Yes.
Page 90 of the new book, in the "Dead" section states that upon reaching "Dead", all active spells, alchemical substances, and other effects immediately disapear. It then goes on to list a VERY select few effects that this is not the case for (Gypsy Curse, Vampire Charm, Amnesia, etc). Terror is not a part of that list, so it does not persist through death.
~JP
