Neither, but the second option is closer to the Scriptures.
There is no immortal spirit (soul) that lives within us as a separate entity. The Bible states that God alone is immortal -
1 Timothy 6:16. If we had some inner spirit that did not die, then we would be immortal. Such teaching is contrary to the Scriptures. See the verse below.
Genesis 2:7- And the LORD God formed man of the dust of the ground, and breathed into his nostrils the breath of life; and man became a living soul.
Therefore, only when God gives you the breath of life, then you are a soul. In other words, the Scriptures refer to a living human being as a soul. Once you have died, then you are not longer a soul. There is no separate soul living within a person. That idea came into Christianity largely through Greek philosophy, although its origins have been found in Egyptian thought.
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Now regarding life after death (going to cut and paste from previous discussions):
The translations for
hell in the majority of instances in the Scriptures is
the grave.
Acts 2:31 He seeing this before spake of the resurrection of Christ, that his soul was not left in hell, neither his flesh did see corruption.
The translation for hell here is the "grave/the place (state) of the departed souls."
For your reference, I am using the Strong's Exhaustive Concordance of the Bible, with Complete and Updated Hebrew and Greek Dictionaries.
Christ gained the victory over death and the grave. See below.
I Cor 15:55 - O death, where is thy sting? O grave, where is thy victory?
In this verse, the term
grave is given the same reference as
hell in Acts 2. The grave is just as defined - the grave/the place (state) of the departed souls.
Mat.12:40 - For as Jonas was three days and three nights in the whale's belly; so shall the Son of man be three days and three nights in the heart of the earth.
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The grave (hell) is in a sense, a holding place until judgment for the wicked or until the second coming for those who die in Christ...
Many times in the Scriptures, the Bible refers to death as a
sleep. One example of this is where Jesus spoke about Lazarus:
John 11:11-14 These things said he: and after that he saith unto them, Our friend Lazarus sleepeth; but I go, that I may awake him out of sleep. Then said his disciples, Lord, if he sleep, he shall do well. Howbeit Jesus spake of his death: but they thought that he had spoken of taking of rest in sleep. Then said Jesus unto them plainly, Lazarus is dead.
Here Jesus refers to death as a
sleep. We get a great picture of what happens to us when we die (sleep) in Christ and what will happen when Jesus comes etc. When Jesus returns the dead in Christ will rise first and those who are alive will be "caught up" with them in the air.
1 Thess 4:16 -17 For the Lord himself shall descend from heaven with a shout, with the voice of the archangel, and with the trump of God: and the dead in Christ shall rise first:Then we which are alive and remain shall be caught up together with them in the clouds, to meet the Lord in the air: and so shall we ever be with the Lord.
Revelation 22:12 - And, behold, I come quickly; and my reward is with me, to give every man according as his work shall be.
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So now we understand, that like Lazarus, those who died in Christ will remain in the grave until Jesus comes to raise them. However, those wicked who are living at the time of the Second Coming will end up dying due to the awesomeness of Christ's coming.
2 Thess 2:8 And then shall that Wicked be revealed, whom the Lord shall consume with the spirit of his mouth, and shall destroy with the brightness of his coming:
So now we see that the grave (hell) will be the holding place for all the wicked until judgment - until the final destruction of the wicked. Those wicked who were already dead before Christ's coming remain in the grave and those who are wicked and living at the time of Christ's coming will die due to His brightness. So all the wicked will die.
Then the Bible tell us how long they will be dead, and when they will be allowed to live again.
Rev 20:5But the rest of the dead lived not again until the thousand years were finished. This is the first resurrection.
The Bible makes sure to tell us that after the 1000 years, that is the first time that the wicked (in general) are allowed to live again. They are not resurrected before that. They are not already in any burning place. They are in the grave (hell).
After they are resurrected, the final destruction will occur.
Rev. 20:13-15 And the sea gave up the dead which were in it; and death and hell delivered up the dead which were in them: and they were judged every man according to their works. And death and hell were cast into the lake of fire. This is the second death. And whosoever was not found written in the book of life was cast into the lake of fire.
Notice the Bible says that "death and hell" delivered up the dead which were in them. It would not make sense if death and "burning fire" delivered up the dead for judgment. When you look at the Greek, it translates to "death and the grave" delivered up the dead for judgment. That makes sense because the wicked were dead and in the grave (hell). So they were resurrected out of the grave for the final judgment. Then death and the grave are cast into the lake of fire. That is the second death. Ultimately, the wicked are destroyed. as are death and the grave (hell). That means that finally God does away with it all. No more dying. No more grave...so more burying our loved ones.
So then we move into Rev. 21...
Rev. 21:4 And God shall wipe away all tears from their eyes; and there shall be no more death, neither sorrow, nor crying, neither shall there be any more pain: for the former things are passed away.