I have an initial design for my house which will be built with SIPS on either a Slab On Grade or a FPSP. For design purposes, the foundation is supposed to appear as though it extends beyond the base of the structure. The house is supposed to look as though it is sitting on a 8" slab that mirrors the roof overhang. This house will be located in Connecticut. I am concerned about insulating the foundation. I see two options: 1) Use an insulated floating slab within a footing. 2) Use a standard foundation (or FPSF) and append a cosmetic row of CMU blocks around the perimeter of the standard foundation.

If it were me, I would put some insulation on top of the slab inside the structure. It doesn't matter how much insulation you put under the slab if the corners are directly exposed to the outside. You can put in 2*4 sleepers on the floor, put in a R-13 Batt, and plywood on that, or your can put 4'*8' foam boards down and plywood on top of that. Extend any load bearing walls all the way down to the slab, and insulate the bottom section of those with fiberglass.

The design also calls for a polished concrete floor. (potentially w/ radiant heat) If it is to difficult to have the foundation ledge design I will drop it completely, or do it purely cosmetically at the end. Is it ok to have the outer skin of the SIP extend over the edge of the foundation as it does in the attached image? I read that the whole sip should rest on the foundation.

Your readings are correct. Both skins of the SIP must provide support for the panels. Without both skins providing support, the foam carries a part of the wall load, and since foam is non-structural, your wall loses its structural capabilities.
Also, the idea of your slab extending beyond the walls is not acceptable. Aside from the lack of thermal break, you are depending on one or two beads of caulk (or some other form of sealing) to stop moisture penetration under the sill plate. The exterior slab provides a perfect platform for rain or snow to lay against the walls, and since there is no vertical drainage plane, the water will eventually work its way into the interior living spaces.
Pour the exterior part of the slab separately, about one inch below the level of the interior slab. Place your SIPS flush with the outside edge of your slab and allow the siding to extend down to the exterior slab. This will continue the look you seek without the potential problems.

Thanks WES. That is what I had thought and was fearing, I think it will add to much cost to this low budget house. I really appreciate the thorough feedback.

Maybe the look can be achieved with a flower bed or raised drainage ditch.

Just install a P/T sill plate(cut to the width of the SIP wall) under the SIP bottom plate. I've seen engineers design them so that they are cantilevered over the exterior foam on an ICF wall, so the the exterior edges of the SIP & the Foam are plumb. Your design would be very similar.

Good Luck!

I think WES's suggestion along with a flower box built along the foundation filled with gravel will provide the look at the least expense. And could be added at a later date, saving on initial cost. The height of the SIP wall is exactly 8' (and 10' in the taller section) so putting in a P/T plate would make the walls just too tall for standard size drywall and plywood siding.

How are you going to keep the SIP skins from resting on the concrete(inquiring minds an all of that)?

This diagram shows that the capillary break can be 6 mill poly.

http://www.sips.org/content/technical/index.cfm?PageId=137

You could put a brick ledge in the foundation, or in your case, a SIP plate ledge. You'd have a better base for your walls, standard heights inside and covering over the foam. With less worries about water infiltration, you could could complete your design in a second pour of concrete. You'd have to have to finesse an odd size for siding, though, which may be possible in the roof overhang.