According to my beliefs...
When the physical thought processes cease, the spiritual entity continues on past it. The process that is now impossible to interject into a vessel causes a feedback effect, giving a ethereal hallucination of an afterlife thematically appropriate to one's own nature. Roughly, when you die, you will see a loving afterlife if you were a good person, and a horrible afterlife if you were a bad person. Once spiritual activity runs through a series of chain reactions of experiencing its nature, it eventually calms down and and the more projected portion of the soul dies. The more central soul will, as a result, 'collapse back to reality' and form a new spiritual connection in what is something akin to reincarnation, but involves merging into newborn souls, because when something is capable of a soul, it will initiate the capability with already having had one.