(a) If the death of an employee occurs from nonoccupational causes after completing less than one year of credited service, the employee's designated beneficiary shall be paid the balance of the employee contribution account. If the death of an employee occurs from nonoccupational causes after completing at least one year but less than five years of credited service, a death benefit shall be paid to the employee's designated beneficiary. The amount of the death benefit shall be the amount set out in (c) of this section.

(b) If the death of a vested member or deferred vested member occurs from nonoccupational causes and the member designated no person other than the surviving spouse as beneficiary to receive nonoccupational death benefits, the surviving spouse may elect to receive either the amounts set out in (c) of this section or a 50 percent joint and survivor option based on credited service to the date of the employee's death or termination. Benefits accrue from the first day of the month following the employee's death and are payable the last day of the month.

(c) If, under AS 39.35.490, a vested or deferred vested member designates as beneficiary to receive nonoccupational benefits someone other than the surviving spouse to whom the member has been married for at least one year, the administrator shall pay the designated beneficiary: (1) the balance of the deceased member's employee contribution account; and (2) a lump-sum death benefit. The amount of the lump-sum death benefit is $100 times the years of credited service of the deceased member plus $1,000.