Is the illusion over when we die?

Sorry, no. The event that we call death is just more contrast made by ego to deceive us into believing that this is all real. In order for the mind to believe that the body is alive, ego has to show us an opposite. Death is just that. But physical death is just as much an illusion as is physical birth.

When your body dies, your mind will immediately project another 'body.' You may define it according to religious trainings or readings. You may believe that you are now a 'spirit body' or a 'soul.' Your new body will seem very much like the physical body that just wore out. Your mind will also project a world, a location, surroundings, other people, animals, and even (wouldn't you know it) things to do.

The Mormon church, in which I was raised, teaches that the spirit world of the dead is still here on earth. I think they're exactly right about that. I think most people who chose to come to earth will choose to stay here after their body gets used up.

After some time passes in this spirit world or after life, you will most likely choose to do the physical life ride again. Physical lifetimes and death times happen over and over until the mind wakes up to the fact that duality isn't Real. This awakening to Reality makes all the dreams disappear. Will you be a physical body when it happens? Or will you be a spirit body? Or will you be a rock? Or an aardvark? You won't be any separate thing. The Awakening is the realization that separation is not Real.

Jesus tried to teach us this. "I am in the Father, and the Father is in Me. He who has seen the Father has seen me." Most people respond with, "What the crap does THAT mean??" But seen from a non-dualistic stance, it makes perfect sense. Jesus knew he was ONE with the Creator and everything else. He knew that sin doesn't exist in Reality ("Today you'll be with me in paradise.") and that death isn't Real. And when he died and came back to prove it, we just made him a special case so we could ignore him!