Why does the signal MOSFET keep failing in this circuit?
You probably have long wires going to the Nfet Gate diodes or ground and Vgs is probably being exceeded. (use 15Vmax? (rated 20V) Put a clamp on that gate.  

Inductive spike fault.

Assuming my theory is correct, better idea.  add 0.01 uF cap   across NchFET D-S, G-S; as a long wire inductive loop damper.  If logic or dry contact switch rise time will be fast enough but dampen.