The soul doesn't inhabit the body, it's the other way around. ;-) The body lives, briefly, within the far greater reality that is the Spirit/soul.

You see, the soul/spirit first of all builds a body for itself, through the normal Earthly biological processes: sex, conception, building by one cell at a time, gestation, growth, birth, maturing process, etc...

The spirit/soul animates that body, giving it consciousness, awareness, a functioning nervous system and brain, and a purpose. The most superficial purpose of the body is survival. The next obvious purpose is experiencing pleasure/avoiding pain. The next, procreation. After that...one moves into much more subtle and powerful purposes, like: spiritual evolution, the development of Love and selflessness, the awareness of spiritual Oneness with others, etc...

Many people are entirely unaware of the more subtle and powerful purposes of Life. They remain concerned primarily with survival, sense enjoyment, and procreation...plus prestige, in most cases. Accumulating possessions becomes a powerful motivation too.

That's their decision. If a god wants to pretend it's just a worm, then the Universe freely allows that... ;-)

The body is just a vehicle and it never would have happened, if not for the purposes of the Spirit which built it in the first place. When the body breaks down and dies, the Spirit continues. Presently it may well build another body. Spirit cannot die.