My four year old has an unusually strong attachment to her great grandfather -- her mother's grandpa. I call it unusual because she never met the man. Nor did I. He passed away several years before her mother and I ever met. Yet she hears stories about him from her mother, and specifically asked "Nana" for a picture of her "great-grandfather who has wings now."
Her mother dutifully explained that great-grandpa lives in Heaven, and he has wings now. My daughter asked if she missed him, and she responded "Yes, I miss him very much," to which my daughter asked why she doesn't go see him? "Heaven is very far away," she replied, to which my daughter heart-wrenchingly replied matter-of-factly
That's okay Mommy, you can go to Heaven and see him if you miss him. Daddy will take good care of me while you're gone!
She doesn't understand -- as no child would understand when using such soft language. Months later, when she was looking at a picture of great-grandpa and great-grandma, she turned to me (her mother was at work) and asked if I could tell her a story about them. I told her "I'm sorry honey, I never met your great-grandparents before they died."
"THEY DIED?!" she screeched at the top of her lungs and bawled for an hour. She was inconsolable. She knew he was in heaven, and had his wings, and that he was very old, but no one had ever told her that these things meant that he was dead. She understood death as a concept (if perhaps not as a permanent state -- "permanency" remains a difficult concept to grasp for children), but had no reason to equate the two.
She was sniffley about it for a week, and I finally confronted her as she was abnormally quiet. I pulled her in close and asked her to tell me what was making her so sad lately. She told me:
I'm worried about what will happen when I die, daddy.
I told her she didn't have to worry about that for a long long long time, and that great-grandpa was much older even than mommy and daddy and even than "Nana" and "Papa" are when they died. She sniffled a little and confessed "But my toys will be so sad when I die and leave them all alone!"
Conclusion:
Death is a natural thing. It will happen to someone your child is close to. If not a family member, then a friend of the family, a pet, or even a favorite character from a book or TV show. Kids are capable of handling this. Don't be afraid to have a frank discussion with your child, even if it's difficult to explain the details. At the end of the day, your job as a parent is to prepare your child for the hard things they'll have to face, and one of those things is the death of a loved one. I can't imagine a reason to let them get hit by the truck rather than teaching them what may be coming down the road.