How do you teach a bad word?

Last night I was out with my boyfriend L., who wanted to practice his English. We started talking and I was surprised that I didn't have to speak as slowly as I did in the past. Our conversation flowed normally, like I was talking to a friend back home.

He was explaining a project they are working on in his company. The project is abstracting uranium from a country in Africa. I wasn't paying too much attention, maybe I was watching the amber liquid in my glass vibrate as the people walked by, but all of the sudden I heard it. The N word.

"Excuse me?" I asked.

"Apparently they have lots of uranium," he went on without noticing my pause.

"No. Stop. What country did you say?" I asked again.

He looked confused. Then said it. There it was again. The N word.

"Whoa. Whoa. Whoa. How do you spell it?"

He wrote out in his notebook n-i-g-e-r. (Note: pronounced /niːˈʒɛər/ or /ˈnaɪdʒər/)

"Oh! Niger! Okay... Whew... Now, I'm going to explain something to you."

I told him that the N word in English is right up there with some of the most offensive words ever. No one should use it. Sometimes rappers use it in songs, but besides that no one says it.

He looked confused again. I realized right away we were having a cultural misunderstanding because Chile is not the most pc country ever and while I may not have an emotional response to Chilean swear words like culiar, probably no one will look at me sideways if I all the sudden start saying it. However, in the case of the N word it is much different. People will not care where you are from. If you say it, it is offensive.

After a few minutes of my explanation he nodded in agreement, "Alright. I won't say it. But, I should probably tell my coworkers because they all say it too."

*****

Now, I ask myself, how do you teach bad words to someone who is learning ESL? What do you say to them? Do you give them a list of the words and say "You should never say these words, but in case you hear them, this is what they mean"? What would you say?