grandfathering in insurance policy?

I've got a plan that we've been working on for a couple of years, and the three original partners (who were the only HCEs) have life insurance policies in the plan that they rolled in when they left their previous firm 20+ years ago.  Since I took over, I've been telling them that they therefore have to offer life insurance to all participants, and provided them a cobbled-up form to have the other participants decline such an election.  I can tell you that no NHCE has ever opted for life insurance, though whether that is a result of those forms, or just not saying anything... well, I've advised them as best I can on that score.

Anyway, 2 of the 3 original partners have left, and their policies are now gone.  There are new HCE partners to replace them, and they do not have insurance.  The last doesn't want to come up with $250K to purchase his policy for the plan.  I'm wondering if I can somehow grandfather that in and have the document say that it is no longer offered going forward effective on some date.  Am I going to run into a BRF issue?

Thanks.

I think you could have stopped offering it as an option years ago. But, as you said, most people don't do this purchase in their plans anymore.

Typically, the policies would have been purchased, paid for 5-8 years and then sold out of the plan. If they didn't do that, they probably didn't think it through OR the agent didn't care about the plan to begin with.

At some point, assuming the guy retires, the policy will have to be surrendered or he'll have to buy it out. Is there any good reason to keep the policy in place any longer? If not, surrender it and put everyone out of their misery.

Thanks, Bill.  I think I've got two plans left with LI, both with the same advisor.  Any time I mention getting rid of the policies, he tells me I don't understand insurance (this is true) and that I'm not seeing the bigger picture (which is probably something like "they pay the FA higher fees!").  So I've given up.

I had always treated LI as an option like a self directed brokerage account - if you offer it to one, you have to offer it to all.  Am I not looking at that properly?  Because I have a bunch of plans (unfortunately) where the owner is in a SDBA and the participants are on a platform, and I handle it like I've been handling LI; each participant has to sign an acknowledgement that they do not want a SDBA.  But if I can amend the plan to stop offering those in and say that the ones already extant are grandfathered, that would be great.

If it's offered, then you do have to offer it to all. But it's not a protected benefit so you don't have to offer it forever. Get the current people to sign off on not wanting insurance and then amend it out for future offering.