I'm new, and just put out an intro post, but I just had to respond to this...
I distinctly remember this exact same topic somewhere around the same age. I don't even know what triggered it, but she started asking about death and whether everything dies and whether she was going to die and whether we were going to die.
She was pretty upset (and it all came at once so I had no time to prepare). What I did was focus on the natural tendency of young children to see time as very slow moving (a year is a long time when it's a third of your life). I said that yes everything dies, but that people often live a really long time. I mentioned a couple of great aunts who lived to be over 100 years old (crosses fingers) and said that I certainly didn't plan on dying any time soon and she certainly shouldn't plan on it either. I kept it light. Like an unpleasant and unavoidable chore that we all eventually have to do (which is kind of how I think about it actually).
And I mentioned the ways in which we go on after we die (our bodies becoming part of the cycle of the Earth and our souls going on to new things -- YMMV obviously).
It was hard, but not as bad as the "how do you keep from having a baby when you're married?" conversation, which happened about a year later.
