I would think that a person should be allowed to spend their money in any legal way they want.
If your uncle has been paying the premiums on a life insurance policy for your grandmother and he is the named beneficiary of that insurance policy, why is it of any concern to anyone else if he collects on it?
While it might be "nice" of him to kick in to help pay her funeral expenses, he isn't OBLIGATED to, any more than you would be obligated to pay them if you won the lottery. It may wven be that your grandmother has a small policy to cover her funeral expenses.
On the other hand, should your grandmother die, a word to the insurance company AND to the police - if it is true that he could have had some influence over how soon she died - would not be out of order, and he can only blame himself for acting in a suspicious manner.
Insurance companies aren't in the business of playing sucker, and for every dimwit that comes down the road with a new scam, they've usually seen better ones before.