Hello welcome to iMore,
There are some apps on the app store that have individual passwords or can be set to ask for a password when you open them however by default iOS does not allow you to lock individual apps.
Yes you can create group contacts, which version of iOS are you using? And would you like to utilize a group? In contacts groups really only acts as a filter, if you are looking to message a group there are 3rd party apps in the app store that do a much better job at managing groups. Personally I like Buzz Contacts.