A power of attorney appoints a representative to handle one's affairs due to mental or physical incapacity. Mental incapacity means that someone is not able to understand the consequences of his or her actions. For example, if someone develops schizophrenia and cannot tell the difference between reality and hallucinations, he or she cannot make financial decisions for themselves.
Physical incapacity could mean that someone is in a coma or brain dead. If someone is paralyzed and cannot sign documents for themselves they may need a power of attorney. If an elderly person is just not well enough to go outside, they will clearly need someone to handle their business and personal affairs.
There are three examples or types of power of attorneys: General, limited, or special. General powers of attorneys take effect immediately and stay in effect until the incapacitated person dies or is no longer incapacitated. A general power of attorney gives an agent the legal right to handle all transactions for the principal.
A limited power of attorney grants the agent powers for certain types of transactions. If a principal wants one agent to handle finances and another agent to handle medical decisions, the principal would appoint two separate agents and limit their power to financial or medical. Limited power of attorneys can be made to take effect on a certain date, immediately, or in light of specified events.
A special power of attorney is executed when a principal just needs help with one transaction that they do not feel comfortable handling themselves. Examples could be anything from real estate transfers to the sale of a business.
As for an actual physical example of power of attorney letters, they vary depending on jurisdiction and type of power being granted. A jurisdiction is a county, city, or state that governs the applicable law. A power of attorney for Chicago, IL may look completely different than a power of attorney in San Diego, CA. The wording may be different. The laws may vary. The best thing to do is consult with an attorney when you want to draw up a power of attorney.