How can I insulate my thermistor? I have had many problems with my heat shrink for the thermostat on my Anet A8 melting from the heat block. 

Is there a way I can insulate my wires from heat but still have enough room to put the thermistor into the block?
You can use kapton tape, small PTFE tube, or silicone tape. I use PTFE on my delta printer (I do have a silicone tape wrapped around my heat block, but that's to help with keeping the heat in the block, not for eletrical insulation (although it would work for that)). These will all handle the temperatures of your heat block fairly well.