When a Sim dies outside a tombstone is left behind, but if the Sim dies inside an urn will be left in its place. Typically, the urn or tombstone will be possessed by the Sims’ ghost and as long as the memorial is on the lot ghosts will continue to haunt the household. Ghosts are not a good thing because they can scare other characters to death including your own.
There is also a matter of life insurance when your character or another character dies. If your character dies and is married then the insurance money automatically goes to the spouse and the children. But if there is a Sim character that is not married and has no family then it will go to the person with whom it had the highest relationship, such as a close friend.
When a Sim character suffers the loss of a loved one they will most likely go into a mode of desperation, falling onto the floor acting crazy and immediately be seen by a therapist.