Instructor with trainee reported while preparing for a maneuver; they became distracted and allowed the aircraft to descend below a safe altitude.

Narrative

Myself and a student were working on PPL checkride preparation today; specifically s-turns near the ZZZ/ZZZ1/ZZZ2 airports. I asked my student to descend to 1200 MSL/AGL initially with the intention of reaching an appropriate ground reference maneuvering altitude once we had passed the local area. We had just done a simulated engine failure and I had decided to give him a quick debrief of his performance on the engine failure during his descent. However; I distracted both myself and my student while discussing the engine failure and realized that we dipped down to 900 ft. AGL/MSL. As soon as I recognized this; we turned away from the industrial area and immediately began a climb back up to 1200 ft. MSL/AGL before turning back towards the road we were planning to use for ground reference maneuvers. While we were never out of range of a safe and empty landing area in the event of an engine failure; we did descend too low. I should have recognized the descent earlier to prevent such a deviation; and realize that I should not have been attempting to discuss a different maneuver during the preparation for a new maneuver; particularly a low altitude maneuver. In the future I will avoid doing this and ensure that I am paying close attention to our altitude.