A three year old would not have the ability to form that concept, let alone verbalize it.

Age two to five years old

Young children are interested in the idea of death, for example in birds, insects and animals. They can begin to use the word 'dead' and develop an awareness that this is different to being alive. However, children of this age do not understand abstract concepts like 'forever' and cannot grasp that death is permanent.

( Source )