Yes, that is correct. Black iron pipe and fittings have no waterproofing and are not for use with water. If you want something that will resist rust, take a look at the galvanized version of this flange. Here is a link to copy and paste into your web browser.
https://www.homedepot.com/p/3-4-in-Galvanized-Malleable-Iron-Floor-Flange-511-604HN/100120677