Uninsured risk changes how rural households make decisions that affect their livelihoods today and well into the future. Microinsurance provides households a measure of certainty so they can invest in profitable opportunities and, in the event of a disaster, reduce their use of costly coping strategies that compromise their livelihoods. Index insurance is a promising alternative to conventional loss-based insurance because it forgoes the need for costly loss verification and minimizes the risk of moral hazard. Even with these benefits, product quality remains a challenge. This paper summarizes the current state of evidence on index insurance for disaster risk and development including its impacts in the field, remaining challenges and opportunities, research gaps, and the knowledge frontier today.