Bismillah.
وَلَا تَحْسَبَنَّ الَّذِينَ قُتِلُوا فِي سَبِيلِ اللَّهِ أَمْوَاتًا ۚ بَلْ أَحْيَاءٌ عِندَ رَبِّهِمْ يُرْزَقُونَ
Do not suppose those who were slain in the way of Allah to be dead; no, they are living and provided for near their Lord.
(Sūrat ‘Āli Imrān, No 3, Āyat 169)
This Āyat was revealed after the battle of ‘Uhud. The verse shows the true status of those who were killed, replying to the mocking attitude of the disbelievers mentioned in the previous verse. The verse also applies to all those who are martyred in the way of Allah ‘azza wajall. It was used by Bibi Zaynab (a) in her sermon in the court of Yazid to show the status of those who were martyred in Karbala.
Tafsir Namūneh narrates a Hadith from Prophet Muhammad sallallāhu ‘alayhi wa-ālihi wasallam which says that Almighty Allah asked the martyrs of ‘Uhud what they desired. They replied, ‘what can we desire that would be greater than being immersed in spiritual blessings and residing in the shadow of Your throne? Our only wish is to return to the earth again and be martyred again in Your way’. Allah subhānahu wata‘ālāreplied that no-one would return to the earth for a second life. Then the martyrs said: If that is the case, our wish is that you send greetings to the Prophet (s) and give the good news of our state to those who are left behind so that they would not worry about us. It was then that this verse was revealed.
The verse tells us a few things about those who are killed in the way of Allah (swt):
1) They are physically gone but are not dead in terms of action and consciousness. They continue the act of receiving sustenance from Allah. The verse after it also talks about how they feel – rejoicing in what Allah has given them of His grace (Q 3:170). There is a higher level of consciousness that they martyrs enjoy.
2) All human beings will continue to live in another realm after the death of the body. The soul never dies. The souls mentioned in this verse live in the intermediates stage of Barzakh, before the Day of Judgment and the realm of the Hereafter.
3) Although all souls will be alive in the stage of Barzakh, the verse singles out the martyrs to emphasize the fact that they will have an elevated state of life as compared to others. They will receive special attention from their Lord.
4) Being near to the Lord is the highest spiritual reward. It is what true believers yearn for. Bibi Āsiyah (a) prayed for it in her final moments: My Lord! Build me a home near You in paradise (Q 66:11).
One who is killed in the way of Allah has a special status as the sacrifice of a martyr is the ultimate sacrifice, that of life. In this world the martyr does not need to be given ghusl or kafan before being buried. The body of the martyr has been purified by its soul and is thus not treated like an ordinary corpse. Islam also elevates the status of a person or deed by comparing it to a martyr. A person who seeks knowledge and dies in its pursuit dies the death of a martyr. Many such hadith show the high status of the martyr.
Imam al-Husayn (a) chose martyrdom over humiliation. It was a choice he made knowing the consequences. He taught us the famous line on living with dignity by saying: To me death is nothing but felicity, and life with oppressors is nothing but disgrace (Bihar al-Anwar, 44: 381; Tuhaf al-‘Uqūl, p 176; al-Luhūf, p 33.)
Sources: Āyatullāh Nāsir Makārim Shirāzī (Ed.), Tafsīr-e Namūneh; ‘Allāmah Muhammad Husayn Tabātabā’ī, Tafsīr al-Mīzān.
https://al-islam.org/imam-husayn-saviour-islam/martyr-analysis-concept-martyrdom-islam