NEW YORK—Lincoln National Corp., one of three insurers to get bailed out by the U.S. government, said it will repay the funds through a planned sale of more than $1 billion of stock and debt.

Lincoln’s plan to buy back the government’s preferred shares, which still needs the approval of federal regulators, would enable the company to exit the bailout program ahead of its previously announced schedule. Chief Executive Dennis Glass had earlier predicted the insurer could repay the U.S. by the end of 2010, and only recently said the insurer’s exit from the Troubled Asset Relief Program could be accelerated.

The company, with a market value of about $10.6 billion, plans to sell at least $335 million of common stock and up to $750 million of senior notes. Proceeds from the stock offering and $250 million of notes, as well as cash from the holding company, will be used to repurchase the government’s preferred shares. The government took the stake as a condition of Philadelphia-based Lincoln’s $950 million rescue last year.

In addition, $500 million from the debt sale will be used “as part of a long-term financing solution” supporting reserves of Lincoln’s insurance subsidiaries.

If the capital raise and repayment go as planned, Lincoln would exit the government plan ahead of larger rival American International Group Inc.. But it would lag behind Hartford Financial Services Group Inc., which paid back the U.S. in March.

The U.S. Treasury will retain warrants to purchase about 13 million shares of Lincoln stock for $10.92 a share. Lincoln, like Hartford, said it doesn’t intend to buy back those warrants.

Shares of Lincoln rose 5.3% to $27.76 in morning trading. The stock has jumped by almost 50% in the past year.

“We appreciate the critical role the government and the American taxpayers have played in stabilizing the financial markets and we are pleased to announce a plan to repurchase Treasury’s investment sooner than originally anticipated,” Mr. Glass said in a statement.

The U.S. Treasury in early 2009 allowed life insurers to partake in a TARP plan that had originally been intended to inject capital only into banks. To become eligible, Lincoln acquired tiny Newton County Loan & Savings and converted its own holding company so that it was overseen by banking regulators. Lincoln said in a regulatory filing Monday it will “continue to be a savings and loan holding company” after it exits the program.

In April, Lincoln said it swung to a $283 million first-quarter profit as investment results improved. But the repurchase of the preferred stock will result in a charge in income available to common shareholders in an upcoming quarter. The company estimated the charge to be about $131 million as of the end of June. But Lincoln will no longer pay annual dividends of $47.5 million on the preferred shares.

J.P. Morgan Chase & Co. will serve as global coordinator for Lincoln’s planned offerings. Credit Suisse, Morgan Stanley, and Wells Fargo Securities will act as joint book-running managers for the equity offering, while Bank of America Merrill Lynch, Deutsche Bank Securities and U.S. Bancorp will act as joint book-running managers for the debt offering.

Nathan Becker contributed to this article.

Write to Erik Holm at erik.holm@dowjones.com

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