A good index can set your book apart but indexing is specialist work. There are rules about what should be included and how the index should be displayed.
Word can create an index for you but it doesn't deal with names well and it is limited in its display options. The index that Word creates is actually a concordance, not a true index.
I use Word but with a few tricks! Send me your manuscript or book of up to 10,000 words as a Word or other word processor document. I'll produce a beautifully-formatted index within a few days.
For a manuscript of more than 10,000 words, see my gig extras.