A semiconductor device has a plurality of conductive vias formed through the semiconductor die with a first insulating layer around the conductive vias. A recess is formed in the first insulating layer around the conductive vias by LDA. A portion of the semiconductor wafer is removed by LDA after forming the recess in the first insulating layer so that the conductive vias extend above a surface of the semiconductor wafer. The first insulating layer extends to the surface of the semiconductor wafer or above the surface of the semiconductor wafer. A second insulating layer is formed over the surface of the semiconductor wafer and conductive vias. A first portion of the second insulating layer is removed by LDA, while leaving a second portion of the second insulating layer over the surface of the semiconductor wafer around the conductive vias. An electroless plated bump is formed over the conductive vias.