I come from a MUD that had corpse retrieval, corpse decay(items drop to ground), completely lootable but nobody would because it was a good community, and 15% exp loss based on current level.

My recommendation:

-No penalty or corpse until level 7. When they reach level 7 and warning comes up that death is no different and they should “HELP DEATH” to learn more about it.
-Offer corpse retrieval that is based upon player level.
-10% exp loss.