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Insulated Wire is Red Alloy Wire that has been insulated. There are several advantages to insulating red alloy wire. First, insulated wire will not energize any blocks it comes into contact with, except along the ends. Second, if you are using many wires in a build then using different colors of insulated wire is an excellent way to color code your wiring. Third, insulated wire can be use with a Bundled Cable. Finally, insulated wire will not connect to insulated wire of a different color so it allows you to run wires in parallel easily.
This video will show how to use red alloy wire, insulated wire, and bundled cable.