No, no. They don't die. They're rescued, but traumatized. They've retired to that nice Agri-world you heard about as a kid. You know, the one where all your lost pets are living now.
Yes, you still lose them if you lose the ship. My "personal narrative" is that they are rescued, but due to Pilot Federation bylaws, they aren't allowed to work with you again. Besides, my elite pilots (who were only getting 10%) had made a couple hundred million by the time of the incidents, so they can go off on their own.
I seriously wish the devs would address the loss better than "they're dead" since even frakkin' passengers get escape pods (built-in to cabins, we have no choice). Heck, I wish they would let us terminate contracts on good terms (dude, you're Elite now and you've got 250 million credits, go strike out on your own!) and maybe have the former pilots show up at times to say hello to us. Maybe even have them show up to assist us when under attack. Or, if they were treated badly, they might occasionally try to hunt us down. Lot of potential depth/immersion here, devs. Think about it.