What is the general rule on including real living people in fiction?

Standard practice is to change names and at least some identifying details; if practical it might also be a good idea to get permission first. Writing semi-fictionalized stories based on real people and events has a long and honorable history (see Jack Kerouac or Hunter S. Thompson), but it's wise to tweak identifying features enough that people won't automatically assume you're documenting a true story.

I'm not a lawyer, but in most jurisdictions my impression is that you're in a better position to handle possible challenges if the people you're writing about are public figures; libel laws are usually weaker for people in the public eye.