Yes, this is the standard method. If you are using a simulator no extra precautions are required. If you are making physical measurements you have to use circulators on the outputs of the two signal generators and a high isolation combiner.
In real world signal generators there is a leveling loop that rectifies the output and sends it back to a leveling circuit. If some other signal is put into the output of the generator a hetrodyne is created which AM modulates the output.