I voted for the first option but my conception is more complicated than that.
My perspective is that tied intrinsically into the physical matter/energy of our body is an element we have not found a way to measure as yet, for simplicities sake let's call this "spirit".
Us, the world, the universe and all that is, is made of energy. We know this. It's my perspective we simply haven't mapped it all.
Now I'm not in any way certain how this all works, but I think it is tied to the concept of "matter can neither be created nor destroyed" I think this other layer, spirit, is a part of that, and however this universe got started, we've been in a state of recycling ever since. Our bodies decompose and feed the earth, our energy is dispersed to the winds and our spirit...I'm not sure what it does, but from my life experiences it clearly lives on in another dimension of existence which we tied to this physical plane are mostly separated from.
Some ancient Celtic peoples conceptualized a "veil" that lay between our world and the other. This was a veil that thinned at certain points throughout the year, on "days of power" where the state of cosmic energy facilitates awareness of and access to the other world. Samhain (Halloween, or Hallowe'en) is one of those days, and probably the most well known.
I think when we die, the learning is not over. I think our spirit continues on to contemplate our lives and resolve issues, learn lessons, and watch over loved ones left behind. I think at some point we then reincarnate. I see all of this as a process of existence, that we are collectively building towards...something.
This is starting to get really long...:look Ok, How this relates to God is this...God is also composed of spirit. I think God is like the collective energy, the sum of all our parts, the living Earth and our individual spirits and those of the Ancestors, they meld together when not physically bound. This is God. And consequently Goddess. Just as we are male and female. I think also, that the gods are individual spirits, as we are, but different, more powerful, more aware of their capabilities in spirit than most of us, and thus, yes, capable of helping us. I also think the gods are made stronger by belief in them.
So I'm a weird blend of a universal spirit belief and a polytheist.