I think my childern (29,27 and 17) were scared at first too. The better I handle it the better they feel. Just stay positive and don't let her know when you get scared.

Maybe there is a diabetes association group near you that you and your husband can join and she might be able to talk to children of other diabetic members so that she can have some of her fears put aside.
I know it is hard for young children to cope with things. Maybe she is not really aware of what diabetes is thinks that dad is going to die soon. Here in our country they are putting on all sorts of scare tactic ads about it (to wake the at-risk people up and get tested) but I know that a young child watching them then finding out that a parent had it, well it would scare her about what the future holds that's for sure. But I think if she can meet adults who have lived with it for years (my mother has had it for 25+ now) and children who have dealt with it in the family I think that might help. And as long as you both stay positive as well I am sure she will be fine.

I haven't really had to deal with the fear factor so I'm not sure what to say. I have been around children who have seen me test my blood sugar and they have alot of questions and I just patiently answer them so they can understand. I try to make it age appropriate. Maybe with a little basic education you could teach her not to be afraid like she has learned with your illness. I was thinking the local library must have some books on diabetes for kids or for kids who have diabetes, you might check that out. If I can think of anything else I'll sure and let you know.

As others have suggested, perhaps your doctor or a group in the aera can be of assistance to helping your daughter understand the issues associated with Diabetis.. I know my grandmom lived with us when I was child. I saw her give herself the shots every morning and plan her daily meals.
One particular time, I was in the hospital, she had come to stay with me and went into shock. It just so happened I had my lunch tray in the room. I call the nurse and told grand to eat some jello.
As it turned out, that was just what she need. From that time on, I was right there with her every morning helping her. When her eyes began to fail her, she taught me how to give her the shots.
SOme kids just need to feel that they can help, even if they are a bit affraid of what is going on at first.
Take Care