A semiconductor device has a first conductive layer formed over a substrate. A first insulating layer is formed over the substrate and first conductive layer. A second conductive layer is formed over the first conductive layer and first insulating layer. A second insulating layer is formed over the first insulating layer and second conductive layer. The second insulating layer has a sidewall between a surface of the second insulating material and surface of the second conductive layer. A protective layer is formed over the second insulating layer and surface of the second conductive layer. The protective layer follows a contour of the surface and sidewall of the second insulating layer and second conductive layer. A bump is formed over the surface of the second conductive layer and a portion of the protective layer adjacent to the second insulating layer. The protective layer protects the second insulating layer.