If a character dies, and the player wants to create a new one rather than attempting to get their character raised, then the new character will start one level below their old character.
I posted 'minimum party level ' - but that level is defined as "three levels below the highest-level PC'. And new PCs always have at least half the XP of their previous XP, so at low levels they won't be more than 1-2 levels below their previous PC.
We use the bottom of the level below their current ex-character. We also give only half expected treasure for equipping purposes.
This is to encourage the player and the other PCs to raise the old walking plot hook (sorry, character) from the dead, otherwise death can end up as a rewarding way to try out a brand new tricked-out PC.