The idealist in me would say that every flight should have a mandatory insurance which will pay out to every occupant in case of catastrophe. The insurance fee shouldn’t even be that high, considering the relative safety of most flights.
Of course, knowing insurance companies, the rules will be full of loopholes and there will be little chance of them ever paying out a single cent.
“Well, one of the wings is still attached to the plane. So we’re downgrading from ‘catastrophic’ to ‘unfortunate’. Sorry for your loss.”

You will typically have the opportunity to sue for any injury or loss. It’s not automatic unless the airline gives you what you would consider a good offer beforehand.

I would consider a refund to be the LEAST they could do.

If a plane has a catastrophic accident with you on board, your family will get the life insurance payout.