The reason IC-rated downlights can be covered with insulation is because they run far, far cooler than old lights.
Your old-style downlights had to have at least a 150mm space around them because of fire risk. But that created lots of heat chimneys through which your costly warm air would escape. LED downlights are also far more energy efficient than old-style lighting, and we know how you can get the best from them. They can save you up to 90 percent on energy consumption –and also lead to you having a warmer home!
If you are looking at LED downlights, make sure you get a product that is CA or IC approved and that the manufacturer specifies can have insulation laid over the top.