has anyone ever seen a plan that had a policy to pay the plan's participants in the event of the demise of the trustee/owner? could a key man policy be purchased to effectively do the same thing. plan has appx. $750,000 and 211 shares. i have personally never heard of any such policy.

Yes, I have heard of this being done for key employees with large balances.

actually, the current trustee/owner is not participating in the plan. his father the former trustee and owner has a large balance, but the policy would cover all the participants i guess in the event of the demise of the owner. would the corp. be the named beneficiary of such policy?

I am not certain of the mechanics but I expect it would work if the company or the ESOP was listed as the beneficary.

Q -who is going to pay for the policy? the plan? Who will own it? will it be a plan asset? Under IRS rules all plan assets must be allocated to participants' account balances (except for suspense accounts). I dont know if LI policy could be asset of owner's account naming plan as beneficary.

I recall going through an extended analysis of that issue many, many years ago and concluding it makes no sense.