Welcome Rosalyn,
That's a very strange answer your host gave. If you already have a website up and running then you already have a host and should already have everything you need. Password protection is simply a script (bunch of code) you install on your own site to make it work so not why they want you to buy something else.
Go to godaddy.com and use one of their hosting plans if you want to switch hosts. I wouldn't buy another package with them. Can you tell me the name of your host? Maybe the type of host you have will explain some things.
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