The soul lives on dear friends (that which has been made cannot be unmade). Yes, it sheds it's clay vessel ... the physical body; in the cycle of life, "ashes to ashes, dust to dust, that vessels returns to the Earth. This remembering of the Universal Laws of life and death has been so freeing for me.
When you no longer fear death, what is there left to fear? Yes, it's difficult to lose the physical presence of someone you love. However, when you realize and welcome that soul to be with you any time and any place, you can understand how blessed we are for the loved ones who surround us.