You underestimate the amount of Bars that can be there optionally. Sure, Heath is one that is the most commonly seen in Games, but Endurance, Experience, Poison, Force Fields, Energy, Magic, Hunger, Thirst and a LOT more can exist, not just Armor. And Hunger itself could even be split into basic Nutrients, so that might be something people do.
Also please be considerate to Colorblind people, the Bars will feature a Bright Color on a Dark background with an Icon next to them. They will ofcourse have actual Color so the non-colorblind people can see the difference easier, but nothing fancy like change of Color like in Pokemon.
That is settings based. A lot of things can be customized. 
But if it is set to be a Key Item, then it stays with you, but it will drop a fake Bag containing all your Stuff along your corpse, for easier pickup.
There will also be a Wallet Key Item, that specifically stores Money. So you only drop a certain percentage of Money upon death (in addition to all Money you decide to NOT store in your Wallet), but using the Wallet has the downside of Pick Pocketing being possible for example. But this is just an interesting Mechanic i thought about.
Oh yes, that will require a lot of thinking as well, like being able to combine Headbands with Hats and Helmets and Headphones and Glasses and Facemasks (totally not topical joke here). How would a DBZ Scouter count? As Left Monocle + Left Headphone? What about (decorative) Contact Lenses, those clearly are not like Glasses, so those get a Slot too. Just TOO MANY THINGS!!!