I have to admit, I never hug the characters. As a kid I did, and certainly I don't have a problem with my own kids doing it, though they are not generally meet and greet fans, but I'm 40+ year old man and I stopped at about 12. Most of the characters, even those in costume, are women. I've shaken hands, exchanged high fives, stood shoulder to shoulder for pics, and if they take the initiative and hold my arm I have no problem, but I won't initiate. It just isn't my thing and when I watch some people and the things I regularly see I find it kind of odd... to put it nicely.
But to each their own. And Disney's policy, outside COVID of course, is certainly more liberal than my own code of conduct, so do what you feel comfortable so long as you don't cross a line.