Until the price reaches the knock-in level, the put has no effect and does not change the redemption amount. Once the price reaches the level (the note knocks in), the put takes effect, and if the price of the underlying asset at maturity is below the initial level, the shortfall reduces the redemption amount.
Take a structured note as an example. If the initial share price is 100, the note knocks in, and the share price at maturity is 70, the redemption amount is 70 against a face value of 100, a loss of 30. This is the same as the loss from selling a put that obliges the seller to buy at 100 and meeting that obligation when the share price is 70. If the note does not knock in, the face value of 100 is returned even when the share price at maturity is 70.
Unlike an ordinary put, a knock-in put has no effect until it knocks in, so the investor bears no loss as long as the price does not reach the knock-in level. Whether the knock-in is checked on the share price during the term or only at maturity differs from product to product.