You actually have it right.
Take this situation. My Morale 5 tank has 4 hits on it. You fire, knowing that any result that equals or beats the armour knocks it out because a hit would inflict one morale marker.
If you equal it it will go up to 6 morale markers and be destroyed.
If you beat it and roll a Screech result, it's also destroyed. If you would have to add markers up to its full morale value alone, the tank would end up on 5 morale markers.
That's why we have the proviso that if adding 3 markers to its current total would kill it, it dies.
Hope that helps!