The configuration is stored in the database, and it's not deleted automatically. You can safely de-activate, delete and install the new version, the configuration will stay in the database. If you want to stay safe, have a back-up of your database and files just in case.
After updating I usually recommend checking the instance options, saving them to re-fresh the database with the additional new values. In case you have any kind of caching enabled, I also recommend clearing that as well.Best,
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