if i feel terrible i say "i feel terrible"

My first answer would be the common one. "Fine, thanks." Because the question "How are you" and the response "Fine, thanks" do not function as a genuine question and answer, but as a social protocol. After you fulfill the social protocol, you may tell your friend (or family member) how you really feel. Or, you could forget about protocol and just tell your friend or family member how you really feel. But even this would be awkward, and I would not avoid the social protocol with anyone else--unless I wanted to be rude.

It depends on how honest you want to be, which probably depends on how well you know the other person and how much you trust them. If you feel depressed, you can say, "I feel bad/depressed/sad," and then discuss it with the other person. But if you don't want to share your feelings, then we typically answer, "I'm fine" even if we are not, because that will end the questioning.