Ask Another Mother: How do you handle the "C" word?

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Dear iVillagers,
The other night when I tucked my kids into bed and we were talking about their day, my 7-year-old daughter piped up "Mum, my home reader was really sad today."  She'd been at her grandmother's house after school so she'd done the reader there and I hadn't seen it so I asked her what it was about.
"Well, there was this little girl called Amy and her best friend Michelle had cancer. And she used to go over there after school to play with her and one day when she went there, Michelle was crying because the cancer had made her blind. So Amy used to go and read her stories. Then Michelle died and Amy was really sad."
Why do these things always happen at bedtime or when you're driving? And why did I have a glass of wine with dinner???
With my 4-year-old son listening attentively (they share a room), my daughter and I then had a very in-depth and (for me) brutal conversation about cancer and death. Immediately, both kids were peppering me with questions.
"What is cancer?" 
"Where can you get cancer? Like, what parts of the body?" 
"Does it hurt?"
"But if it's just a lump, how does it actually make you die?"
"Can you get cancer in your penis?"
"What about poo? Can you get poo cancer?"
"Can kids really get cancer?"
And on and on. I did my best but my god it was a treacherous path to walk. I was conscious that I didn't want them to associate cancer with death because we have several people in our family and friends who have beaten cancer and some who still have it. I wanted them to have hope without sugar coating it entirely.
Eventually, I told them it was time to go to sleep and changed the subject briefly so it wouldn't be the last thing they discussed before slipping into dreams.
But I was so totally thrown – not by the conversation so much – I actually enjoy having challenging conversations with my kids about all sorts of complex subjects from religion to gay marriage. No, what threw me is that my daughter had brought home a reader about such a delicate, important, distressing subject and nobody had thought to warn me.
When I ranted to my husband about it, he shrugged and made an offhand comment about it being better that it was just in a story than in real life and of course, he's right about that.
Still, is it normal for your kids to have such full-on subjects in their readers? How have other parents handled it?