What Is Debit Insurance?

Debit insurance, also identified as home service insurance or industrial insurance, usually covers values of $10,000 or less and appeals mostly to low-income families. Debit insurance gets its name from the fact that insurance companies administer it through the issuance of an identification card that is similar to a debit or credit card.

Death Benefit

One aspect of debit insurance is the death benefit, meant to help pay for funeral and burial expenses. Since most debit insurance policies only cover up to $10,000, the death benefit itself may not be enough to completely pay for these expenses, but it can help. If funeral or burial expenses amount to more than $10,000, the family of the deceased must come up with some other method of payment.

Monthly Premium Payments

Debit insurance was created for families with low incomes. Agents often collect the premium by coming directly to clients' doors. Because the purpose of debit insurance is to make insurance available to low-income families, it comes at low cost and offers low levels of coverage. Insurance companies may require payment of premiums on a weekly, bi-weekly or monthly basis.


The size of the policy will not affect certain expenses, so when a smaller policy is paid as debit insurance, its premium for every $1,000 will be higher in comparison to regular insurance policy. Some debit policy owners do not make regular payments, which constitute a loss for the company. Unpaid accounts are passed on to other debit policyholders, thus increasing their premiums. Debit insurance pays for home collection, higher commissions and fees. Due to the costs of such lapses and the additional costs that come from dividing coverage among a larger number of individuals, debit insurance holders have to pay more for the same amount of coverage.

Buying Debit Insurance

A number of insurance companies have both debit and regular insurance. Before you decide on a policy, do your research and find out which type of policy is better for you. You may find that it is more affordable for you to go with a different type of insurance.