Deep and ultra-deep reservoirs, characterized by high temperatures and pressures, are increasingly critical for oil and gas exploration. Excessive wellbore temperature can degrade drilling fluid performance and shorten the service life of downhole tools. To mitigate these issues, effective thermal management strategies are essential. Among them, insulated drill pipe (IDP), equipped with a thermal insulation layer, offers high insulation efficiency. This study develops a transient wellbore-formation heat transfer model considering the effect of the IDP. Heat transfer control units are formulated based on energy conservation, discretized using the finite difference method, and solved with the Gauss-Seidel to determine wellbore temperature. The proposed model is validated using two real wells, achieving mean relative errors below 1 % for bottomhole and outlet temperatures. Furthermore, the insulation properties impact including thermal conductivity, thickness, length, and spraying position on wellbore temperature is systematically analyzed. Results indicate that lower thermal conductivity, increased thickness, and extended coating length effectively reduce wellbore temperature. When the entire drill pipe is coated with 2 mm, 0.02 W/(m·K) insulation, the bottomhole temperature (BHT) is reduced by 31.28 % compared with the static formation temperature (SFT). When the entire drill pipe is coated with 4 mm, 0.06 W/(m·K) insulation, the BHT is reduced by 29.12 % compared with the SFT. An optimal insulation spraying position is also identified, but IDP with different insulation properties have different optimal installation position. Finally, the Non-dominated Sorting Genetic Algorithm II (NSGA-II) is applied to optimize IDP design parameters and the best installation position in a real-well case study.