My FIL sometimes shoots out of his hip and doesn't realise the hurtful things he sometimes says. However, my husband doesn't seem to mind it. How should I deal with situation and ask my FIL to just "be quiet!"

Its very difficult to mend the ways of elderly people. They are used to behaving in a certain manner and don't realize what they are saying and that it might hurt or anger others. Perhaps your husband is used to his this behavior or he knows there is no use correcting his father. If you answer back your FIL he will take it badly. Such persons do! Best is to try to ignore or leave that place when he is speaking hurtful things. You can involve your MIL here to convey things to your FIL.