Loss of a blade certainly means shutdown of the engine. This is normal, accepted, and accounted for. It has happened before on a Falcon 9 flight (shutdown of an engine, I mean, I don't know if a blade was thrown). It also happened during Apollo 13's second stage burn.
Even if the entire rocket was lost, it STILL doesn't mean loss of life. All manned rockets I'm aware of (and I'm not a rocket scientist or even a particularly devoted follower of rocketry) have launch escape systems, and they get tested; the one for Apollo was even tested semi-unintentionally; the Little Joe II booster that was carrying the capsule for the test blew up before the test was supposed to start, and the capsule separated and survived just like it was designed to.