A big part of combat should be that you learn to play the lifeforms IMO. For that reason, no upgrade which has been bought with skill points you have gained by levelling up should be lost on death. You should instead respawn with the old upgrades.
You can do other things to encourage not dying, such as:
Prolonged respawn times depending on the strength of your lifeform
Bonuses gained by gaining bonus à la skulks with shotguns
Losing when dying, but without being able to go a level down, à la Path of Exile
A big part of combat should be that you learn to play the lifeforms IMO. For that reason, no upgrade which has been bought with skill points you have gained by levelling up should be lost on death. You should instead respawn with the old upgrades.
You can do other things to encourage not dying, such as: