What happen when a player's character dies in an ongoing campaign?
Does he/she create a new character?
If so, what level is the new character?
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It all depends on what is available.
Firstly, lets just cover exactly when a PC actually dies:
Just because they reach 0 HP, doesn't necessarily mean they're dead.
Now, as for what happens afterwards: it all depends on your game, and the DM. For the most part, there are ways to bring back party members from death, and the Resurrection spell is one such way.
You touch a dead creature that has been dead for no more than a century, that didn't die of old age, and that isn't Undead. If its soul is free and willing, the target returns to life with all its hit points.
This spell neutralizes any Poisons and cures normal Diseases afflicting the creature when it died. It doesn't, however, remove magical Diseases, curses, and the like, if such affects aren't removed prior to casting the spell, they afflict the target on its return to life.
This spell closes all mortal wounds and restores any missing body parts.
A Caster in the party can learn this, if they are of high enough level, or, you can likely quest for a healer to do so. That is, of course, if the DM allows it. Talk to them to discuss the possibility.
That said, there are certain quests (Tomb of Annihilation, for example), where the whole point is that PCs cannot be resurrected, and it is up to the party to cure the land of the curse that prevents this.
In the meantime, since Resurrection is often not a straight-forward event, it might be worthwhile to roll up a new character, or perhaps take over the role of an NPC that has joined the party, or whatever, as a stand in so you're still a part of the game.
Otherwise, if all of these are not a possibility in your game, you will have to roll up a new character. As for what the character level is, that is something to discuss with your DM. Boosting your PC level would depend on the level the rest of the party is at.
Surely this topic must be addressed in there. I mean its an experience that will happen to every playing group eventually.
Well, if you look at page ... just a sec ... page, um ... can't seem to find it. The index has "Death Dells (Abyss)" and "Death Domain" but no "death" ... they wouldn't have left this out? Surely not.
Oh wait, I was foolishly thinking that because it was called the Dungeon Master's Guide it might actually contain guidance for Dungeon Masters. Silly me.
OK, rant over ...
The rules for dying are on pp. 197-198 of the Player's Handbook - either you can be killed by massive damage or by failing enough death saving throws.
After you are dead there are a number of spells that can bring the character back to life:
The spell Gentle Repose (2nd level: Cleric, Wizard) can stretch the time limit on any of the spells by 10 days per application. The spell Animate Dead (3rd level: Cleric, Wizard) can allow you to make use of your late, lamented colleague and make them responsible for hauling themselves back to town for some high-level magic.
Having reached the he's dead, Jim point the usual response is the player goes through the five stages of grief. Be warned, only experienced players go through them as quickly as Homer Simpson and the anger stage can involved improvised missile weapons in the form of dice and pencils.
The player really only has 2 options:
Option 1 is simple and clean, they pack their gear, pay for their share of the pizza and walk out of everyone's life never to be seen again.
So let's think about option 2. Well ...
And here they are:
Do you pause the game while the player makes a new PC or just send them to the corner of shame with a pile of d6s?
The player can get cracking straight away in either case - the question is about the rest of the group. I would suggest that you should play out the rest of the encounter and then decide after that.
Do you introduce the character as soon as they are ready or do you make the player sit on the sidelines playing with their phone and saying "Are we there yet?" every 2 minutes?
My take: you stick the PC in as soon as its ready and bend the narrative to make it fit. If that leaves some thinking the fix is a just so story that's because it is. If that jars some people's sense of verisimilitude: tough - we're here to play and one person sitting on the sidelines is not "playing".
Does the new PC start at 1st level, or the level of the previous character, or a level below their previous level, or the lowest level character in the party, or ...
Dropping a 1st level PC into a 12th level party is clearly not going to work - the player would be rolling up another new character one round into the next combat encounter. The new PC must be of sufficient power to survive the encounters the party will have. D&D 5e has bounded accuracy so being a level or 2 behind is not the end of the world. It really depends on whether you think the player should be mechanically punished for PC death.
Does the PC own the previous PC's stuff? Or, do they get their own stuff?
Gear and magic items are not critical in 5e to a PC's success. However, introducing unearned items can cause a perverse incentive to seek out death so the next PC is more powerful. Of course, punishing people for losing a PC is a bit onerous. No right answer.