the things you are referring to:
1. sleep at an inn
2. item: phoenix down
3. revive spell by a cleric
your current party has 3 healers,(bard,paladin,monk) utilize that advantage so that no one falls in combat!
however- when someone does- it's supposed to be inconvenient for you.
Did you ever play final fantasy 1? LOL.
How it is currently is absolutely perfect. Death should be meaningful to get you to be careful and build your characters up in certain areas.