I grab a screenshot from my video, and then you can either paste it into Paint and open with Photoshop, or do what I do and view it via Dropbox, where mine save automatically - then open with Photoshop.
What I did with my latest thumbnail (see the video in my signature - or, if this is outdated, my Useless January Facts! video) - was Quick Select all of me and transfer that to a separate layer so I could put a white outline around myself. Then I transferred back to the original where I enlarged the image of me slightly, and added a Text layer in underneath.
I'm freakin' pants at Photoshop, but doing that was easier than I thought it would be! Haha.
I hope this helps you! Oh, and this is very important.
When cropping your thumbnail, please ensure it is in a 16:9 format so you don't lose anything!