The only time I have needed an insulator is due to wind. I run a diffuser plate and have a thin barrel. A couple Thanksgivings ago I had a hell of a time getting my UDS above 300*. I went as far a pouring out the charcoal basket and starting with a fresh basket of coal, thinking the old coals got wet possibly. I fought with it for a while before I realized it was the fact that it was in the 20's and wind was 20-25 knots. Luckily I have several old wool blankets from my military days. I folded one in half and wrapped the barrel. Ran tape around it a few times.
The temps came right up and held at my target of 325*. I kept the blanket on there the rest of the winter, just out of laziness, without a problem. In the summer when I peeled the blanket off it was charred and brittle.
So, in my opinion, if the wind is up and outside temp is low, you will need some type of wind block. Not necessarily an insulator.