1. GM speaks in character as NPC - player has opportunity to tell if NPC is lying.
I think there is a pitfall, here. Unless there are actual inconsistencies or fallacies known to the player in what the DM says, the player has an opportunity to tell if the
DM is lying,
not the NPC. In cases where the NPC is simply ignorant of developments, or is him/herself deceived, this may be particularly relevant. Insight, to me, is skill in "reading" another - spotting tells, body language and natural physiological reactions to stress and deceit. It will not detect an untruth told by a character who sincerely believes what they are saying to be true. That is, it will detect when the
character is lying, not when the
DM is lying (or otherwise under stress or deceiving the players).
2. NPC always has to roll Bluff vs PC Passive Insight, if fail then PC auto-detects lies with their lie-radar EVEN IF THEY HAVE NO REASON TO BE SUSPICIOUS. I find this incredibly implausible, it ignores real-world social dynamics. It also means players never have to engage their own grey matter. It really sticks in my craw.
I don't find this implausible at all. I have occasionally noticed when people are being evasive or even deceitful, even when I had no particular reason to be suspicious; I suspect that many parents and teachers have done likewise, and possibly many in business jobs and so on, too. There are some people who flush bright red when they tell even a small lie - this represents a natural "trait" that gives penalties to Bluff that D&D characters don't have!
If a person is
deliberately trying to deceive, they
will give out measurable physiological and possibly physical signals as a result of the stress. The only questions are how subtle they manage to make those signs (represented by their Bluff skill, modified by how "big" a lie they are trying to tell) and how good the recipient is at detecting those signs (their Insight skill, modified by how alert and suspicious they are). Some of the circumstances of each case may be obvious - and can be represented by die/DC modifiers. Other circumstances will be unknown - and are represented by the die roll.
3. NPC makes check vs passive Insight vs PC. If player seems the slightest bit less than totally oblivious, the DM informs them they can roll an active Insight check.
The way I run it is the NPC makes the bluff vs. Passive Insight check, yes. If they fail, I tell the player that something seems amiss - they are nervous/seem evasive/look guilty or whatever. If the player asks for an Insight check, I roll it for them (since the unknown factors represented by the die roll are, to them and their character, just that - unknown). Otherwise, I give no overt indication that there is reason to doubt the NPC - in fact, I try to do as good a job of "lying in character" as I can.
Compare to PC trying to deceive NPC - either the GM lets it pass if the NPC has no reason to be suspicious, or the GM is a stickler and forces a Bluff check for everything. Even then, the PC only has to beat NPC Passive Insight to succeed - one dip, not the three the NPC had to get through.
As DM I have a priviledged position; I have to know most of what the PCs do and plan in order to perform my "DM-ly functions". I therefore know things the NPCs don't. If there are facts that I know the NPC knows that what the PCs claim contradicts, the NPC at a minimum gets an Insight roll (or just gets defensive). If the PC's roll beats their Insight, though, they are oblivious - but the PC always has to roll, to account for the "stress signals" that they will inevitably be giving off.
I think there's a place for passive insight in certain circumstances, but normally as DM I give plenty of in-character signs an NPC is lying,
As I mentioned, I explicitly don't (unless, perhaps, the NPC is unusually stupid and trying to bluff, anyway). I try to do as "professional" a job as possible to maintain the "illusion" in play. If I fail, so be it but I will probably at least try to have the players ignore a lapse that is, after all, mine, not the NPC's. I will also make it clear that what Insight detects is whether or not the NPC
believes what they are saying to be true - it's not some sort of objective truth finder.
and if the player isn't even suspicious enough to request an Insight check I don't feel obligated to have the NPC roll Bluff, just as a PC wouldn't have to roll Bluff vs a non-suspicious NPC.
This strikes me as unfair. The player does not have the feedback available to the character. In a study of what job interviewers took note of when assessing the value/veracity of interviewees' responses, the proportions were as follows:
"Visual" cues - body language, etc. = 55%
"Vocal" cues - tone, intonation, inflection, etc. = 38%
"Verbal" cues - what was actually said = 7%
If this is accurate, what the player has available to be suspicious about will be, even if in-character speaking is used throughout, 7% of the actual information available to the character - plus a bunch of spurious feedback based on a human being only peripherally connected to the character their PC is actually dealing with. Even assuming what is desired is a simulation, that's not what I would call even a mediocre simulation.
