Ezra, two great questions. In fact, I thought it'd be easy until I realized there were two!

Whole (permanent insurance) or term (temporary) - do you have a permanent, or temporary need?

Most needs are temporary. The problem is always that if you get 10 year term, what happens year 11, day 1. There are ways to plan for decreasing insurance needs, but it's always a consideration.

There are valid permanent needs - business owners covering their buy-out costs with insurance, clients with estate liquidity needs - but it is few, and fewer if the estate tax exemption stays high.

How much should you spend? That's the quick answer (though very complex) - like most personal finance questions, it depends.

If you died yesterday, what promises do you have to keep? How big are the priorities that can't be met with your current assets? How's your health?

In the end, the cost is the cost. The trade-offs come in what's higher on your priority scale and what can fit in the budget, rather than how much should you spend. And don't make it a guilt item - for example don't give up vacations with your loved ones now, to max out the insurance... those memories may mean more to your heirs than keeping 100% of their prior standard of living should they need to collect... it all depends on your priorites....

In my experience in preparing financial plans for individuals I have found that the majority need inexpensive term coverage. The financial plan needs analysis shows me how much insurance coverage a person needs to meet the ongoing cash flow requirements of survivors. That is the amount of coverage I recommend and this is reviewed regularly. Buy for a term that covers you to projected retirement date. The younger you are when you buy this coverage, the less expensive it will be.