The amount of life insurance you need is usually a function of how much money you make. Basically, the point of life insurance is essentially to replace the income that will be lost by the death of a family member. Thus, how much you need is really based on what you earn, because the popular literature says that you're supposed to be able to invest the life insurance proceeds and have the investment income replace whatever the decedent earned. That's why insurance companies are always on thelookout for people who are way overinsured, because it raises a red flag for them in terms of potential insurance fraud.

I think at one point it used to be advised that you have 10 times your salary in coverage. Now, of course, with the focus on invested insurance proceeds replacing salary, you really need 20 times your salary in coverage. (This is because the authorities all say that, after investing insurance proceeds, you should be able to withdraw 4-5% each year without ever running out of money. Asssuming that 5% would represent the annual salary of the insured, you need 20 times that amount - 20 times your salary - in life insurance coverage)