I've also got a prototype of the death-thingie working now. As the player dies he/she respawn as a new character and all previous equipment and inventory, level etc. will be lost. Journals, Quests and inventory can however be collected again by killing the previous character (who returns as a zombie, kinda like in ZombiU.
Below is a peek at general gameplay ( quest/mission related stuff, shop keepers, inventory etc. )
and a Prototype of Player Deaths: