Death and taxes and mmorpgs

Now to get a bit more gamey

In alot of mmorpgs there's a penalty if your character 'dies'. I'm thinking this is really lopsided. You can't make up for this loss - if you were fighting monsters for loot before, you'll be fighting monsters after the death too - that doesn't make up for having lost, your just doing what you did before.

Take this idea - imagine that after defeating a certain number of monsters, you gain a 'life', so to speak. Once you have this, if your character dies, he suffers no penalties - he just loses the life. And you can have, say, three lives. This way you can store up some protection against your character dying and get ahead if you've died before (because you will die at some point, if only from server issues - this lets you store up something that will remove a future loss).

Or heck, maybe my idea isn't even enough. Perhaps if you die, there's some way of fighting monsters and getting their loot PLUS extra loot until the death penalties costs are made up for.