TORONTO, Feb 10 (Reuters) - Manulife Financial Corp and Sun Life Financial, Canada's two biggest life insurers, are increasing premiums to offset higher costs this year from inflation that has risen to a three-decade high, executives said on Thursday.

A 50-basis-point increase in fixed income yields would also translate into a C$1.85 billion ($1.5 billion) rise in embedded value, Manulife Chief Executive Roy Gori told analysts on a post-earnings call.

Manulife on Wednesday posted core fourth-quarter earnings of 84 Canadian cents per share, up 13.5% from a year earlier and beating analysts' expectations.

Smaller rivals Sun Life Financial and Great-West Lifeco on Wednesday also reported higher earnings.

Manulife shares jumped 3.9% to C$27.95 in morning trading in Toronto, their highest intraday level since 2008. Sun Life, whose U.S. earnings dropped 51% due to higher COVID-related death claims, declined 3.9% to C$70.97, while Great-West shares fell 1.55%.

The main Toronto index rose 0.6%.

"There are some aspects of our business where higher rates will create some headwinds, but we have flexibility as it relates to driving scale through expenses or price changes to offset those," Gori said.

The company could push up prices in its long-term care business, which may be susceptible to increased costs, although a shift to cheaper home care prompted by the pandemic has offset some of that, Chief Actuary Steve Finch said.

Sun Life executives said higher costs due to inflation could be a positive in its stop-loss business, which protects employers against unpredictable losses.

As policies reprice every year, "we would be able to react very quickly," Dan Fishbein, president of the insurer's U.S business, said on an analysts call. "Not that we're hoping for medical inflation, but the primary impact of medical inflation on our stop-loss business would be more premium."

Sun Life has already raised premiums in its disability and group life businesses, but those will take some time to take effect as policies are longer, he said.

Sun Life's MFS Investment Management unit, which focuses primarily on equities, could see some challenges, CEO Michael Roberge said.

An expected increase in market volatility, higher interest rates and high stock valuations are likely to send more investors into cash, reducing flows into funds in 2022, he said.

($1 = 1.2647 Canadian dollars) (Reporting By Nichola Saminather; Additional reporting by Manya Saini and Mehnaz Yasmin; editing by John Stonestreet and Chris Reese)