Just laugh along with them. I always do. My siblings say, "you're so ugly because you're A ginger!" So I say, "I know right! Red hair is like so ugly!" It annoys them, and it makes them feel like they can't defeat you.
I laugh. Usually their insult makes them looks stupid 'cause it either made no sense or described themselves. Or I ask 'Is that the best you can do?' Or laugh and agree with them. Some people aren't very smart and get confused by it.
By throwing a yo mamma joke back at them and also saying what ?what was that (then walk up to him and say I'm sorry i did her that over you mouth bleeding then sock him in the mouth has hard as you can and say I'm sorry what was that then raise your fist at him that should do it