That should be correct.
I haven't cancelled my service, but there have been times when iTunes couldn't connect to my account. During those times all of my playlists and albums remained as usual, but those added through Apple Music were greyed out. So I'm basing my advice off of those experiences.
I think it applied to songs stored in the cloud (songs I had that weren't on Apple Music or the iTunes Music Store), based off of my experience in using the service prior to Apple Music, quitting for a year, and then joining Apple Music, but I'm not 100% certain on that. If in doubt, you should be able to download those songs and store them locally, which would guard against any possible deletion from Apple's servers - they would just re-upload once you rejoined.