How do you deal with MIL who insist baby to sleep with her instead of mummy?

It depends. If she means well, and it's so that she can take care of baby while you get your well-deserved rest, then maybe I'll allow it once in a while, not everyday. If it's because she's clingy and possessive, then no. Let your husband tell her you are more comfortable with baby sleeping with you.

Would get husband to deal with MIL instead