Death in RPG-style videogames is handled many different ways, depending on the game. If there's not a reasonable chance of death in the game, then players may lose interest because the game is not challenging enough. If the penalty for death is too great, then it may be too discouraging to players, and they may give up on the game.
Here are a few possible approaches to handling in-game death:
Permadeath
This is the most hard-core option. If the characte