And the early Church understood it this way (bolded added; italics at source):
Wherefore, passing now to the words which we find farther on concerning unbelievers,
"Who shall give account to Him who is ready to judge the quick and the dead," there is no necessity for our understanding the dead here to be those who have departed from the body. For it may be that the apostle intended by the word dead to denote unbelievers, as being spiritually dead, like those of whom it was said, "Let the dead bury their dead," (
Matthew 8:22) and by the word living to denote those who believe in Him, having not heard in vain the call,
"Awake, you that sleep, and arise from the dead, and Christ shall give you light;" (
Ephesians 5:14) of whom also the Lord said:
"The hour is coming, and now is, when the dead shall hear the voice of the Son of God, and they that hear shall live." (
John 5:25) On the same principle of interpretation, also, there is nothing compelling us to understand the immediately succeeding words of Peter —
"For this cause was the gospel preached also to them that are dead, that they might be judged according to men in the flesh, but live according to God in the spirit" (
1 Peter 4:6) — as describing what has been done in hell.
"For for this cause has the gospel been preached in this life to the dead," that is, to the unbelieving wicked,
"that when they believed they might be judged according to men in the flesh,"— that is, by means of various afflictions and by the death of the body itself; for which reason the same apostle says in another place:
"The time has come that judgment must begin at the house of God," (
1 Peter 4:17) —
"but live according to God in the spirit," since in that same spirit they had been dead while they were held prisoners in the death of unbelief and wickedness.
-- St. Augustine of Hippo,
Letter 164