- File > New Document …
- Facing Pages
- Page Size 7.5" × 10"
- Click on more Options
- Enter the bleed (8.25." − 7.5")/2 and (10.75" − 10.00")/2 You can calculate it before, but in InDesign you can do it in the fields, e.g. write 8.25-7.5 click tabulator, set the curser after the result and write /2 and click tabulator.
- I think the term life area is not completely correct. I think it is meant for the final page size, which is the most important value, normally, life area is the area where important content is allowed and nothing will be cut off.
The specs are incomplete so it is impossible to make anything more than an educated guess about how to set this up, but "live area" would always be smaller than the page size by at least as much as the bleed to allow for shifting without losing important information, so my guess is the actual page size is 8 x 10.5, with .125 bleed all around and .125 margins, but it could easily be something else.
You need to get real specs.
Live area and Safe zone are often used interchangeably, so I'm guessing Peter is right. Search for Print Safe Zone:
InDesign doesn't have a facility for creating a Live Area (something that has bugged me since InDesign 1.0 in 1999).
Follow Will's instructions for the bleed setup, but to create a Live Area you'll need to use guides. Just set your guides on the master page(s) 1/8th of an inch (0.125 inches) in from the page edge on all four sides.
TIP: You can also change the color guides in InDesign before you make them. I typically use green guides to describe my Live Area, which keeps them distinct from margin guides and other ruler guides I create.
I have a 4-minute tutorial on changing guide colors here: Using Multi-Color Guides http://www.trainsimple.com/CourseDetailUserMember.aspx?id=208
Just to add to the excellent advice from others, the Page size is also known as the trimmed page size (TPS) and when you set up a new document in InDesign you set this dimension first and everything else – the bleed, the slug and the margins – are measured from that.