I prefer ibeam cursors to the block ones, I find them less obtrusive. However, I could not find an option to modify the cursor shape in the XFCE terminal preferences; until I looked under the hood. In
~/.config/Terminal/terminalrc the value of
MiscCursorShape is set to
TERMINAL_CURSOR_SHAPE_BLOCK by default. Change it to
TERMINAL_CURSOR_SHAPE_IBEAM for an ibeam cursor or to
TERMINAL_CURSOR_SHAPE_UNDERLINE if you want an underline.
I wish all application developers kept an underlying readable text file for configuration. In addition to being light-weight and portable, they are transparent and offer an efficient way of configuration, without having to even start the application.