We spray foam insulate the band joists on all our homes. It provides a great air seal. If you spray just the band and leave the sill plate untouched you have a 1 1/2" gap for termite inspection purposes. Do check your local code to verify if an ignition barrier/thermal barrier is required.

Its the drafts that cause the most problem. If worried about termites, try caulking the all the edges of the rim joist, then use pestblock spray foam between the sill plate and foundation wall to give you an airtight seal. Then you can use normal insulation. Its a lot of work but it is worth it.

We had our basement sill sprayed few years ago. old time cellar. Like night and day draft free. Termites can be treated outside the home carpenter ants.

I wanted to do this until I heard somewhere that the foam off-gasses harmful toxins. I haven't had a chance to research this - have any of you? Are some types better/safer?