I think the passive way is not the good option.
People disrespect the one they can. They always attack weak people who can't respond and this kind of people are the worst fuck*** coward.
I always try to be respectful of anyone but some people do not deserve it.
So my policy is pretty simple, don't bother me and i will be the kindest person of the world.
Insult me and ... well ... if i'm not afraid by the person (i'm not crazy too, there are some mad guys who can beat you for nothing...), Fireback with class.
RE: How do you react to insults?