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The failsafe is never your only hope. You can do an -11(g) amendment to correct a failed coverage test. However if the plan document says that a coverage failure will be corrected under the failsafe then you have to follow the terms of the plan document and apply the failsafe. This is a big reason why I advise against the use of the failsafe is most cases; once it's in the document you are stuck with it. You have a lot more flexibility with an -11(g) amendment to correct the failure in the way you want.

So you're saying there's a chance.

There are always concerns when 412(e) is involved. Assuming the policy fully provides for the plan's benefit, from a qualification aspect the plan might be OK, but refer back to my first sentence above. The excess premium payments (aka contributions) might not be deductible. Furthermore, if the plan already provides for a benefit at the 415 limit, then there's no place for the money to go (refer back to my first sentence above). In 2004 IRS came out with all sorts of bad news for abuses in fully insured plans, up to and including "listed transactions" for buying insurance in excess of the plan benefits. I am not an expert in listed transactions and have no idea if this would apply here, refer to ERISA counsel and of course, refer back to my first sentence above.

You still need a plan with individual groups in order to vary the contribution by person.