In few starting lines on this page of the material, it is mentioned that guidance from actuarial association can make life insurance products lower cost and more flexible ? Could you please explain, how ?
It's important to read the solution in full. It says: "Guidance should be less onerous and expensive than regulation. This should make life insurance products lower cost and more flexible on account of enjoying an appropriate, but not undue and over-costly, regulatory regime. " So it is not saying that professional guidance makes contracts cheaper. It is saying that contracts will be cheaper under professional guidance than with regulation. Regulation tends to be fuller and more prescriptive than guidance, eg regulation might have a long list of specific rules whereas guidance might have a more flexible set of principles. As a result regulation tends to have higher cost and be less flexible. Of course having no form of guidance/regulation at all would have the least cost and the most flexibility. However, it would also expose policyholders to the most risk.
