This document explains how to require a password to open a document which also encrypts the file.
1) Open the document you want to protect.
2) On the Word menu, click Preferences.
3) Click Security.
4) In the Password to open box, type a password, then click OK. (Note: Password to modify, does not encrypt the document)
5) In the Confirm Password dialog box, type the password again, then click OK.
6) Click Save.