It is known that the sages say that: “The righteous in their death are called alive and the wicked in their life are called dead”.

This is not referring to life and death as the regular known idea, it refers to spiritual life. In the spiritual realm there is also the concept of life and death, as in the physical realm the connection of the life source to the body is called life, also the connection of a higher level to the soul is called spiritual life. In other words, each spiritual level is called “the physical body” and the level above it is called “the sustenance (life source). 

Why are righteous people called alive when the die? It is because their soul is connected with higher level of sustenance and they get even higher after their physical death. Contrary, wicked people, even though they are alive...