Is it permissible to return an insult in kind, such as insulting someone with their illness in response to their insulting me with a defect I have, and will I be afflicted if I respond to him, and am I entitled to supplicate against him because he was the one who initiated it?

It is permissible for the wronged to retaliate with similar abuse, without exceeding it, and it is also permissible to supplicate against the oppressor. However, patience and forgiveness are better due to their benefits, which include: knowing that Allah is the Creator of the actions of His servants, that tribulation is due to sins, that forgiveness leads to a sound heart, that Allah honors those who forgive, that recompense is of the same kind as the deed, and that patience in the face of harm leads to the adversary's retreat and regret.