(a) A death benefit shall be paid and any supplemental contributions shall be refunded to the designated beneficiary, upon receipt of a valid claim and proof of the death of a member who

1. (1) is not retired and is not eligible for benefits under AS 14.25.162 or 14.25.164; and

2. (2) either

   1. (A) has made supplemental contributions under AS 14.25.055 since the date one year immediately preceding the member's death or since July 1, 1983, whichever is later; or
   2. (B) is making supplemental contributions under AS 14.25.055 but has made them for less than one year.

(b) Upon the death of an active member who meets the conditions specified in (a) of this section, the amount of the death benefit is the sum of the following less any retirement benefit previously received by the member:

1. (1) the member contribution account;
2. (2) $100 times the years of membership service;
3. (3) $1,000; and
4. (4) $500 if the deceased member is survived by one or more dependent children at the time of death and if the designated beneficiary is a dependent child of the member or is the parent or guardian of the dependent child of the member.