From Second Life Wiki
Residents take damage from collisions with physical objects. Once the Resident's energy reaches 0%, s/he's send back to the home destination. Residents can not permanently die in Second Life.
Damage Scripting for Weapons
llSetDamage(float damage): Sets the amount of damage that will be done when this object hits an agent. If damage is greater than 100.0, it will instantly "kill" the agent.