Passwords and logins for Word files or folders

It's certainly possible to encrypt a Word document, this is a built-in option if you haven't seen it already and with a long complex password, it's a fairly secure option, especially in more recent versions of Office that use AES 256-bit encryption.  Just don't forget the password as there will be no way to access the document or recover the data otherwise!  

https://support.office.com/en-us/article/add-or-remove-protection-in-your-document-workbook-or-presentation-05084cc3-300d-4c1a-8416-38d3e37d6826

In a work environment, typically folders or sites and permissions might be used to protect documents, controlling who can access this data in the first place though this can be taken further with things like Azure Information Protection.