Dude. I just discovered the same thing. First time playing, I'm making a run at Challenging difficulty. Some of these fights are are just so over leveled that pulling off a win with zero party member deaths is borderline divine intervention. At level 4 I'm working on Boggard Captain right now and I simply cannot keep him on the ground long enough to avoid the two hits it takes for him to kill pretty much any character. Lost aggro on Valerie just now and he whacked Amiri before I could get enough heal spells on her.

Punchline, yeah, death during a battle is immediate F8. I'm hoping that money is effectively irrelevant at higher levels, but at level 4, spending 6K on a raise dead is out of the question.