions.
  
• Whether you smoke. With the exception of one major provider, almost all insurers will charge a higher rate to give cover to a smoker than a non-smoker.
  
• The deferral period. The selection of deferral period can have quite an effect on the price of the policy. Obviously, a long deferral period means that the company is less likely to pay out, so the policy is cheaper. If you have a deferral period of 4 weeks, then there is a reasonable chance that you will have several periods of 4 weeks out of work through illness before you retire or terminate the policy. This will make it more expensive.
  
• Definition of disability. The more specific the cover, the more expensive. In other words, if you want to be covered for any injury, illness or disability that will prevent you from going back to the exact same job, you will have to pay more for it. Being unable to perform any sort of job whatsoever is less likely, so it is cheaper to insure against this.
  
• Type of premium. A guaranteed premium may start out to be slightly more expensive than a renewable premium. This is because the insurance company is protecting itself against high general levels of future claims from the beginning. Renewable premiums are cheaper at the start, but you may find that your premiums rise drastically to cope with a really bad financial year for the insurer.