The other day I had my lvl 50 Marauder get instakilled (via a Haymaker finisher from brawler, but coding for all the instakills seems similar), and when the death msg popped up I had no option for using my BoL (which I'm 100% sure he had, even checked the game file afterwards). I was Unstoppable at the time, which may have had something to do with the bug.
Now, the rejecting BoL is clearly a bug, but I'd like to bring up a related concern with how Instakill effects vs players work. When I was hit by it, I had both Unstoppable going for 8 more turns, and a Heroism of significant negative life for even more. While I can accept this, it seems pretty counter-intuitive and of questionable design. I would have assumed that either Unstoppable would prevent it, or that my negative life survival would count toward my life total for purposes of calculating instadeath vulnerability (which it doesn't). I'd recommend making either or both of those things true.
PS: For the record, since not getting my BoL is clearly shenanigans, I then resurrected him and just manually removed his BoL. I accept a death from that, but not insta-permadeath! His quest continues!
