Yes! They automatically moved you to another kind of spectral world where you could recover. It happened to me quite a lot when I died that I had to go back and it was a hassle although through the portal sometimes I could go back and it was less laborious.
Really when I played it I could not believe it was developed for PS1, I understand that in the early 2000s as you say they developed the later versions of Blood Omen (which I plan to play) which is the first and this one, but from there I think they did not release more, the closest was an MMO based on the world of Nosgoth but it had nothing to do, it would be great if they released a new version with the new graphics engines.