 In this section, I will be telling you about the four basic features of insurance contracts. So we are talking about risk management, we are talking about transferring risk to some other parties and that can be done by buying insurance. So there are four important features that are related to the insurance contracts that we need to understand, we need to know, we need to understand properly. So these four features of insurance contracts include exclusions, caps, deductibles and co-payments. So I am going to explain these four features one by one. So when we say exclusions, exclusions are basically those types of losses that are not covered by the insurance company. They say that if these kinds of losses occur then we will not cover them. For example, there could be some diseases that the insurance company does not cover life insurance. And if suppose a person bought life insurance from an insurance company, the insurance company tells you that if you die by accident or you get some other disease, in that case we will repay you the agreed upon amount of money if you buy life insurance. But somewhat they will say that if the death is because of these possibilities, the life insurance will not be... We are not going to cover you for that. Then you will not get any money. And what can be the consequences? Can there be any deadly diseases? For example, if there is an individual who is already in the last stage of cancer, then the life insurance company will not cover you. This will be a case of exclusion. Similarly, if a person has bought life insurance policy of 20 lakh rupees or 1 crore rupees, and they commit suicide at the next stage, and they die, then the life insurance policy will not cover them. That is also a case of exclusion. So, there are certain losses where insurance companies define that these are exclusions. In this kind of possibility, we cannot cover your losses in such kind of accidents. And that is an important feature of the insurance policies. And we need to understand that whenever we are going to buy an insurance policy, we need to learn about the various exclusions that may be involved in that particular contract. Another important thing which we need to understand is the concept of CAPS. In insurance contracts, CAPS also applies to insurance companies. They say that your loss is this CAP. 20 lakh rupees, 50 lakh rupees, 1 crore rupees, 10 thousand rupees. If there are more damages than this, then we will not cover you. So, the expense has a CAP on it. So, this is another important feature. For example, a health insurance company has put a CAP on you for health insurance. Suppose it is 5 lakh rupees. So, if your hospital bill is 5 lakh rupees or 5 lakh rupees, then the insurance company will pay your health expenses. But if over and above 5 lakh rupees is your policy and the CAP is there, if your expenses or your bills are higher than that, then the extra amount at the top of the CAP that has been imposed will not cover you. So, the insurance policy buyer has to bear their expenses themselves. So, there is this important concept of CAPS which we need to understand when we are going for the insurance policies. Another, the third important feature of an insurance contract is the concept of deductibles. So, there are certain deductibles that are included in an insurance policy. A deductible is an amount of money which the insurance company has to pay their expenses themselves. So, there will be some expenses which the insurance policy will define that these kinds of expenses or expenses will have to be paid by themselves. And for this, I am going to quote an example. Suppose, the insurance policy said that the total damage of Rs. 1000 Suppose, if you take it to the workshop, they said that the overall damage which is due to the light or a scratch, you will have to spend Rs. 5000 for that. So, the initial Rs. 1000 will be paid by the insurance buyer. So, that is known as a deductible. So, there are certain policies, there are certain insurance contracts in which the deductibles are also included. So, this much basic expense of Rs. 1000 will not be paid by the insurance policy buyer, it will not be paid by the company. The third feature is the concept of co-payments. Co-payments means that this is written in the contract of the insurance policy that the overall damage which is due to the light or a scratch will be paid by the insurance policy buyer himself. So, this is called co-payments. So, this is another feature that is incorporated in the insurance contracts in which the co-payments are defined, ratio defined, pre-greed defined ratio. In which the insurance policy buyer is paid by the insurance policy buyer himself. So, the ratio defined ratio is the pre-greed defined ratio in which the insurance buyer is told that in the case of any loss, the total loss or damages of the total damage will be paid by you and the remaining percentage will be paid by the insurance company. So, when we talk about deductibles and co-payments, they are both concept but there is a difference. There is a technical difference between the two. And you must be thinking why these types of concepts or features are included in the insurance contracts. The reason is that we see that there is a concept of moral hazard. If I know that my vehicle, my car or any equipment I have is expensive and for that I bought a policy by Carrivia Insurance, so I might not be taking care of that particular thing properly because I know that there is insurance on the back end and if anything is damaged, the insurance company is going to look after all the damages and the losses and the problems that are going to be there. They will cover all the damages. So, the insurance company should also look after the insurance buyer properly. For that, they introduce the concept of deductibles and co-payments so that the possible losses of the insurance company can be controlled. When I know that my vehicle will have some damage in this case, I have to pay the cost of 20% repair. I am going to bear 80% company. So, I will drive carefully and take care of that so that if there is any problem in this case, I will also face losses. So, that is the reason behind having these features of co-payments and deductibles that are included in the insurance contract. So, in the same way, I will give you an example to elaborate on this. Suppose, someone has bought their health insurance, so, the health insurance company has to pay the cost of the co-payment. So, again, they can go for this concept of co-payments. They can add the cost of the insurance company to the co-payment. Out of that, they will pay 10% insurance buyer and the remaining 90% insurance company will pay the cost. So, by doing this, people will take care of themselves. They will look after the things that they are having so that they don't have any financial burden or burden on them. So, this is the advantage of having the concept of deductibles and co-payments. In the deductible, you have to pay a certain amount to repair or any damages in the context. The insurance buyer has to do it himself. If there is an expense on it, the insurance company says that they will pay you.