What happens to dead people's social security money?

It is insurance, but it is not life insurance.  If you die before reaching the age where you start to collect, you don't get anything back. Just like if you insure your car or house for 30 years and never have an accident or damage to the house, you get nothing back.

A surviving spouse or child can claim the one-time death benefit of $255 (that number hasn't changed in over 30 years). And surviving spouses who are at least age 60 can collect a survivors benefit up to when they are eligible to receive their own, and if the survivors benefit pays them more than they would receive on their own work record, they can continue on the survivors benefit until their own gives them more.  Minor children of the deceased may receive a survivors benefit up to 18 (19 if they are still in high school).

There are other specific circumstances where a family member can receive a benefit based on the work record of the deceased, but one must qualify.

It remains int he SS fund.  Family cannot claim it, though a surviving spouse then chooses which SS they want to receive, their own, or the deceased spouses.  You cannot inherit SS.

If you die before you get SS, you don't get it.  Unless you have dependent children--I think they get something until they're 18.

This is why I oppose anti-smoking laws.  People who die young put less stress on the system.