I use a mod by Skycaptain called http://www.tesnexus.com/downloads/file.php?id=30586 As the title says you never die when using this mod, you are knocked out. But there are consequences!
You acquire a Soul Beacon item by making a donation at any Altar of Julianos. The cost of the beacon is tied to your level. You place your Soul Beacon in a safe location and when you are knocked out you will be transported back to that spot. It works only once, then you need to buy a new one. And you can only buy one at a time.
If you are knocked out without a Soul Beacon your soul will be forfeit and you will be transported to an Oblivion realm. You now have to fight your way out of the Oblivion realm to get back to Cyrodiil. If you die in an Oblivion realm you go right back and you stay there until you can find a way out. Or else get used to your new home.
Items (excepting quest and scripted) are randomly removed from your inventory when you are knocked out. These items are placed in a special chest near the spot where you were knocked out (
not your Soul Beacon location) . A marker is added to your compass to point to the location of the chest (in case you didn't know where you were).
You may also permanently lose a random amount of gold each time you are knocked out.