yes it's unfortunate, but standard practice as you say.
it sounds like the deceased is not immediate family. bear in mind that many companies (certainly the budget airlines) would not refund you at all in this case. I quote from their booking conditions:
"easyJet regrets that it is unable to offer refunds in the event of passengers being unable to fly owing to any change in personal circumstances, including but not limited to medical grounds, with the exception of the application of the 24 hour cancellation policy.
In exceptional circumstances, however, easyJet will consider issuing a credit in the event of the bereavement of an immediate family member (mother, father, brother, sister, grandparent or child) provided that the claim and a copy of the death certificate are submitted by post to the easyJet Customer Services Department."
so they won't even guarantee a refund in this case...they'll merely "consider" it.