I used the cardboard speaker holder that my in-ceilings came in to keep the insulation off of the speaker. It is open on the sides, but I just placed the insulation on top and around, but didn't pack it in tight,.
In-ceilings and in-walls are made to be used in a variety of environments, including insulation and such. All should be good.
Monoprice says the following about their in-wall/ceilings, "
|Question: There is insulation behind my wall. Is it safe to install the speaker without a box?
|Answer: In-wall speakers are designed with the posibility of insulation in mind. The insulation will not harm the speakers or create any hazzard. Even regular box speakers have insulation in side them to reduce the effects of standing sound waves.