Smoffatt the thermal grease is not an insulator in case you got that from Minorl's comments. But if it is dried out, heat will not transfer and so the transistor can overheat and possibly short.
The best kind of grease is white. There is a clear variety also, but the white grease seems to be more efficient. It should be applied with as little as can do the job; a very thin but even coat on both sides of the insulator seems to work best. One of the better compounds is made by AOS Thermal Compounds, part number 520221E, although that part number is for a one pound jar, which takes a very long time to go through even if you are replacing power transistors every day. I am sure they sell it in lesser quantities.
http://www.aosco.com/
The best kind of grease is white. There is a clear variety also, but the white grease seems to be more efficient. It should be applied with as little as can do the job; a very thin but even coat on both sides of the insulator seems to work best. One of the better compounds is made by AOS Thermal Compounds, part number 520221E, although that part number is for a one pound jar, which takes a very long time to go through even if you are replacing power transistors every day. I am sure they sell it in lesser quantities.
http://www.aosco.com/