The D stands for Death/Debt. Typically I use about $10,000 to $15,000 for final expenses, and add to this whatever consumer debt the family might have.
The I stands for Income. I've seen many financial professionals recommend taking the bread winner's yearly income and multiplying it by 10.
The M stands for Mortgage. This is an easy one. Just take a look at the remaining balance on the most recent mortgage statement.
The E stands for Education. If the family wants to fund its child's/children's post secondary education, consider that a typical university education tuition fee in Canada is at least $4000 or $5000 per year, per child, but could be $8,000/yr or higher depending on the school. Calculate accordingly.
In the my post Whole Life vs. Term Insurance, Round 2 I mentioned a 35 year old male looking to protect his family. If this male bread winner had a wife and two children about 5 and 8 years old, as well as a mortgage and some personal debt, his insurance need might be as follows:
Debt/Death = $40,000 ($15,000 final expenses + $25,000 in student loans/car loans/credit card debt)
Income = $450,000 ($45,000/yr x 10)
Mortgage = $180,000
Education = $40,000 ($5,000/yr x 4 years x 2 children)
If we add all of these values up, we find that the insurance need for this man is $710,000.