My dm overstepped a lot (I use past tense as we are low contact and live in different countries so she doesn’t have the opportunity so much these days) so I get how frustrating these kinds of things can be and also how difficult it can be to address it with such characters.
Playing devils advocate, it could be that your DD caught your MIL off guard and she wasn’t prepared and therefore maybe wasn’t as delicate with the topic as you might’ve been yourself. It could be that MIL said that people usually die when they are very old, and your DD said “old like GGranny and GGrandad?” and she’s now put 2+2 and got 5...
Without being there, it’s tricky to say. But your priority now is to make sure your DD is not anxious and you, as mummy, can help reassure her on the whole death thing. If it is kore than just a passing thing (eg she has nightmares, is crying a lot about it, not talking to people, seems visible distressed etc) then for sure, next time you see MIL you could mention that DD had been upset and you wondered how the conversation had gone, was she upset at the time etc etc?
I can sympathize op as my own DM made me want to take control over everything with my DC, because I simply could trust her to not undermine me, or go off piste with things. It wasn’t so hard when other people did as it was more, dunno, innocent and they genuinely got in a muddle abd were trying their best. But DM got my heckles up. And I hated biting my tongue and accepting that I simply could not control what cones out of her mouth!
Anyway, I’m rambling now.... I guess my advice is to make sure your DD is ok, then let it go unless it’s become a thing for your DD, abd if that’s the case broach it delicately in a curios way way rather than an accusative way.