Apparently you no longer die in this game. Instead, you somehow miraculously survive (maybe you go off in a lifeboat like the other ships use? :P) and face the (military) consequences of the loss. If you haven't had much of a career, they consider the loss to be either gross incompetence or intentional, and court martial you. If you did well, then the commander orders you a new sub. That's also when you can choose to "end your career on a high note." Which I think is odd, because losing a sub isn't exactly a high point in anyone's career. :P
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