Losing the battle is enough. Let's look to the future where there may well be instanced, timed content with hard boss battles and entry time restrictions / hard to obtain or expensive pop items. Attempting that when not ready will lose the pop or waste the run.

That should be penalty enough, losing a rank in addition is going to be an extra slap in the face.

OK, right now there is no real incentive not to die, but there is also no hardcore content yet either. But it will come.