Extending keywords is a practice where you extend the concept of viewing your keyword as a theme. As it is meant to define your page, you should really try to include whatever words can complete your theme. If your main keyword or theme for the page is car insurance for example, you should think of whatever other words are related to car insurance.
Such words can be found in either Google KeywordTool or by using Google Sets. You can also search for you page keyword and look at what pages end up on top in the search engines. What other words, related to the word you are working with, are included in the top three results. I generally use SEO Quake to find what words have the highest density on top ranking webpages for the keyword I am pushing for.